What is Stellar?
A Guide to Understanding, Buying, Selling, Sending & Mining Stellar
An In-Depth Stellar Guide by Americas Cardroom
Curious about Stellar? We’ll get you up to speed in a matter of minutes. Keep reading to learn how Stellar works, where you can buy the cryptocurrency, how to choose an XLM wallet, and much more.
What is Stellar?
Stellar is an open source and decentralized protocol that connects banks, people, and payment systems. The Stellar network is fully open, making it ideal for storing and moving cash. With Stellar, it’s possible to create, send, and receive digital representations of any fiat or crypto currency, including bitcoin, euros, and US dollars. The Lumen (XLM) token, also known as the Stellar Lumen, is the native currency of Stellar’s open source blockchain payment system.
The Stellar network is known for its speed, especially when compared to other cryptocurrency options like bitcoin. Transferring Stellar Lumens doesn’t depend on the approval of miners, which can lead to delays, especially at scale. Rather than relying on conventional mining for transaction validation, Stellar uses a Federated Byzantine Agreement (FBA) algorithm called the Stellar Consensus Protocol, which operates like a high-speed voting system. This mean Stellar transactions settle in just 3 to 5 seconds on average.
How secure is Stellar?
The Stellar network is decentralized and secure. And although anyone can create a validator node, the network is secure thanks to the Stellar Consensus Protocol (SCP). When initiating a transaction, the SCP system organizes participants into mini networks and each node of the mini network is aware of who the essential participants are. During the transaction, the node will wait for the majority of participants in its network to reach a consensus before settling the transaction. Within a matter of seconds, enough participants will accept the transaction, preventing hackers or attackers for rolling it back.
Is Stellar a private cryptocurrency?
Transactions with Stellar are encrypted and do provide some privacy. For example, wallet addresses are a string of numbers, which do not contain your real name, address, or phone number. Nonetheless, all transactions are stored on the blockchain, so they aren’t completely anonymous. Please be aware that reputable exchanges may require you to provide ID when creating your account. Many cryptocurrency exchanges are also bound by Know Your Customer (KYC) and other financial regulations, which will require you to surrender some of your privacy.
Who or what is backing Stellar?
Stellar is entirely open source and decentralized, but the protocol is backed by the Stellar Development Foundation, which is a nonprofit corporation based in the State of Delaware. Financial institutions, market makers, service providers, and payment providers have already harnessed the power of the Stellar’s open financial infrastructure. Stripe, Franklin Templeton, IBM, and Deloitte are just some of the industry heavyweights who use Stellar.
How will Stellar Lumens gain value?
The Stellar Lumen has already exhibited its ability to gain value. The currency skyrocketed in tandem with other blockchain assets during the cryptocurrency crazes of 2018 and 2021. Aside from speculative manias, increased adoption of the Stellar network could improve the utility of Lumens and their value as a currency. As more institutions count on Stellar, it’s not far-fetched to assume that Lumens will become more useful in the practical sense and more valuable as an asset.
How to mine Stellar?
Unlike Bitcoin and other blockchain assets, Stellar Lumens cannot be mined. Nor are Lumens awarded over time. At launch, Stellar introduced a supply of 100 billion Lumens. In the five years following the launch, the Lumen supply increased by 1% per year as intended.
Stellar relies on re-established nodes to confirm transactions through a voting system or consensus process rather than using proof of work like Bitcoin. Stellar awards Block rewards via a network fee, which is equivalent to 0.00001 XLM or 100 stroops.
Where to buy Stellar cryptocurrency
You can purchase XLM at most popular cryptocurrency exchanges, including Coinbase, Kraken, Binance, Bittrex, Bitfinex, Upbit, Coincheck, Huobi, NovaDAX, and GM Coin. You can also take advantage of Stellar X, which is a global decentralized crypto platform that lets you trade cryptocurrency for fiat.
How to buy Stellar cryptocurrency
Buying Stellar is as easy as downloading a wallet app, creating your account, writing down your private key, and transferring cryptocurrency to your wallet. As mentioned above, you can buy XLM from numerous exchanges, including those featured in this guide. Although your payment options for buying Stellar Lumens will vary, you can typically use a debit card, credit card, or bank transfer. Many exchanges also let you buy XLM with other crypto such as Bitcoin.
How do you set up a Stellar wallet?
Stellar Lumens are compatible with web wallets, downloadable wallets, and hardware wallets. Coinbase is the most popular web wallet for Lumens. When you buy or sell Lumens on the site’s cryptocurrency exchange, Coinbase will automatically store your Lumens in a hosted wallet. In other words, you can create a wallet simply by creating a Coinbase account and purchasing Some Lumens.
Whether you have a PC, Mac, Android, iPhone, or iPad, you’ll have a choice of downloadable wallets. These wallets function by storing your private keys on your computer or mobile device. Keybase, Solar Wallet, and LOBSTR are the most popular. To download or install your wallet, visit Google Play, the App Store, or the official website of your preferred wallet.
If you’re interested in hardware wallets, the Ledger Nano S and Trezor are the two most popular options. Both models store your private keys offline on a small peripheral device that it isn’t connected to the internet, which provides greater security than downloadable and web-based wallets. You can buy these products directly from the manufacturer or popular computer retailers.
How do you send Stellar to a wallet?
Sending XLM to your wallet will depend on the wallet you choose. With LOBSTR, for example, you simply need to share your federation address, 56-character stellar address, or QR code with the exchange or whoever is sending you Lumens. You can also request payments by completing the request payment form and clicking request.