Stellar (XLM) is a decentralized blockchain platform designed to facilitate fast, low-cost international payments and to support the development of financial products that can be used by individuals and institutions worldwide. Created in 2014 by Jed McCaleb, one of the co-founders of Ripple, Stellar aims to address the challenges faced by the global financial system, especially when it comes to cross-border transactions. In this article, we will explore why Stellar could be an excellent choice for beginner cryptocurrency investors and how you can get started.
What is Stellar?
Stellar is a blockchain-based platform designed to facilitate fast and low-cost international payments. The native cryptocurrency of the Stellar network is Lumens (XLM), which is used to pay for transaction fees, as a bridge currency for cross-border payments, and to facilitate decentralized applications (dApps) built on the Stellar blockchain.
Stellar differs from other blockchain platforms in its focus on financial inclusion. While many cryptocurrencies are focused on peer-to-peer transactions or decentralized finance, Stellar’s primary goal is to create an efficient payment system that can connect banks, payment providers, and digital currencies, enabling quick and affordable international transactions.
Why Invest in Stellar?
Financial Inclusion: One of Stellar’s core goals is to provide financial services to underserved populations, particularly those in developing countries. By enabling low-cost, efficient cross-border payments, Stellar aims to increase access to financial systems for people who are excluded from traditional banking.
Partnerships with Major Institutions: Stellar has formed partnerships with a wide range of financial institutions, including IBM, which is using the Stellar network to develop cross-border payment solutions. These partnerships increase Stellar’s credibility and potential for widespread adoption.
Faster and Cheaper Transactions: Like Ripple, Stellar is known for its ability to facilitate fast and inexpensive transactions. While Bitcoin can take several minutes to confirm transactions, Stellar can settle transactions in just a few seconds, and transaction fees are incredibly low compared to Bitcoin and Ethereum.
Strong Developer Community: Stellar has a robust and growing community of developers who are building a variety of applications and services on the Stellar blockchain. This community-driven approach to development ensures that the network will continue to evolve and remain relevant in the long term.
How to Invest in Stellar
Choose a Cryptocurrency Exchange: To buy Stellar, you’ll need to choose a cryptocurrency exchange that supports XLM. Popular platforms like Binance, Coinbase, and Kraken allow you to trade XLM with various fiat currencies or other cryptocurrencies.
Create an Account and Complete KYC: Once you’ve selected an exchange, sign up and complete the Know Your Customer (KYC) process to verify your identity. This step ensures that you comply with regulations and helps prevent fraud.
Deposit Funds: Deposit fiat or cryptocurrency into your exchange account. This can be done through various methods, including bank transfer, debit/credit card, or by transferring other cryptocurrencies.
Buy XLM: After funding your account, navigate to the trading section, search for Stellar (XLM), and select the amount you wish to purchase. You can choose to buy full XLM coins or fractions of them, depending on the amount you want to invest.
Secure Your XLM: Once you’ve purchased XLM, it’s important to store it securely. Consider transferring your coins to a hardware wallet or a secure software wallet for safe long-term storage. Storing your XLM on an exchange is convenient for trading, but it’s not as secure as using a private wallet.
Risks of Investing in Stellar
Market Volatility: Like most cryptocurrencies, Stellar is subject to significant price volatility. This can lead to short-term losses, especially if the market experiences a downturn. It’s important to have a long-term investment strategy and to be prepared for price fluctuations.
Regulatory Concerns: Cryptocurrencies are still largely unregulated in many parts of the world. Changes in government policies or regulations regarding cryptocurrencies could have a significant impact on Stellar’s price and adoption.
Competition: Stellar faces competition from other blockchain platforms that aim to address cross-border payments, including Ripple and SWIFT GPI. While Stellar’s focus on financial inclusion sets it apart, the competition could hinder its widespread adoption.