A recent partnership with IBM (NYSE: IBM) has seen a relatively new cryptocurrency hit the charts. People are now curious about how to buy Stellar Lumen (XLM). Before we get into buying and selling, though, let’s take a quick look at what XLM is all about.
What is stellar lumen?
Stellar lumens are units of a digital currency. Each unit is stored in a common public ledger on the Stellar network, which is based on blockchain technology. Lumens help move money around the world in fast and secure transactions between different currencies. Lumens protect the Stellar network and individual Stellar accounts from DoS attacks (Denial-of-Service).
There is a small 0.00001 lumens fee associated with each transaction, which prevents a large number of transactions that tend to take up general ledger space and cause flooding.
Why buy Stellar Lumens?
Let me start this with the two main reasons you should buy Stellar Lumens.
First, you have to have at least 20 lumens to use the Stellar network. Think of it as a minimum balance.
Second, there is a fee of 0.00001 XLM (almost nothing) for each transaction. This is to keep people from flooding the network with meaningless transactions.
The basic idea behind Stellar was to create a global financial network that is open to everyone. In essence, Stellar plans to be like a futuristic version of “PayPal”. Stellar uses “anchors” that hold your money and spend credit so people can convert various currencies into lumens.
Stellar’s multi-currency exchange feature gives users a flexible approach to easily exchanging currencies on a global scale. In practice this means that you pay your friend in India with XLM and that friend can withdraw the money in rupees. And when you travel abroad, you don’t have to worry about converting your money into a foreign currency. You can only pay with your lumens.
It looks really good for this altcoin. In October, Stellar began a partnership with IBM to develop a blockchain-based cross-border payment solution that could increase transaction speed and reduce transaction costs. This is another feather in Stellar’s cap after working with “KiK”, one of the world’s most widely used messaging services. (Source: “How to Buy Stellar Lumens (XLM): Brief Instructions”, medium, last accessed on January 1, 2018.)
Stellar wants to do to the cryptocurrency world what credit cards did to the fiat currency world. When Stellar is successful (and there is no reason why it shouldn’t) it takes a lot of pressure off the credit card system. In fact, if Stellar squeezes out 10 percent of the credit card system, its price will soar into the triple digits. Remember, now it’s not even in the individual numbers.
How to Buy Stellar Lumens: Step-by-Step Instructions
Investors looking to buy and sell Stellar Lumens cannot do so directly. There are three basic steps to follow when purchasing Stellar Lumens.
- Set up a wallet for Stellar Lumen.
- Buy Bitcoin or Ethereum on a reputable exchange.
- Swap your Bitcoin or Ethereum for stellar lumens.
There are many different wallets available (desktop, mobile, and hardware). Here we are discussing desktop / laptop wallets.
To get a wallet, go to the Stellar Wallet Github and download a wallet that is compatible with your computer. For example, if you have a Windows 64-bit computer, you can select StellarDesktopWin64-v3.0.zip. (Source: “stellarchat / desktop-client” GitHub, last accessed on January 1, 2018.)
Once the file has downloaded, unzip it, create a new account with a password, and save the file.
As an added security measure, back up your wallet file on another computer or on a hard drive. This is important because if you lose or delete this file, you will lose access to your wallet.
Once you’ve created a password, you’ll be given a Stellar wallet address and secret key for your wallet.
The next step is to buy Bitcoin or Ethereum. Head over to “Coinbase” which, in my opinion, is the most trusted cryptocurrency exchange out there right now. Think of Coinbase as PayPal in the cryptocurrency world.
Create your Coinbase account. With security in mind, after creating your account, you should opt for two-factor authentication.
The next step is to create an account on a cryptocurrency exchange that you can use to exchange Bitcoin (BTC) or Ethereum (ETH) for Stellar Lumen (e.g. “Binance”). I prefer ETH over BTC as Bitcoin has high transaction fees and slow transaction times.
As with Coinbase, it’s a good idea to set up two-factor authentication for your Binance account.
Once your Binance account is ready, navigate until you find the “ETH deposit address”. This is the receiving address for your Ethereum. Copy this address and paste it into your ETH wallet in your Coinbase account.
Submit your ETH to your Binance account.
Once the ETH transfer is confirmed, it’s time to swap your ETH for XLM. In Binance, click on “ETH Markets” and then on the XLM / ETH pairing. Go to “Buy XLM”. If you want to convert all of your ETH into lumens, click on “100%” under the “Amount” field.
For maximum security, I would not leave any coins in exchange. So the next step is to move your XLM into your wallet.
Go to the “Deposits and Withdrawals” tab in Binance and click on “Withdrawals” in the XLM row. Insert your XLM receiving address in the address field. Click on “Submit”. Your lumens are on their way to your wallet. Click the History tab on your wallet to review. Your transactions should show up there.
Stellar Lumens Exchange List
In the example above, I used Binance to trade ETH for Lumen, but there are plenty of other exchanges where you can buy and sell Stellar Lumen.
The following list of Stellar Lumen exchanges includes my six top exchanges for trading other cryptocurrencies in Lumen, as well as the cryptocurrency pairings they offer for XLM.
- Bittrex: XLM / BTC, ETH
- Poloniex: XLM / BTC, USDT
- Octopus: XLM / BTC
- Coinbase: XLM / BTC, ETH, BNB
- GateHub: XLM / BTC, ETH, ETC, REP
- Exrates: XLM / BTC, USD
In addition to these exchanges, one could also use the Stellar Decentralized Exchange, which supports XLM / BTC, XRP, and EUR.
How do I buy stellar lumens with Credit / debit card
I have a few questions about purchasing Stellar Lumens with a credit / debit card. The process is the same as described above, except that when you buy ETH or BTC you are using your credit card instead of fiat currency. With Coinbase you can buy BTC or ETH with credit cards.
Then send your BTC or ETH to one of the exchanges mentioned above and exchange your BTC or ETH for Lumen.
Of course, you can also buy Stellar Lumen directly with your credit card at Changelly, but even if you are willing to spit off the high transaction fee, there is a catch: your purchase is limited.
Get Free XLM Tokens: How to Claim Stellar Lumens
Many people are curious about the opportunity to get free Stellar Lumen Coins. Unfortunately the deadline for this offer has expired. People who owned Bitcoins could only claim Stellar Lumens free of charge against their Bitcoin possession on July 27, 2017.
With recent collaborations with big names like IBM, the potential for this cryptocurrency is pretty high (pun intended) and it could be a great investment.
If you have Bitcoin, the best way to get Stellar Lumen is to trade your Bitcoin for XLM. However, for those who don’t have Bitcoin instead of buying Bitcoin, it would be a better idea to buy Ethereum and swap ETH for XLM through Binance, Gatehub, or another exchange.