What is Stellar Lumens? A lead to XLM
Stellar Lumens (XLM) is a cryptocurrency for fast, secure, and cost-efficient cross-border money transfers via the Stellar Network.
Stellar Lumens (XLM) is a cryptocurrency designed to help people transfer money quickly, efficiently, securely, and without excessive fees. Its advantages mainly involve cross-border transfers.
XLM is the native currency of the decentralized peer-to-peer Stellar Networking Blockchain. This platform functions as a payment infrastructure that connects two end-users, who can be individuals or companies wanting to carry out financial transactions.
These transactions can be done with cryptocurrencies and fiat currencies such as the dollar and real. To make this possible, XLM plays an essential role within this network, which we will explain in this article.
What is Stellar Lumens (XLM)?
Stellar Lumens (XLM) is a cryptocurrency designed to help people transfer money quickly, efficiently, securely, and without excessive fees. Its advantages mainly involve cross-border transfers.
XLM is the native currency of the decentralized peer-to-peer Stellar Networking Blockchain. This platform functions as a payment infrastructure that connects two end-users, who can be individuals or companies wanting to carry out financial transactions.
These transactions can be done with cryptocurrencies and fiat currencies such as the dollar and real. To make this possible, XLM plays an essential role within this network, which we will explain in this article.
What is the purpose of the XLM cryptocurrency?
XLM was created to be used as a payment technology that has the potential to make a big impact on society by opening new possibilities for people who rely on international transactions. Sending money between different countries or even between different institutions and banks within the same country can be very expensive and complicated. This can have a negative impact on the productivity and performance of businesses that rely on these types of transactions.
Stellar was developed with the primary goal of improving the lives of people and businesses that rely on international transactions. The goal of the project is to help fight poverty and help people reach their full potential by offering low-cost financial services.
Like Bitcoin, Stellar has an open-source code that allows anyone to access and make improvements to the project. Additionally, Stellar operates with its own consensus protocol, which is slightly less decentralized than other cryptocurrencies, but allows for greater efficiency.
How does the Stellar network work?
The main goal of the Stellar network is to provide a safe, cheap, and fast solution for money transfers, especially international remittances. Stellar Lumens (XLM) tokens are used to send and convert money. XLM tokens allow for one type of currency to be sent and arrive at its destination as a different currency.
Through a verification process run by "anchors," which can be banks or any kind of money transfer service, the network changes the money into the desired currency. These anchors connect the traditional banking system and the Stellar network, enabling currency conversions.
The Stellar network also works as a decentralized exchange where any financial asset added by users can freely move around.
How does Stellar Lumens (XLM) work?
In essence, the Stellar Lumens (XLM) token makes it possible to change currencies on the Stellar Networking platform and encourages users to act in a responsible way. Each user must hold at least 1 XLM token to use the platform and pay a minimal fee of 0.00001 XLM.
This ensures users follow the platform's rules and prevents misuse. Approximately 50 billion XLM tokens were pre-produced, with around 25 billion currently in circulation. The token's inflation follows a predictable model, increasing by 1% annually.
Even though XLM tokens were first made to help people trade currencies, they have become a popular trading asset that is subject to market laws. Therefore, XLM operates like any other cryptocurrency.
How did Stellar Lumens (XLM) come about?
Jed McCaled, a co-founder of Ripple, left the project in 2013 and a year later launched his new invention, Stellar Lumens.
Like other cryptocurrency projects that adhere closely to the proposal of Decentralized Finance, Stellar was developed to facilitate the sending of money, particularly international remittances, which is a task that takes time and involves a lot of money due to high fees.
Stellar aims to address these two main points by creating a fast and cheap method of sending money around the world, which mainly impacts retailers who rely on international remittances to work.
The Stellar development team believes that access to good financial services should not be an obstacle for people, and that these services should not charge abusive fees to be executed. So, they focus on giving people an easy-to-use solution for financial services that only requires internet access and basic hardware.
Open your free account to buy Stellar Lumens (XLM) and other cryptos.
There are many comparisons between Jed McCaled's two initiatives, Ripple (XRP) and Stellar Lumens (XLM). This is because the main goal of both projects is to provide a service that makes transactions easier.
However, Ripple is much more focused on transactions between banks, while Stellar is much less corporate, seeking to impact companies beyond the banking sector and also individuals.
Stellar's key advantages are:
Fast transactions: Stellar's Lumens (XLM) tokens can transfer money in 2-5 seconds, even for international transactions, which is faster than electronic transfers.
Easy currency exchange: Lumens enable easy currency exchange between different types of currencies, including fiat and other cryptocurrencies.
Accessibility: The Stellar platform is easily accessible to retailers with internet access and basic hardware.
Decentralization: The Stellar network is decentralized and not controlled by any entity, allowing the Lumens to follow the natural dynamics of the crypto market.
Low cost: The cost of using Stellar's service is extremely low at 0.00001 XLM.
Strategic partners: Stellar's institutional partners, including IBM, have helped increase the network's impact and usage, as evidenced by the increased number of users and trading volume in Q1 2022.
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