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How To Buy Stellar (XLM)? A Comprehensive Guide

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stellar

Key Takeaways

  • Stellar (XLM) is a decentralized network launched in 2014, facilitating fast and cheap cross-border payments worldwide.
  • Major exchanges like Binance, Coinbase, and Bybit offer multiple trading pairs for buying XLM.
  • Transfer XLM to your personal wallet after purchase for safekeeping.

In this article, let’s discuss how to buy Stellar (XLM) by learning the necessary steps, from choosing a reliable exchange to securing your digital assets.

What Is Stellar (XLM)?

Stellar (XLM) is a decentralized network that launched in 2014 to facilitate fast and cheap cross-border payments worldwide. The project connects financial institutions and individuals, enabling them to send and receive money quickly and at minimal cost.

Understanding Stellar (XLM)

Beyond the basics, here’s a deeper dive into Stellar:

Technology

Stellar relies on a few key technological components to function:

Distributed Ledger Technology (DLT)

At its core, Stellar utilizes a DLT, similar to a giant, shared spreadsheet recording all accounts and transactions on the network. This ensures transparency and security as everyone on the network has a copy of the ledger.

Stellar Consensus Protocol (SCP)

Unlike some blockchains that use energy-intensive mining for verification, Stellar employs SCP. SCP is a more energy-efficient consensus mechanism where a small group of trusted nodes (called validators) verify transactions. These validators constantly communicate and vote on the validity of transactions. Once enough validators agree based on consensus, the transaction is considered valid and added to the ledger.

Anchors

Anchors are trusted institutions that connect the Stellar network to traditional financial systems. They act as bridges, allowing users to deposit and withdraw real-world currencies (USD or EUR) in exchange for Lumens (XLM) on the Stellar network.

Pathfinding Algorithm

When you send a payment on Stellar that involves currencies different from XLM, the network uses a pathfinding algorithm. This algorithm finds the most efficient route to convert your initial currency into the recipient’s currency, considering exchange rates and fees across different anchors.

How It Works

Stellar facilitates transactions through payment channels, where users hold funds in temporary accounts, enabling faster and cheaper micropayments.

When you want to send money on Stellar, you initiate a transaction specifying the recipient and amount. The transaction is broadcast to the network and verified by nodes using the SCP. Once enough nodes agree on the transaction’s validity, it’s added to the ledger, and the funds are transferred.

Stellar also allows the creation of tokens representing real-world assets like currencies or commodities.

Use Cases

Cross-Border Payments – Stellar aims to streamline international money transfers, offering a faster and cheaper alternative to traditional banking systems.

Micropayments – The network’s low transaction fees make it suitable for micropayments, enabling individuals to send and receive small amounts easily.

Decentralized Applications (dApps) – Developers can build dApps on the Stellar network, fostering innovation in various financial services.

Advantages

Faster And Cheaper Transactions – Compared to traditional methods, Stellar offers significant advantages in speed and cost.

Scalability – The network is designed to handle a high volume of transactions efficiently.

Security – Blockchain technology ensures secure and transparent transactions.

Decentralization – Eliminates reliance on central authorities, promoting transparency and trust.

Factors To Consider Before Buying Stellar (XLM)

Volatility – Like all cryptocurrencies and similar asset classes, XLM is subject to price fluctuations.

Risk Assessment – Assess the risks associated with investing in XLM, such as market volatility and regulatory factors.

Market Analysis – Analyze XLM’s price trends, market capitalization, and trading volume to make informed investment decisions.

Fundamental Analysis – Evaluate Stellar’s technology, partnerships, and development roadmap to gauge its long-term potential.

Where To Buy Stellar (XLM)?

Binance Binance is a major exchange offering a wide range of cryptocurrencies. It offers multiple ways to buy crypto, including credit cards, debit cards, and peer-to-peer (P2P) trading.

Bybit This exchange is known for its derivatives and margin trading features, but you can also use the platform for spot trading.

Coinbase Coinbase is an American-based cryptocurrency exchange that allows you to buy cryptocurrencies using various payment methods, including bank transfers, debit cards, and wire transfers.

Wallets And Storage Options

To store your XLM securely, you will need a compatible cryptocurrency wallet. Options include:

Hardware Wallets – Provide offline storage and enhanced security (e.g. Leder and Trezor).

Software Wallets – Offer convenient access via desktop or mobile applications (e.g. Trust Wallet and MetaMask).

Exchange Wallets – These are provided by cryptocurrency exchanges for trading convenience but may be less secure than dedicated wallets.

Choose a wallet that aligns with your security preferences and usage requirements. Always prioritize security by implementing backup measures and safeguarding your private keys.

Buying XLM Tutorial

Create A Crypto Exchange Account

Provide the required information and complete the verification process as instructed by the chosen exchange.

Fund Your Account

  • Peer-To-Peer (P2P) Trading: This method allows you to directly buy XLM from another individual using various payment methods supported by the P2P platform. However, the availability of this method depends on the exchange and your region.
  • Alternative Payment Methods: Some exchanges offer alternative payment methods besides traditional bank transfers, including credit cards, debit cards, and cash deposits at specific locations.

Locate XLM

Navigate to the trading section of the exchange and select an XLM trading pair (i.e. XLM/USDT, XLM/BTC).

Place A Buy Order

Choose the type of order you wish to place (market or limit order) and specify the amount of XLM you want to purchase.

Review Your Order

Review the order details and confirm the transaction.

Secure Your XLM

Transfer your XLM to a secure cryptocurrency wallet after purchase for long-term holding. While exchanges are convenient for buying and selling, they are not ideal for long-term storage. You can transfer your XLM back to the exchange whenever you sell.

Final Thoughts

Stellar (XLM) is a promising project with the potential to revolutionize cross-border payments and financial inclusion. However, before considering the token as an investment, carefully assess your risk tolerance and conduct thorough research.

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