How to Buy Stellar Lumens (XLM) Currency?

Stellar CoinA recent partnership with IBM (NYSE:IBM) has seen a relatively new cryptocurrency race up the charts. People are now curious about how to buy Stellar lumens (XLM). But before we get to the topic of how to buy and sell them, 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 on a shared public ledger of the Stellar network, which is based on blockchain technology.  Lumens help move money around the world in quick and secure transactions between different currencies. Lumens help protect the Stellar network and individual Stellar accounts against denial-of-service (DoS) attacks.

Each transaction has a minor fee—0.00001 lumens—associated with it, which prevents large numbers of transactions, which tend to take up space in the ledger and create flooding.

Why Buy Stellar Lumens?

Let me start this with the two basic reasons why to buy Stellar lumens.

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First, one needs to have at least 20 lumens to use the Stellar network. Think of it as a minimum balance.

Second, a fee of 0.00001 XLM (almost nothing) is charged for every transaction. This is intended to discourage people from flooding the network with meaningless transactions.

The basic idea behind Stellar was to create a global financial network that is open to anyone. Essentially, Stellar plans to be like a futuristic version of “PayPal.” Stellar uses “anchors” which hold your money and issue credit so people can convert different currencies into Lumen.

Stellar’s multi-currency exchange facility offers users a flexible approach to easily swap currencies on a global scale. What this means in a practical sense is that you could pay your friend in India with XLM and that friend could withdraw the money in Rupees. And when you are travelling abroad, you needn’t bother about converting your money into a foreign currency; you can just pay with your lumens.

Things are really looking up for this altcoin. In October, Stellar began a partnership with IBM to develop a blockchain-based cross-border payment solution that will help increase transaction speeds and reduce transaction costs. This is yet another feather in Stellar’s cap after its collaboration with “KiK,” one of the world’s most-used messaging services. (Source: “How to Buy Stellar Lumens (XLM): Quick Guide,” Medium, last accessed January 1, 2018.)

Stellar aims to do to the cryptocurrency world what credit cards did to the world of fiat currency. If Stellar succeeds (and there is no reason why it should not), it will take a huge chunk out of the credit card system. In fact, if Stellar displaces even 10 percent of the credit card system, its price will skyrocket into three figures. Remember, it’s not even in the single figures now.

How to Buy Stellar Lumens: Step-by-Step Guide 

Investors looking to buy and sell Stellar lumens cannot do so directly. There are three basic steps to follow while buying Stellar lumens.

  1. Set up a wallet for Stellar lumens.
  2. Buy Bitcoin or Ethereum from a reputable exchange.
  3. Exchange your Bitcoin or Ethereum for Stellar lumens.

There are many different wallets available (desktop, mobile, and hardware). Here we’ll discuss desktop/laptop wallets.

To get a wallet, go to the Stellar Wallet Github and download a wallet that’s compatible with your computer. For example, if you have a Windows 64-bit computer, you could select “StellarDesktopWin64-v3.0.zip.” (Source: “stellarchat/desktop-client” GitHub, last accessed January 1, 2018.)

Once the file is downloaded, unzip it, create a new account with a password, and save the file.

As an extra safety measure, create a back-up for your wallet file on a different computer or on a hard disk. This is important because, if you lose or delete this file, you lose access to your wallet.

Once you create a password, you’ll be given a Stellar wallet address and a secret key to your wallet.

The next step is to purchase Bitcoin or Ethereum.  Go to “Coinbase,” which is—in my opinion—the most trusted cryptocurrency exchange currently on the market. Think of Coinbase as the PayPal of the cryptocurrency world.

Create your Coinbase account. Keeping security in mind, once your account is created, it’s a good idea to opt for the two-factor authentication.

The next step is to create an account on a cryptocurrency exchange that allows you to trade Bitcoin (BTC) or Ethereum (ETH) for Stellar Lumen (such as “Binance”). I prefer ETH over BTC because Bitcoin has high transaction fees and slow transaction times.

As with Coinbase, it would be 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.

Send your ETH to your Binance account.

Once the ETH transfer is confirmed, it’s time to trade your ETH for XLM. In Binance, click on “ETH Markets” and then click on the XLM/ETH pairing.  Go to “Buy XLM.” If you want to convert all your ETH into Lumen,  click “100%” below the “Amount” field.

For maximum security, I wouldn’t leave any coins in the exchange.  So, the next step is to move your XLM to your wallet.

In Binance, go into the “Deposits & Withdrawals” tab and click on “Withdrawal” in the XLM row. Paste your XLM receiving address into the address field. Click on “Submit.” Your lumens are on their way to your wallet. To verify, click the history tab on your wallet; your transactions should show up there.

Stellar Lumens Exchanges List 

In the above example, I’ve used Binance to trade ETH for Lumen, but there are many other exchanges that allow you to buy and sell Stellar lumens.

The below Stellar lumens exchanges list features my top six exchanges for trading other cryptocurrencies into Lumen, and the cryptocurrency pairings they offer for XLM.

  • Bittrex: XLM/BTC, ETH
  • Poloniex: XLM/BTC , USDT
  • Kraken: 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 to Buy Stellar Lumens With How-To-BuyCredit/Debit Card

I get quite a few queries about how to buy Stellar lumens with credit/debit card. The process is the same as the one described above, except that, when you buy ETH or BTC, you use your credit card instead of fiat currency. Coinbase allows you to buy BTC or ETH with credit cards.

Then you send your BTC or ETH to any of the above-mentioned exchanges and trade your BTC or ETH for Lumen.

Of course, you could also buy Stellar lumens directly with your credit card on “Changelly,” but, even if you are willing to cough up 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 possibility of getting free Stellar Lumen coins. Unfortunately, the date for that offer is over. People who had bitcoins were able to claim Stellar lumens for free against their Bitcoin ownership only on July 27, 2017.

Analyst Take

With the recent collaborations with big names like IBM, the potential for this cryptocurrency is quite Stellar (pun intended), and it could make a great investment.

If you have Bitcoin, the best way to get Stellar lumens  is by trading your Bitcoin for XLM. However, for those who do not have Bitcoin, rather than buying Bitcoin, it would be a better idea to buy Ethereum and trade ETH for XLM on Binance, Gatehub, or another exchange.