There sadly exists a significant disparity within worldwide finance, with many populations still not having access to dematerialized money, or even to banking in general. The individuals and small businesses that could greatly benefit from the perks of online finance are routinely denied practical access to it. Beyond this, a universal financial network would go a long way towards connecting people, businesses, institutions, and payment systems. Such are the motivations of Stellar Lumens (XLM). The Stellar team built an open-source payment infrastructure with the goal of reducing the costs associated with monetary transactions and providing a true cross-border solution.

Let us delve deeper into the world of Stellar and see what makes it so different thanks to our Stellar Lumens guide.


Stellar Lumens (XLM): Introduction and definition


Under the Stellar Lumens umbrella, there are in fact two distinct concepts: Stellar and Stellar Lumens or XLM. Both of these belong to the same universe but identify different aspects of it. Stellar is the name of the system’s blockchain-based distribution ledger network, while Lumens is the network’s cryptocurrency (whose token representation is XML).

You may have heard of one of the co-founders of Stellar Lumens if you are not entirely new to the world of cryptocurrency. Jed McCaleb is indeed famous in the industry for his involvement in the creation of the Ripple protocol and its token, XRP. One of the main reasons he decided to split away from the project was that it had focused its aim on financial institutions. There, the Ripple Network can play a role in facilitating near-instantaneous, inexpensive, cross-border transactions. McCaleb’s vision, however, was to come up with a system which could be substituted to banks rather than to solve problems central establishments themselves were facing. In joining Joyce Kim to create the Stellar payment technology in the form of an open-source system, he wanted to do away with the need for central authorities altogether.

Some of the main benefits of Stellar Lumens include what made Ripple famous, in that the platform allows one peer to send money in any given currency, to another peer who can receive a corresponding amount in a different currency of their choosing. Transactions are typically completed in less than 5 seconds and for a fee of 0.00001 XLM, which is currently priced at barely more than $0.10 USD per token. This makes the system particularly competitive for those looking to exchange currency, with the added advantage of a very seamless process.

The XLM Token

XLM, the Stellar Lumens token, is essential to the transaction / currency exchange process. The XLM supply is controlled by Stellar, which issued 100 billion Lumens at its launch in 2014. For the five years that followed, an inflation rate of 1% was applied to the supply every year, though the Stellar community then voted to stop operating this way.

The total number of Lumens in existence was therefore reduced by half, and only 20 billion are currently in circulation.

Finally, XLM cannot be mined. The Stellar consensus protocol (SCP) is responsible for Lumens transactions.


How does Stellar Lumens (XLM) work?


Multi-currency transactions are at the heart of the Stellar Lumens model, which can use one out of two different methods to carry them out, depending on the situation.

If the network identifies one user wishing to exchange EUR for USD (for instance) as well as one user who needs to exchange USD for EUR, it establishes a connection, and proceeds with the exchange automatically. If Stellar cannot find a direct pairing, it looks for a “chain of exchanges”. This means that it will exchange EUR for USD by fulfilling the expectations of a user hoping to turn USD into ETH, those of another user wanting to exchange ETH for BTC and, finally, those of someone who would like to swap BTC for EUR, thus closing the loop.

Sometimes, however, people need to exchange currencies that are less widely represented. This is where XLM comes in. Using Stellar allows individuals to transfer the amount of their choice in their own currency onto the Stellar Platform. There, it is turned into Lumens, which the network is then able to convert into any other fiat currency. Once again, the process is seamless, extremely cheap, and incredibly fast.

As an open-source, decentralized network, Stellar is also very accessible. A simple Internet connection and a Lumens-capable wallet are all one needs to join the platform and enjoy its functionalities.

Stellar keeps the ledger safe by imposing a nominal barrier, which implies that users are required to hold at least one Lumen to be allowed to use the service. This minimum balance deters large-scale spammers without being significant enough to prevent individual users from utilizing the service.


Why use Stellar Lumens?


Stellar aims to empower people all over the world by giving them access to digital money. Concretely, the Stellar team is working tirelessly towards raising awareness about their solution and setting up partnerships with various institutions and organizations across the planet. For instance, Stellar released a Vumi integration, allowing the open-sourced messaging platform to use cell phone talk time as currency. Deloitte Digital Bank also announced the creation of its Stellar-based cross-border payment application in 2016. Stellar’s current network now includes NEC Payments, Swipe, SatoshiPay, Wipro, Stripe and even IBM.

One of the main downsides of Stellar Lumens is that it evolves in a high-competition environment where projects can have some difficulty receiving all the recognition they would need to truly take off.


How to buy XLM on Bitit?


In most cases, purchasing XLM directly from an exchange will prove complicated. Setting up an account is a confusing and time-consuming process, as is buying the tokens themselves.

On Bitit, however, users can interact with the platform as if it were a simple online store. From Bitit’s Dashboard, you can check the current exchange rate for any cryptocurrency against the fiat currency of your choice and purchase Lumens seamlessly.

The tokens are then sent to your favorite wallet directly in just a few seconds.


How to store XLM?


Several storage solutions are available for XLM, each with its own set of specificities.

Lumens-compatible web wallets include Coinbase’s, though storing any currency on a DEX has a number of implications many users are uncomfortable with. Downloadable wallets, such as Keybase, Solar Wallet or Lobstr are considered more secure, though they are no match for hardware options. Some compelling examples are the Ledger Nano S or X and the Trezor. They store your coins without ever letting them get into contact with the Internet, thus ensuring optimal security.


Stellar Lumens news reports much dynamism on the part of the project, which is continuing to gather momentum as more and more partnerships are struck. One of its most recent collaborations is one that was just revealed with the Samsung Blockchain Keystore. If XLM follows the same path as XRP, it could one day become a widespread solution for individuals to rely on for all their dematerialized payment needs. In the meantime, Stellar’s vision is slowly taking shape and seems to hold some exciting promises.