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How to Buy Stellar Lumens (XLM) in 3 Simple Steps

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Author: Sam Grant Updated: April 14, 2022

Stellar Lumens is an open-source, decentralized protocol for digital to fiat money transfers, which enables cross-border transactions between any pair of currencies nearly instantly. 

Through the use of Stellars native token ‘Lumens’ (XLM), users can send any currency to anyone, anywhere in the currency of their choosing.

Stellar can efficiently process 1,000 transactions per second with fees less than a penny each. There are around 50 billion Lumens with 24 billion of that in circulation, the rest is held by the Stellar Foundation.

Furthermore, XLM can be traded anywhere in the world in less than five seconds, making it tailor-made for cross-border transactions and a seriously disruptive option for commercial businesses when compared to existing payment rails. With this, the Stellar Foundation hopes to bring financial systems closer together. 

Stellar has had some exciting adoption advancements in the last year, potentially preparing (XLM), the blockchain project’s native cryptocurrency, for future success.

Like many others, you may be wondering how to buy Stellar Lumens? In this guide, we will outline the best way to purchase Stellar Lumens for investors of all skill levels.

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5 Things to Consider If You Want to Buy Stellar Lumens

Before buying any cryptocurrency there are a number of factors you must consider that will ultimately affect your investment.

When choosing a crypto exchange or platform to use, you’ll need to identify your priorities in terms of convenience, speed, and expenditure as different platforms involve different levels of complexity and fees.

Carefully choose your preferred secure payment method

Choosing a payment method, goes hand-in-hand with choosing an exchange or broker, as not all platforms offer a variety of payment methods.

Whether you deposit your funds to an exchange or broker using PayPal, a bank transfer, or your credit or debit card - all methods have different processing times and fees that can bite into your investment.

Will you need to set up your own wallet?

Depending on the type of investor or trader you are, you will need to think about how you want to gain exposure to Stellar Lumens and the risks involved.

Generally speaking, if you buy Stellar Lumens on an exchange you will need to transfer your coins off the exchange and into your wallet for safekeeping. While convenient, leaving your coins on a crypto exchange is dangerous as exchanges can be hacked or go out of business.

If you are merely interested in trading Stellar Lumens without the hassle and risks of holding the coins, a broker is a popular option. Brokers enable you price exposure to XLM without the requirement to own or store coins.

Comparing costs

When comparing costs of buying Stellar Lumens you will need to take into account three types of fees: blockchain processing fees, exchange or brokerage fees and payment method fees.

Fortunately, processing fees for the average user are negligible on the Stellar Lumens blockchain and don’t need to be factored into your investment decision.

Safety and security

Stellar’s consensus mechanism is a kind of Federated Byzantine Agreement (FBA) known as the Stellar Consensus Protocol (SCP).

It sounds complicated, but all it really means is the network is designed to be secure enough to handle commercial transactions.

Lumens (XLM) - the native currency of the Stellar Lumens blockchain - performs two important roles. 

A small base fee is required for every transaction – set at 0.00001 Lumens, which performs an anti-spam role on the network and keeps transactions running smoothly.

Lumens are also needed to secure the network, with a minimum balance of 0.5 lumens required in every account on the Stellar network, helping to foster token demand.

If you select a cryptocurrency exchange, do your due diligence as they vary from a usability or security standpoint and can be unregulated.

If you only want to speculate on the price of XLM, without the rigmarole of moving and managing your digital assets, buy XLM for trading purposes via a broker. It is generally a more simple process with fewer fees.

These platforms are established and offer advanced security systems like two-factor authentication (2FA), malleable automated trading systems, and professional help.

Can you understand and navigate the platform?

For the inexperienced, cryptocurrency exchanges can be daunting to navigate. Failure to understand them fully can result in crucial mistakes. Make sure you understand the mechanics of any platform before risking capital.

This means understanding the difference between market orders and limit orders, how to set a stop loss and best practice measures to minimize the risk of a critical error like leaving a zero off a buy order.

If you aren’t comfortable with the intricacies of an exchange, we recommend trading through a broker, as the user interface is generally a lot more user friendly and you won’t have to secure your assets.

What is the Best Payment Method for Buying Stellar Lumens?

Depending on whether you have selected an exchange or broker you will be presented with various options to deposit funds to the platform.

You’ll need to carefully select a payment method that suits you as some come with a cost that will impact your investment.

Buying Stellar Lumens with PayPal

While PayPal is a trusted payment provider the world over and one of the most convenient on this list, it is neither the cheapest method nor the one accepted by most exchanges.

Regulated cryptocurrency brokers are more likely to offer PayPal. Buying Stellar Lumen in bulk with PayPal is generally more economical than buying smaller amounts.

Make sure to calculate the fees required before investing to avoid any nasty surprises as fees vary from platform to platform.

Purchasing with Cash

Unfortunately, purchasing Stellar Lumens with cash isn’t really a practical option. This is because Stellar Lumens is not typically offered as a market on peer-to-peer exchanges where you would normally arrange to meet people in person to exchange cryptocurrency for cash. 

Via Bank Transfer

Buying Stellar Lumens with a bank transfer is the preferred method for the majority of cryptocurrency investors because it is one of the most affordable methods.

With your bank account linked to an exchange or broker, you can transfer funds back and forth with ease.

Bank transfers can take time to process depending on your bank, so don’t expect to be able to buy Stellar Lumens as quickly as some other methods.

PurchaseStellar Lumens with credit cards or debit cards

Credit cards and debit cards might be the fastest and most convenient method of all. The downside is credit cards and debit cards also typically incur the highest fees of all payment methods available.

There are positives to this payment method, however. When you buy Stellar Lumens with a debit card or credit card, you tend to earn rewards.

What Fees are Involved?

No matter if you are purchasing Stellar Lumens on an exchange or through a recommended broker you will encounter fees of some kind. These businesses need to charge fees to provide a safe cryptocurrency trading platform. 

It’s best to think of fees as a service charge that makes it possible for you to buy Stellar Lumens conveniently.

Unfortunately, these same fees that allow you to easily buy and sell cryptocurrency can also eat into your total trading profits.

Exchanges tend to have higher fees than brokers as they have greater overheads in providing the infrastructure to move and store coins.

Transaction Fees

To send Lumens from one address to another, Stellar blockchain fees are negligible and not a factor in most people’s decisions.

If you trade Stellar Lumens on an exchange, you’ll be faced with both ‘taker’ and ‘maker’ fees. Taker fees are usually around 0.25% while maker fees are a little lower at approximately 0.20%.

Brokers charge a trading or brokerage fee for the services they provide.

Deposit Fees

In addition to trading fees, exchanges also typically charge deposit and withdrawal fees. If conducting numerous transactions these can add up.

Brokers generally come with fewer deposit fees. In some cases, they will only have a minimum deposit and no deposit fee, to encourage signups.

Withdrawal Fees

If you want to take your profits off an exchange you will be charged a withdrawal fee, regardless of its fiat or crypto.

Brokers are less likely to charge withdrawal fees, as they are a platform more expressly designed for trading CFDs only. The fees you will be charged also depend on your payment method.

Safely Storing Your Stellar Lumens

In order to store your Lumens, you will need a Stellar wallet that can hold them safely out of the prying hands of a would-be hacker

There are a number of wallets that support Stellar, let’s take a look at the different options step by step.

Web Wallet

Web wallets are the custodial wallets held on exchange platform servers, whereby the centralized exchange holds your private keys.

This is a high risk as exchanges can go bankrupt, get hacked or exit scam. Only ever use web wallets as a short-term solution.

Mobile Wallet

Known as a ‘hot wallet’ because it is connected to the Internet, mobile wallets are widely considered a better option than leaving coins and keys with an exchange. Mobile wallets are a versatile solution offering some convenience and a degree of safety.

The issue is that being a ‘hot wallet’, it is potentially susceptible to hacks. Reinforce your mobile phone’s security with pin codes or fingerprint ID. The most respected mobile wallets for storing Stellar Lumens are Solar Wallet, Keybase, and Stellar X.

Desktop Wallet

Desktop Wallets are another type of ‘hot wallet’ that are less convenient than mobile phone wallets but can be more secure. It’s always a good idea to add security measures like 2FA to beef up your desktop security. Lumenshine and Solar Wallet are two reputable wallets that will allow you to store Stellar Lumens on a desktop.

Hardware Wallet

This wallet is known as a ‘cold wallet’ as it stores your coins and private keys on a device that is not connected to the Internet.

For this reason, it is the most secure method you can employ. If you need to move your Lumens coins they connect to the Internet through a USB. Trezor and Ledger Nano X are two of the leading types of hardware wallets.

Wallet Combinations

You may do everything right, purchase your XLM, store your XLM in a hardware wallet offline, only to lose the pocket-sized device.

For this reason, you should consider diversifying between different wallets, so a mistake or hack won’t cause easily avoided heartbreak.

What Other Coins Can I Trade or Use to Buy Stellar Lumens?

As we mentioned earlier, XLM is not readily available with fiat pairs, so if you want to buy XLM you will have to buy one of the big boys first, usually Ethereum (ETH) or Bitcoin (BTC) using a Bitcoin exchange.

What’s the Smallest and Largest Amount of Stellar Lumens I Can Buy?

Each unit of Stellar Lumens is divisible by seven decimal places. The smallest unit of measurement is called a ‘Stroop’ being 0.0000001 XLM. The name Stroop is taken from the Stellar mascot, Stroopy.

There is no minimum purchase of Stellar Lumens. How little XLM you can buy is really only limited to how economical it is when you consider trading fees.

Likewise, there is no maximum XLM you can buy. Users can buy Stellar Lumens without limit.

Can I Buy Anonymously with no ID? Is it Safe and Legal?

Cryptocurrency is a new asset class and like many people, you are probably wondering if it is safe to buy Stellar Lumens.

With the popularity of cryptocurrency spreading they are becoming more accepted by governments. It is both safe and legal to buy Stellar in many places around the world now.

Normally, when a person wants to buy a cryptocurrency anonymously with no ID, they use an anonymous exchange without verification. With increasing regulations, these exchanges are ceasing to exist and we don’t recommend using them.

Unlike Bitcoin, it is virtually impossible to buy Stellar Lumens anonymously on a peer-to-peer market or escrow service.

To purchase Stellar Lumens safely, it is better to go through an exchange or broker with verification for a secure Stellar Lumens purchase.

Will Buying Stellar Lumens Make Me Money?

Does purchasing Stellar Lumens make you money? Unfortunately, it is never as clear-cut as ‘buy Stellar, get rich’.

When considering whether to purchase Stellar Lumens you need to look at different metrics including price history, recent developments, and coin supply.

Based on recent reports, Stellar is working to expand its market share and conducting initiatives to bring more people to build financial applications on the network.

Stellar is working with many countries worldwide to boost its ecosystem, use cases and strategic partnerships.

Recently, German cryptocurrency lender Bitbond released its security token offering (STO), called BB1, on the Stellar network. This was a watershed moment for the crypto industry and could pave the way for further STOs.

When considering the best price to buy Stellar Lumens, it is worth noting it is currently down around 94 percent from its record highs.

Check out our Stellar Lumens Price Page for more detailed information before deciding to invest.

How to Spend Your Lumens

The Stellar network offers users and businesses an extremely versatile tool for sending a transaction in one currency and have it arrive in a matter of seconds in another, anywhere in the world.

The Stellar network is also looking to support the other classes of transactions like merchant payments or remittances. Applications are also being built on the Stellar Network that will utilize the native currency XLM.

How to Sell Your Lumens

If you are new to cryptocurrency, the process of selling Stellar Lumens on an exchange can be a little nerve-racking.

It is crucial that you fully understand the process so that you don’t make any mistakes. Remember, you will have to trade into another coin like Bitcoin or Ethereum before you can sell for fiat currency.

If you are only interested in benefiting from XLM price movements then going through a broker is easier.

CFDs simplify the process of trading Stellar Lumens and provide a level of security that some cryptocurrency exchanges don’t.

Frequently Asked Questions

  1. Jed McCaleb, the co-founder of Ripple, founded Stellar Lumens in 2014. Ripple is a competitor of XLM.
  2. Stellar provides a network that brings together payment systems, banks across borders with access to fast, cheap, and dependable payments. Stellar's native token, Lumens is the currency that makes this possible.

  3. With prices down, more than 90 percent from all-time highs, and adoption increasing it may well be a good time to buy. Make sure to include macro market trade winds in any investment decision.  
  4. The recently launched quarterly Stellar Build Challenge has led to hundreds of developers from all over the world, building their own applications on the Stellar network. In addition, Stipes's CEO collaborated with Stellar's creators Jed McCaleb and Joyce Kim to create the Stellar Development Foundation, a non-profit organisation focusing on supporting and growing the open-source Stellar network. This is in contrast to Ripple which is from a for-profit organisation with Stellar being a fork.

  5. Some investors don’t factor in the additional cost of buying other coins to gain access to XLM. If you use Bitcoin, you will have to pay Bitcoin fees. Buying for trading purposes through a broker is one way to avoid this.
  6. Usually, when people lose funds it is not due to a hack, it is due to avoidable human error. Don’t overestimate your technical capabilities when using Stellar exchanges.

  7. Yes. The Stellar network is the payment rail and point of sale applications are being developed by the community.
  8. Like Ripple, the Stellar network is one of the fastest. With Stellar, the entire process of coming to consensus normally happens every 2–5 seconds.

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