When it comes to the world of cryptocurrencies, there are multiple different options available to potential investors. Each digital coin offers something slightly different, and they all have their particular pros and cons.
One of the lesser-known altcoins that has recently gained quite a lot of interest is Stellar Lumens (also known as XLM). This article will explain everything you need to know about XLM as an investor and how you can buy Stellar lumens if you intend to invest.
What is Stellar?
Stellar is a decentralized network that is designed to connect banks, people, and payment systems together more efficiently. The goal of the Stellar network is to let people use their money quickly and easily. The Stellar network consists of many different computers around the world that are used to process transactions and operate a decentralized ledger.
Stellar was founded in 2014 by Jed McCaleb, a well-known figure in the crypto space. McCaleb also co-founded Ripple, which is another popular crypto. Stellar Lumens (XLM) is the native token of the Stellar network. XLM is used to facilitate transactions on the Stellar network.
How Does Stellar Work?
The Stellar Network functions very similarly to the Ripple Network. Many different nodes are used to make up the network and process transactions. These nodes work together to create a network that is decentralized and distributed. Stellar Lumens (XLM) work as a type of “gas” to incentivize people to run the nodes that make up the network.
Pros of Stellar Lumens
- Stellar is already being used by banks — There are already some big-name banks that are using the Stellar Network to process transactions.
- Stellar has a great team behind it — Stellar has a great team with a good track record of delivering on their promises.
- Stellar has a very low inflation rate — Which means there will be a smaller amount of new tokens created each year compared to other networks.
Cons of Stellar Lumens
The way the Stellar network functions, combined with the low barrier to entry, has also led to a few downsides. These include:
- No profit potential — Stellar Lumens are designed as a medium of exchange, not as a store of value. This means no one is making a profit from holding XLM.
- Fee structure — The low barrier to entry means there are very low fees. While this is a positive for users, it also means the network won’t generate a lot of revenue.
- Centralized design — The Stellar network is centralized and one of the nodes is run by the team. This goes against the ethos of the blockchain world, where decentralization is the goal.
How to buy Stellar Lumens
There are some different ways you can buy Stellar Lumens. You can either use a cryptocurrency exchange to swap other coins for Stellar, or you can buy Stellar Lumens with fiat currencies such as USD.
- Exchange — If you already own cryptocurrencies such as Bitcoin or Ethereum, you can use an exchange to swap them for Stellar Lumens. This is a quick and easy way to buy XLM, but it generally comes with a high fee.
- Buy with fiat — Another option is to buy Stellar Lumens directly with fiat currencies, such as USD. This is a good option for beginners who do not own any other cryptocurrencies. However, the downside is that you generally need to go through a lengthy verification process.
How To Store and Hold Stellar Lumens
If you are holding your Stellar Lumens in an online wallet, it’s a good idea to move them to an offline one. This will reduce your risk of being hacked, and it will also allow you to hold your XLM more securely. You can find a full list of wallets that support Stellar Lumens on the official website. Stellar.org recommends using the Ledger Nano S hardware wallet or the Stellar Desktop Client — an easy-to-use client that lets you create and manage your Stellar wallets. It also lets you send and receive payments, manage your portfolio, and trade on the Stellar Decentralized Exchange (SDEX). Stellar Lumens are an ERC20 token and can also be stored in MyEtherWallet.
Should You Invest in Stellar?
Stellar is a relatively new project, but it looks like it has all the potential to become a significant player in the cryptocurrency world. If more banks begin to use the Stellar network, it could have a significant and positive impact on the price of XLM.
Stellar is a fascinating project with a lot of potential, but it’s crucial to remember to do thorough research before investing in any new project. Only then can you make an informed decision and decide if Stellar is right for you.