Buying Stellar [XLM]? Everything you need to know (A beginner’s guide)
2017 was indeed the year of cryptocurrencies. Frenzied investor interest, skyrocketing prices, wild speculation – it had everything going on. Sadly, within a few weeks into the new year, digital currencies suffered a huge setback. All the castles build in the air in 2017 came crashing down heavily. The value of Bitcoin fell down nearly by half and other major alt-coins like Ripple and Ethereum were also stuck in the same boat.
Despite, this gloomy outlook, there are a few cryptocurrencies that are on an upward trajectory. And, one major player in this space is Stellar.
Stellar for Beginners: Say Hello to Stellar Lumens (XLM)
Today, Stellar Lumens is one of the top ten cryptocurrencies. In fact, the price of this crypto coin saw a major spike, after it bagged one of the most prestigious partnerships in the world of digital currencies with none other but the tech giant, IBM. Today, experts predict that Stellar is a Ripple without the drawbacks of the latter.
More and more cryptocurrency investors and enthusiasts are jumping into Stellar Lumens. Here, in today’s article, you can read all that you need to know about this currency, it’s journey over the year, price history, current price trends and future predictions. Let’s dig in.
Stellar Lumens (XLM): A Step-by-Step Beginner’s Guide
What are Stellar Lumens (XLM)?
According to CoinMarketCap.com, here’s the Overview:
- Network – Stellar
- Currency – Stellar Lumens (XLM)
- Founded – 2014
- Mission – Stellar aims to be a platform that connects banks, people and payment systems. It aims to integrate all these to facilitate the transfer of money quickly, reliably and at zero cost.
- It cannot be mined
How Much is Stellar Worth?
- Market Cap – $4,369,268,877 USD
- Volume (24h) – $34,126,000 USD
- Circulating Supply – 18,605,300,960 XLM
- Overall Supply – 104,025,824,192 XLM
- Current Price – around USD 0.23
- Peak Price – $0.91 occurred on January 3, 2018
The Big Bang of Stellar Lumens – a Short History
Stellar is one altcoin that is known by many names – Lumens, STR and XLM. But did you know that Stellar was born from the Ripple (XRP) protocol? Yes, Jed McCaleb, the founder of Stellar is a co-founder of Ripple. He is also the former creator of Mt. Gox, the first bitcoin exchange before it was sold to Mark Karpeles.
The co-founders of Ripple, Jed McCaleb, and Chris Larsen split up as they couldn’t agree on the future vision of the currency. Following the split, Jed launched his own cryptocurrency in 2014. And, thus Stellar was born.
Jed split from Ripple by a fork and introduced 100 billion Stellars (it was then known as Lumens). McCaleb wants to ease payment and transaction speeds just like his rival, Ripple. The significant difference between the two is that Stellar Lumens is structured as a non-profit organization. He wants to keep the digital currency as decentralized as possible. One way, he proposes to achieve this goal is by distributing the coins optimally among future users.
Highlights and the Salient Features of Stellar Lumens
- It can handle over 2000 transactions per second
- The transaction time is around 3-5 seconds
- Next to zero transaction costs
- Can be used to send or trade any other cryptocurrency or fiat currency
- Works on the Stellar Consensus Protocol instead of the PoW (Proof-of-Work)
- Is decentralized
- Uses smart contracts and multi-signatures
At the time this article was published, there are around 18 billion Stellars in circulation. The remaining (total supply is 103 billion XLM) are circulated in such a way that 1% inflation happens every year. These are some impressive features, and even the crypto-giants like BTC and ETH are sure to be jealous of.
How did Stellar Lumens reach such an envious position within a short time? The answer rests on its team of advisers.
Team and Advisors
Stellar has an impressive team which includes the top names in the cryptocurrency world. Let’s start with the man who started it all – Jed McCaleb. He has an illustrious career in the crypto-world. He began Mt. Gox, the world’s first Bitcoin trading platform. He then sold it to Karpeles, after which it went bankrupt in a short time. He then launched Ripple and later went on to start Stellar Lumens. It’s indeed impressive that he has three of the most successful crypto-companies in his resume.
Furthermore, the Stellar Lumens team has some very talented advisors including Patrick Collison (the CEO of Stripe, 10-billion dollars worth payment platform), Matt Mullenweg (the founder of WordPress), Sam Altman (the President of Y Combinator), Greg Stein (Director at the Apache Software Foundation) and several others.
How does Stellar Work?
Though the code of Stellar has been completely rewritten since its fork from Ripple, it still is similar to Ripple in several ways. Stellar provides a method for all financial entities to communicate with each other using the same language. It’s sorta like how emails work. You can send an email to someone in the other corner of the planet without paying anything.
On the other hand, if you transfer money to someone in another country, you’ll have to pay quite a sum for the transaction. And, it takes time (sometimes even days) for the transaction to happen. The reason why emails cost next to nothing, whereas money transfers cost more is that all email providers (Gmail, Yahoo, Hotmail, etc.) use the same underlying system. On the other hand, banks and other financial institutions have their own systems, which make it time-consuming and expensive to communicate.
What are Stellar Anchors?
One of the most significant features of the Stellar network is “Anchors.” These are units that act as a bridge between different currencies. Let’s illustrate the working of anchors with a real-world example.
For instance, if you want to transfer money from your account (in USD) to a foreign account, you may use Paypal. The first step involves moving the amount from your account to your Paypal account. You can then send the money to the recipient’s Paypal account, who moves it from his Paypal to his bank account (which can be in any other currency).
“Anchors” do the role of Paypal in the Stellar network. Instead, of moving money between your accounts, the anchor does it automatically for you. Since anchors communicate with all other anchors in the network, it’s more powerful and faster than what’s available right now.
The Stellar Consensus Protocol – Decentralization Protocol Explained
Stellar doesn’t use Proof-of-Work. Instead, it works on the Stellar Consensus Protocol (SCP). The SCP keeps the stellar network protected from external attacks. The entire network is decentralized meaning that the transactions are verified by the community and not anyone center point.
All servers in the network communicate with each other every 2-5 seconds, to verify if a particular transaction is legitimate. This means that unlike Bitcoin, Stellar Lumens is fast, scalable and virtually free.
What Sets Stellar (XLM) Apart from other Cryptocurrencies?
Lumen links quickly with all fiat-currencies and allows instant exchange between the seller and buyer, without even dealing with cryptocurrency.
The Stellar network has a built-in currency in the network for two main reasons.
- Lumens serve as an anti-spam. For each transaction in the network, a minuscule fee is charged for it. Usually, it’s around 0.00001 XLM of the transaction amount. This fee prevents the network from a DoS attack (meaning it acts against nefarious users from flooding the network). Lumens serve as a security token, protecting the network.
- It facilitates multi-currency transactions. They provide for transactions between currencies that are difficult to access or don’t have an existing market.
Unlike other major cryptocurrencies, XLM is given away for free. By giving away free lumens, the team behind the Stellar network aims to invite communities to build the services they require using the Stellar network.
Fair Distribution of Lumens
According to the SDF, 95% of the tokens on the Stellar network are distributed, while the remaining 5% is held by Stellar.org to meet operational costs. The handouts are processed in the following manner:
- 50% to individuals
- 25% for government institutions, business grants, and non-profits
- 20% to bitcoin holders
- The team retains 5% for further developments
How to Purchase and Store XLM?
Lumens is available for purchase on several exchanges like Poloniex, Kraken, and Bittrex. Additionally, Stellar offers a direct sign-up program. Once you have acquired Stellar Lumens, you can store them in over ten different wallets.
Here are a few popular ones:
- Lobstr is a Stellar wallet that is available as a web app, as well as iOS and Android apps.
- The Stellar Desktop Client is another open-source wallet that is available for desktops. You can encrypt your secret key with it and store it on your machine locally.
- If you’re looking for a user-friendly wallet Papaya is a great option. No need for any technical knowledge to use it.
Stellar (XLM) Price Predictions 2018
One of the striking aspects of Stellar Lumens is that it has an impressive team backing it up. Indeed, XLM presents an excellent alternative to Ripple. The one advantage that Ripple has over Stellar is that the former has a more substantial number of banks and companies behind it.
However, the recent partnerships with Deloitte and IBM prove that Stellar is well on its way in entering into influential alliances with the top companies in the industry.
With that said, there are still some questions about the future of this currency. And as with all other aspects of cryptocurrencies, only time will tell, whether Stellar picks up in volume and emerge as a mainstream altcoin.
Image via Shutterstock
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