Over the course of last decade, one of the many technologies that have played an important role in shaping this world is blockchain. Bitcoin was the first project that utilised blockchain to give this world its very first decentralised cryptocurrency. However, many developers soon learned of the true potential of blockchain and its applications which surpass the realm of digital currencies. Ethereum and Ripple were among the first projects which took blockchain beyond cryptocurrencies and they set the precedent for others to follow. Among the many projects that are out there, Stellar is the most popular one.
What is Stellar?
Stellar is an open-source protocol that facilitates cross-border transfer of value and payments, for a fraction of a penny. The Stellar network has been developed using blockchain technology and is essentially a globally distributed public ledger. Using Stellar, people can send money across borders quickly at low costs, in addition to making payments in different currencies at relatively low costs.
Stellar aims to be an open financial system that can be accessed by people of all income groups, at very affordable prices. In addition to facilitating remittances, other services which are offered by Stellar are:
- Mobile Money
- Mobile Branches
Stellar Network is made up of many decentralised servers which are distributed globally. These servers comprise the Stellar’s distributed ledger, or blockchain and keep a record of every transaction in the system. Therefore, once a transaction has taken place, it is impossible to delete it from the network records. This distributed ledger also ensures that the network remains operational at all times.
The native cryptocurrency of the Stellar Network is Lumens, also known as XLM. This native coin serves as an intermediary and is used to bridge the gap between multiple currencies and cryptocurrencies. In simpler terms, Lumens facilitate multiple currency transactions.
For example, if you are looking to send money in INR and have the party on the other end receive it in EUR, then XLM will be the digital intermediary that will enable this transfer at the lowest cost possible. Furthermore, Lumens are also required to pay transaction fees and maintain minimum balances on accounts.
Owing to these features, Stellar is quite similar to Ripple. In fact, Stellar was originally based on Ripple protocol and it is fair to say that Stellar is the decentralised version of Ripple. Both these projects are in direct competition with each other.
The total supply of Lumen tokens is capped at 100 billion and it is not possible to mine these tokens. At the time of writing this article, a little over 18 billion Lumens are in circulation.
Where to buy Lumens (XLM)?
Lumens are available for purchase on several licensed cryptocurrency exchanges. Some of the most popular ones are Binance, Upbit, Bittrex, Poloniex, Kraken, Bitfinex, et cetera. Stellar.org also distributes a small amount of Lumens to individuals who sign-up through an invitation link.
A comprehensive list of all the wallets that support Lumen tokens (XLM) can be found on the official website. Some of these wallets are Stronghold, Astral, StellarTerm, Foxlet, et cetera. However, it is recommended that you store your XLM tokens in a hardware wallet like Nano Ledger S or Trezor.
It is not possible to mine XLM tokens directly. You can consider mining Bitcoin or Ether and then trade the same for Lumens on any of the cryptocurrency exchanges.
Lumens Price Trends
At the time of writing this article, 1 XLM token is worth approximately $0.45. When it comes to price variation, this cryptocurrency followed a path quite similar to other coins in the same space. XLM gained more than 700% in value in a matter of weeks between December 2017 and January 2018. Towards the end of the first week of January, XLM tokens gained a new high of $0.7. However, the rally failed to sustain itself and in February, the price of the token collapsed. It lost all its recently made gains in just a month and by late March, it was back to trading at levels below $0.2. However, the price increased once again April, though it’s yet to be seen how long this rally will continue.
Risks Associated with Investing in Lumens
As mentioned earlier, Lumens is quite similar to Ripple in many ways. Despite its revolutionary outlook, it is still a cryptocurrency at the end of the day that is subject to extreme volatility and regulatory setbacks. Additionally, Stellar.org has also advised its customers to read and understand the potential risks associated with digital currencies.
Therefore, instead of investing your hard-earned money in cryptocurrencies like Lumens, it is better to consider safer alternatives such as mutual funds.
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