Stellar (XLM): What Is It, History and How to Buy

Sam Lipscomb, CEPF®

April 15, 2021 at 9:27 AM·6 min read

Stellar (XLM): What Is It, History and How to Buy

Stellar is a decentralized computer network that operates using blockchain technology. On the Stellar network, you can trade its form of currency, which is called lumens (XLM). This cryptocurrency is required to complete transactions on the Stellar network. Stellar and XLM were created in 2015, with the basic idea behind Stellar being to create a cryptocurrency that can reduce transaction costs and serve as a bridge between fiat, digital or other currencies. Cryptocurrencies can be confusing and rather volatile, so it may be a good idea to work with a financial advisor before investing.

What Is Stellar (XLM)?

Stellar is an open-source, peer-to-peer digital currency network that emerged in 2015. The network was founded by current chief architect Jed McCaleb, former lawyer Joyce Kim, who has since left Stellar and current chief scientist David Mazières. The idea behind the network is to make it easier and faster for people to send different types of currencies around the world. It can also provide banking services and liquidity for people who can’t access traditional banking services.

Stellar’s cryptocurrency tokens are called lumens, or XLM for short. While Stellar and XLM coexist in the same system, they are technically two different things. Stellar is the foundation of the blockchain network, whereas lumens are traded on the network. According to Stellar’s website, there are currently 50 billion lumens in circulation. Stellar will not produce any more lumens, so you cannot mine them.

Here’s how Stellar works: Let’s say someone is looking to transfer $50,000, but doesn’t have access to a bank capable of completing the transaction. This person could instead transfer the equivalent of $50,000 in lumens. The recipient could then trade those lumens for $50,000, or an equivalent amount of a different currency. In the end, clearing times are reduced and no banks need to be involved on either end of the transaction.

How to Buy Stellar Lumens

You need lumens to use the Stellar platform. You can buy lumens, but not Stellar itself. Luckily, buying lumens is fairly simple at a variety of cryptocurrency trading platforms and brokerages. CoinBase and Kraken are two of the most popular networks for buying lumens with U.S. dollars. Binance, Bittrex, Bitfinex, Upbit, Coincheck, Huobi, NovaDAX and GMO Coin are also options.

LOBSTR is the native Stellar crypto wallet, where you can buy lumens directly in network. Currently, lumens are worth less than a dollar each, and you can’t buy fractional shares as of time of writing. Stellar is different from many other cryptocurrencies in that it’s more of a utility to facilitate trades than an asset in and of itself, like Bitcoin.

When it comes to storing lumens, it’s recommended that you use a hardware wallet or a digital wallet. While these are the best and safest ways to store your cryptocurrency, be careful not to forget your access codes or passwords. This could result in the permanent loss of your cryptocurrency.

Stellar (XLM) History

The Stellar network launched in 2015 under its founders, Jed McCaleb, David Mazières and Joyce Kim. McCaleb was formerly the founder of Mt. Gox, and he was also a co-founder of Ripple. The Stellar Development Foundation, which is a nonprofit, was created alongside Patrick Collison, the CEO and co-founder of Stripe, as well as a $3 million investment from Stripe. Stellar gained nearly 3 million users by the end of its first year.

In 2019, Stellar burned about half of its outstanding lumens, which induced a price jump. This caused some controversy, as cryptocurrency manipulation is often a risky move. However, the price soon leveled out and Stellar revealed that it would not produce any more lumens in an effort to stabilize its market.

Stellar lumens are some of the best performing cryptocurrency “altcoins” on the market today. Lumens are exchangeable all over the world and remain a popular cryptocurrency representation of other currencies. The platform’s source code calls GitHub home. It remains a decentralized blockchain system, as is the case for most cryptocurrencies.

Stellar (XLM) Price History

Like most cryptocurrencies, Stellar XLM has seen major price spikes and valleys. According to CoinGecko, the lowest price a lumen ever reached was in March 2015, when they were worth $0.00047612 each. Stellar’s highest price came on Jan. 3, 2018, when a single lumen was worth about $0.87.

Although prices bottomed out a bit following that time, they have climbed back strongly in 2020 and 2021. Based on information from CoinDesk, the current market capitalization of XLM is around $40 billion.

Should I Trade or Sell Stellar Lumens?

When it comes to cryptocurrency, it’s important to be knowledgeable about the risks you face. As they are new, cryptocurrencies can be volatile, and it’s possible to lose money if you choose to invest. Stellar notes that while lumens will always have value within its own network, their value relative to other currencies may change. In short, that affects the real world value of lumens for normal people.

That said, Stellar lumens could be a more stable cryptocurrency investment, simply due to the fact that they are more of a medium of exchange than a cryptocurrency token that’s meant to be held as an asset. While these types of cryptocurrencies, like Bitcoin or Dogecoin, are extremely popular, they can be harder to trust.

Bottom Line

Stellar is a blockchain-centric cryptocurrency platform on which you can buy, sell and trade lumens, Stellar’s form of cryptocurrency. Lumens are an easy-to-use and transferrable cryptocurrency that provide fast access to liquidity. Lumens represent a certain amount of another currency, making it simple to quickly transfer, say, U.S. dollars to someone who might not have access to banking services in a traditional way.

Tips for Investing in Cryptocurrency

Investing is hard enough on its own, but adding in cryptocurrency makes things even more difficult. A local financial advisor can help you sort things out, though, and finding one doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in just five minutes. Get started now.
While Stellar can help you with more specific cryptocurrency transactions, there are other options you may want to look into, such as Bitcoin. Check out our guide on how to invest in Bitcoin to learn more.

The post Stellar (XLM): What Is It, History and How to Buy appeared first on SmartAsset Blog.

Reuters
Factbox-Key issues discussed by Blinken in talks with Chinese leaders
U.S. Secretary of State Antony Blinken met his Chinese counterpart Wang Yi and Chinese leader Xi Jinping in Beijing on Friday in the latest high-level contacts between the superpowers aimed at keeping tense relations under control. The visit brought little progress on contentious issues, including China's support for Russia in Ukraine, tensions over Taiwan and the South China Sea and U.S. complaints about cheap Chinese exports.
3m ago
Associated Press
Private security firm says missile fire seen off the Yemen coast in the Red Sea near crucial strait
Missiles suspected to have been fired by Yemen's Houthi rebels landed a distance away from a ship traveling through the Red Sea on Friday, a private security firm said. The attack follows an uptick in assaults launched by the Houthis in recent days after a relative lull in their monthslong campaign over Israel's war on Hamas in the Gaza Strip. The Houthis did not immediately claim the missile fire, though it typically takes the rebels several hours to acknowledge their attacks.
8m ago
Associated Press
Minneapolis approves $150K settlement for witness to George Floyd's murder
The Minneapolis City Council has agreed to pay a $150,000 settlement to an eyewitness who tried to intervene to prevent George Floyd’s murder and who says he suffers from post-traumatic stress disorder as a result. Donald Williams, a mixed martial arts fighter who testified against former Officer Derek Chauvin in his 2021 murder trial, sued the city last spring, alleging he was assaulted by police while trying to prevent Floyd's death on May 25, 2020. The lawsuit alleged that Chauvin looked directly at Williams, grabbed a canister of chemical spray and began shaking it toward him and other bystanders expressing concern for Floyd’s welfare.
13m ago
Associated Press
JPMorgan's Dimon says stagflation is possible outcome for US economy, but he hopes for soft landing
JPMorgan CEO Jamie Dimon says stagflation could be one of a number of possible outcomes for the U.S. economy as the Federal Reserve attempts to tame stubbornly high consumer prices. In an interview with The Associated Press at a Chase branch opening in The Bronx, Dimon said he remained “cautious” about the U.S. economy and said inflation may be stickier for longer and that “stagflation is on the list of possible things” that could happen to the U.S. economy. “You should be worried about (the possibility of stagflation),” Dimon said.
19m ago
NBC News
Teacher arrested, accused of using AI to falsely paint boss as racist and antisemitic
Dazhon Darien, a Maryland high school teacher, allegedly fabricated a recording of the principal making hateful remarks.
25m ago
AFP
Kenya flood death toll since March climbs to 70
The number of people killed in floods in Kenya due to heavier than usual rainfall since the monsoon began in March has risen to 70, with nearly half the deaths in Nairobi, the government said Friday."The official tally of fellow Kenyans who regrettably have lost their lives due to the flooding situation now stands at 70 lives," government spokesman Isaac Mwaura said on X, after torrential rains killed 32 people in the capital Nairobi this week.
35m ago
CNN
Andrew Tate will stand trial on trafficking and rape charges, Romanian court rules
The trial of Andrew Tate, a self-proclaimed “misogynist” online influencer accused of human trafficking and rape, can go ahead, a Romanian court said Friday.
39m ago
Associated Press
Long flu season winds down in US
The U.S. flu season appears to be over. Last week, for the third straight week, medical visits for flu-like illnesses dipped below the threshold for what's counted as an active flu season, the Centers for Disease Control and Prevention said Friday. Other indicators, like hospitalizations and patient testing, also show low and declining activity.
42m ago
Reuters
Israeli minister Ben-Gvir slightly hurt in car accident
RAMLE, Israel (Reuters) -Israel's hardline national security minister Itamar Ben-Gvir was slightly hurt in a car accident and taken to hospital on Friday, police said, adding that they were investigating the circumstances. Video aired on Israeli media showed the car Ben-Gvir was travelling in had flipped over. Police commissioner Kobi Shabtai told reporters two other people were injured in the incident.
45m ago
NBC News
What Bill Cosby's overturned conviction could signal about Harvey Weinstein's case
Harvey Weinstein’s legal team saw some hope on the horizon when Bill Cosby’s indecent assault conviction was overturned three years ago by Pennsylvania’s top court.
47m ago
Associated Press
US says it's reviewing new information about Israeli unit accused of abuses before the war in Gaza
The U.S. has determined that an Israeli military unit committed gross human-rights abuses against Palestinians in the West Bank before the war in Gaza began, but it will hold off on any decision about aid to the battalion while it reviews new information provided by Israel, Secretary of State Antony Blinken said in a letter to House Speaker Mike Johnson. The undated letter, obtained by The Associated Press on Friday, defers a decision on whether to impose a first-ever block on U.S. aid to an Israeli military unit over its treatment of Palestinians. Blinken stressed that overall U.S. military support for Israel’s defense against Hamas and other threats would not be affected by the State Department's eventual decision on the one unit.
59m ago
AFP
Poland trumpets its Van Gogh, once peddled for a beer
Poland opened an art show Friday to celebrate its only Van Gogh painting, a rare early landscape worth millions that was once hawked by a pedlar for the price of a beer.The small oil painting -- also known as "Farmhouses Among Trees" -- is "interesting for its modesty and for showing a whole different side to Van Gogh," said Agata Smolnicka, co-curator of the Warsaw show.
59m ago
Time
Supreme Court Wrestles With Implications of Granting Trump Immunity
“This case has huge implications for the presidency, for the future of the presidency, for the future of the country,” said Justice Brett Kavanaugh.
1h ago
NBC News
Key Fed inflation measure rose 2.8% in March from a year ago, more than expected
Inflation showed little signs of letting up in March, with a key barometer the Federal Reserve watches closely showing that price pressures remain elevated.
1h ago
Reuters
Support for South Africa's ANC near 40% weeks before election, Ipsos poll shows
Support for South Africa's governing African National Congress (ANC) has fallen to just over 40%, an Ipsos opinion poll showed, weeks before a general election that could usher in the biggest political change since the end of the apartheid era. While the ANC is still on track to win the most votes on May 29, if it gets less than 50% support it would have to seek one or more coalition partners to govern the country, the first such alliance since the party swept to power under liberation hero Nelson Mandela 30 years ago.
1h ago
Time
The Challenges of Election Coverage Present Opportunities
In an unprecedented year, the core of journalism remains the same
1h ago
AFP
US oil giants' profits dip as Exxon deal nears finish line
ExxonMobil and Chevron both reported a dip in profits Friday on lower refining margins and natural gas prices, but ExxonMobil's big takeover appears on track to close before Chevron's. While ExxonMobil's Pioneer deal appears on the cusp of closing, Chevron's proposed $53 billion takeover of Hess hit a speedbump following a challenge from ExxonMobil.
1h ago
Time
What Professors Owe Our Students Right Now
"If we are to reclaim our university, faculty and students must do it together," writes Barnard professor Nara Milanich.
1h ago
CNN
Significant tornado and severe weather threat underway in the central US
A multi-day severe thunderstorm event is underway as the central US endures damaging wind gusts, large hail and tornadoes and the danger posed by these fierce storms will only increase into the weekend.
1h ago
AFP
Herds of endangered hippos trapped in mud in drought-hit Botswana
Herds of endangered hippos stuck in the mud of dried-up ponds are in danger of dying in drought-struck Botswana, conservation authorities told AFP Friday.Near the vast wetlands of the Okavango Delta in northern Botswana, the dried-up Thamalakane River has forced herds of hippos to head for natural water reserves close to the tourist town of Maun.
1h ago

Latest Stories