Intro to XLM for newbies: Why use and where to acquire?

XLM for newbies

Even though Stellar Lumens are thought to be among the best cryptocurrency out there, it can be tough to buy them with fiat. It does not mean that it is challenging to obtain XLM; it just means that the usual route is to use another cryptocurrency to buy Stellar Lumens. You are more likely to find exchanges that offer ETH to XLM pairs, for example, than USD to XLM.

This may seem like a complicated process to undergo, but the joy of crypto-to-crypto transactions is that they are often completed within seconds.

This guide will help you learn about the Stellar network and how you can get involved in buying Stellar Lumens, whether you are a beginner or a seasoned trader.

What Is Stellar?

Interestingly, Stellar uses the exact same rules as Ripple, but it comes with some crucial differences.

The main difference between Ripple and Stellar is the fundamental reason for their existence. Ripple is a company designed to make a profit and help financial institutions, such as banks, in facilitating money transactions. It is noticeably market-driven. Stellar is a not-for-profit foundation. The purpose behind Stellar is far more altruistic. Its mission is to create a payment network that is “free for all”.

 

How Does the Stellar Network Operate?

The Stellar network works in a similar way to Ripple. It attempts to solve issues experienced with international payments by converting the payment to a digital currency, which can then be sent and received by another party.

Payments work by using an intermediary, or a network anchor, that holds and converts the funds. Fiat (such as euros or dollars) is sent to the network anchor where conversion takes place. The funds are exchanged for digital money, such as XLM. XLM is then sent to the network anchor of the receiving party. It is at this point that the digital currency is converted back to fiat, and the receiving party can withdraw.

Buying Stellar Lumens can be done in two ways. The most popular is to purchase another crypto, such as Bitcoin or Ethereum, and then exchange that currency for XLM. You can also purchase the coin directly using fiat currency, but there are few trading platforms that support such a swap.

Each method is valid and will be down to personal choice and circumstances.

Choosing a Wallet

No matter which way you will choose to purchase Stellar Lumens, you may also want to think about the type of wallet needed to store your Lumens. There are several Stellar wallets available. Depending on your requirements, it is essential to use a wallet that supports both Stellar Lumens and other cryptocurrencies.

A hard wallet is a physical device that holds the private keys to your cryptocurrency offline. The fact that they are stored offline makes it the most secure way of holding cryptocurrency. Ledger is one of the leading names for offering unhackable wallets. However, not everyone opts for a hard wallet.

The Stellar network makes it easy for beginners to get involved with digital currency. There are laptop and mobile solutions for storing Stellar Lumens. For those, who wish to opt for the web and mobile wallets, Blockchain.com’s wallet can store a range of cryptocurrencies. This means buying, transacting, and exchanging different digital currencies will be easy.

Where Is Best To Exchange ETH to XLM?

There are lots of places where ETH can be exchanged for XLM, and each person will probably find the one they prefer the most.

However, for newbies or those who want flexibility with their crypto, Godex comes highly recommended. This exchange provides a simple and efficient service to every client. But the killer feature of Godex is that it is anonymous, meaning you don’t need to reveal your sensitive information to buy crypto.

Binance is another popular option and allows trading Ethereum against XLM. It has a desktop and mobile version, which makes completing an ETH to XLM exchange even easier. Download the app or visit the website to see the current rate and decide when you want to make your exchange.

What Are Stellar Lumens Used For?

There are several purposes for using Stellar Lumens but buying as an investment is not a popular one.

The primary use of Stellar Lumens is to act as a universal translator between different currencies. It helps money to be effectively sent to people across the world who require different fiat currencies. The Stellar network completes a currency transaction with ease due to being blockchain-based. This allows XLM to be kept locally on a person’s laptop or mobile device and to deliver the cryptocurrency to any receiving party quickly.

When Is It Ideal To Convert ETH to XLM?

This is a question that everyone would love to have the answer to. However, as with all cryptocurrencies, it is impossible to predict the exchange rates with any certainty. People who study the markets may have an idea of when it would be best to make the conversion, but there is no guarantee that the exchange rate won’t be better the next day.