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Stellar XLM: Cryptocurrency Guide & Review 2018

It is predictably common for cryptocurrencies to declare that they are making the world a better place. Stellar Lumens (XLM) has got a lot of people excited, but does this crypto pbroject live up the hype? We’ll explain what Stellar (XLM) is, what it does and give our verdict on whether it’s worth backing.

What Is XLM & Stellar?

Stellar Coin Logo

The first thing to know is that Stellar is the network and a Lumen is a digital currency used in this network. Lumens are also referred to as XLM. This is how things are now. Like cryptocurrencies such as Bitcoin, Lumens (XLM) are the units of value that are transacted within the network. This allows users of Stellar to transfer value around the world and switch between different fiat currencies in a fast and secure way.

The Stellar network started life all the way back in 2014 when the co-founder of Ripple had ideological differences with the rest of the Ripple team. Jed McCaleb disagreed with the centralization of Ripple and decided to part ways and found the Stellar project.

2014 is a long time ago in cryptocurrency and the Stellar network launched with 100 billion Stellars and reused a lot of the Ripple code base. Essentially, this made the project a fork of Ripple. Fortunately, Jed decided in 2015 that it was confusing having a network called Stellar and currency called Stellars. This resulted in the currency being renamed Lumens so that it could be better distinguished from the Stellar network and Stellar the nonprofit organization.

Given the crypto’s origins, there has been a lot of confusion on whether the cryptocurrency is just a rebranded clone of Ripple. So much so that Jed took to Twitter in late 2017 to explain that the code for the Stellar network was completely different to Ripples.

Jed McCaleb says Stellar XLM is not a fork or Ripple on Twitter

What Problems Are Being Solved With Stellar?

In a nutshell, Stellar Lumens is all about giving everyone access to essential financial services and creating a more inclusive digital economy. What most people do not know is that out of the 7.6 billion people on the planet, around 2 billion don’t even have a bank account.

At first glance, being unbanked doesn’t seem that much of an issue. After all, couldn’t people just use cash or open a bank account if they wanted too? You would actually be incorrect thinking this. Banks require numerous documents to open an account, due to regulatory reasons. In many developed countries, people simply do not have the ID or verification documents needed to open a bank account.

Without a bank account, it is also practically impossible to access credit. This is a big disadvantage when you consider that the housing market is built on debt. Most entrepreneurs also require credit facilities to get their businesses off the ground. The lack of access to banking services actually stifles innovation and the creation of jobs in the local economy.

Whether you agree with it or not, we live in a much bigger and globalized world. Payments across borders are common and many businesses could not function without them. Indeed, a whole industry has sprung up in transferring money from one country to another. These global remittance companies are charging people nearly 10% in fees to send money back home to Africa. Many developing countries really depend on cross-border remittances for their own local economy. To put this into context, in Liberia, remittances make up a 27.1% share of total GDP.

Stellar XLM offers another way: A platform fully supported on mobile devices with cross-border transaction fees as cheap as one ten-thousandth of a cent.

How Does Stellar Lumens Work?

Stellar believes that there is a need for “a worldwide financial network open to anyone.” That is why the Stellar network is open source, and free to be modified by anyone. XLM aims to fill the gap in the financial system by connecting individuals, institutions, and payment systems through the platform.

The team focuses on making cross-border transactions cheaper, quicker, and more reliable than they are now. As with many cryptos, Stellar Lumens is decentralized. The idea is that no one person or company should be in a position that allows them to abuse their power. This ideology has led to the Stellar network running on a web of decentralized servers supported by an international association of individuals and entities. These decentralized servers support the distributed ledger that records all the data and transactions on the XLM platform. This means no one has overall control over the network.

In a nutshell, the Stellar network functions in a similar way to PayPal. However, it is significantly cheaper, flexible and unlike PayPal, it doesn’t require a user to own a bank account. Instead of uploading funds from a bank account, XLM users upload funds to an anchor on the network. This anchor is where your money is stored and what issues the credit to your virtual wallet.

What Is A Stellar Anchor?

Anchors have two simple functions: they take the deposit and issue the corresponding credit to the account on the Stellar network, thereby allowing the user to make a withdrawal when they bring the anchor the credit they had issued. For this whole process to take place, you must trust the anchor to be honest with your deposits and withdrawal credits. Think of it like a decentralized PayPal for cryptocurrency.

When users upload funds to the anchor, they are converted into lumens and recorded on Stellar’s public ledger. This integration allows the users to send funds instantly on the network without having to wait for a bank transfer.

It also makes cross-border payments easier. For instance, if you were in the US and wanted to send money to your friend living in Germany, you could easily use your USD balance in your Stellar account to transfer funds via the network.

Stellar would automatically convert the dollars to euros at the lowest exchange rate, and credit your friend’s account with the exchanged EUR. Once he receives the funds, your friend can withdraw the money from an anchor that supports euros.

Stellar XLM Decentralized Network

Most cryptocurrency platforms promise decentralization, and Stellar Lumens is no exception. The Stellar decentralized system is made of associates capable of running autonomously, independent of each other. Because of the decentralized system, the transmitted data is distributed among a network of servers, instead of being driven by only one central source.

This means that the network does not depend upon any single person or company. Since there are a number of servers working independently from each other, the system will keep running even if a few of the servers are disrupted or go offline. This decentralization allows for faster transactions to take place.

The Consensus Algorithm

The Stellar servers communicate and sync with one another to verify the transactions and make sure that the transactions are valid and get recorded successfully into the global ledger.

For example, if you want to send $10 to someone on the same Stellar network, the trusted servers will start a process to sync with one another and agree on the validity of your $10 payment. All the servers need to agree that you do have $10 worth of credit on the network before validating your transaction.

This is known as the servers coming to a consensus, and the whole process takes around five seconds. Consensus also results in faster and cheaper transactions compared to mining.

Using Stellar Lumens

There is a nominal transaction fee for using the Stellar platform. This is called a base fee and is meant to discourage malicious users from making multiple transactions on the network (known as a DoS attack). The base fee is currently 0.00001 XLM, which amounts to just one ten-thousandth of a cent. Try beating that for a cross-border transaction fee.

The fee is paid by the sender of the transaction. Unlike most other cryptos, the base fee is not used for profit. The fee is collected by the ledger and redistributed in the process of inflation.

It must be noted that Stellar transactions are irreversible, but it is possible to freeze the assets issued. Once frozen, the asset becomes valueless to the user, and are sent back.
Aside from that, the network takes steps to mitigate risk with the means of this decentralized structure. If Stellar.org the nonprofit ceases to exist, transactions would still continue to be confirmed on the Stellar network, and anchors integrate with the network.

Privacy is a hot topic in cryptocurrency. Remember that all transactions on the Stellar network are public, and they are recorded on a global public ledger. Since the platform is open source, anyone can view the network and make modifications to it. This means that if you are big into privacy, then XLM is probably not the crypto for you.

How Is XLM Being Used?

The Stellar platform has been built to make essential financial services available to a greater number of people around the world. According to Stellar, companies like Deloitte, Parkway, and Tempo are building “innovate services” on the network. Some of the uses of the Stellar network are:

Reduced costs of micropayments

Making small monetary transfers adds to the fees and expenses. The platform helps reduce the costs of micropayments by up to 40 percent. Since Stellar is based on consensus and not mining, the transactions are faster and cheaper. Not only do users get to enjoy smaller transaction fees, but each transaction takes five seconds or less.


Sending money from one country to another used to be quite a hassle before services like PayPal came. However, these services have high fees and the process often takes several days. Banking the unbanked is a major requirement for higher remittances. For instance, a large number of migrant Africans and Bangladeshis work in the Middle East.

However, since these migrant workers come from poor regions and are low skilled, they are not paid much. This poses a big problem for them when sending remittances to their home country or village through various tax-evading schemes which violate laws.

These migrants do not have bank accounts, and most commercial banks in these countries do not have the necessary infrastructure to serve remote regions. Sending money to countries like Liberia has the highest fees. This is a big problem that the cryptocurrency aims to solve.

With a platform like Stellar, you can now send money from and to any country in as little as five seconds, for a fraction of a cent. These low-cost payments can be sent between different fiat currencies, or between fiat and XLM. Either way, what you get is fast, secure transactions between any region at a very low cost.

Mobile money

With the help of Stellar, you can inter-connect multiple mobile money platforms. If you are a business, your customers can send mobile money to recipients with different providers, without any hassle. In fact, you can even expand your retail operation through the network, without the overhead costs.

Launching ICOs

Initial Coin Offerings are a popular way to create decentralized applications as well as promote a new cryptocurrency. Some of the already existing Stellar ICOs are Everlife, Ternio, Slice, and Smartlands.

The Founder

Jed McCaleb, an American programmer, and entrepreneur founded both Ripple in 2011 and Stellar in 2014. McCaleb left Ripple in 2014 after disagreements with the board of directors over the direction of the project. He based Stellar on the Ripple protocol in the beginning, but then adopted the Stellar Consensus Protocol in 2015. McCaleb is the chief technology officer at the project. Jed has already founded two top-ten cryptocurrency projects and that speaks volumes about his pedigree. We certainly would not bet against him to succeed.

Should You Invest In XLM?


  • Stellar offers a very real solution to the global remittance problem.
  • Financial connections and the ability to send payments across borders is the engine behind the world economy. The project opens up the doors for the world’s two billion unbanked population to participate and the opportunity to add value.
  • Mobile use is massive in developing countries where people even prioritize phone credit over buying food. The widespread use of mobile devices makes mobile money a very real possibility. This, in turn, should open up new local business opportunities.
  • Big companies like Deloitte and IBM have seen the value of Stellar and are building solutions on the network.
    We live in a globalized world. Transfers of value across borders are only likely to increase over time. This makes finding a low fee method for low fee transactions ever more important. Fortunately, Stellar could well be the answer.
  • Like Ethereum, Stellar can launch ICOs on its platform. You can about XLM of having elements of both Ethereum and Ripple in a single cryptocurrency.


  • Transactions over the network are public and can be viewed by anyone. This means if you are an advocate for privacy, then Stellar is not the crypto for you.
  • The project is not completely decentralized right now.
  • XLM is trying to achieve a lot and this will take time. Investors will need to be patient if they are to see the project fulfill its potential and execute its vision.
Stellar coin price chart from Coinmarketcap.com

Image via Coinmarketcap.com

How Can I Buy XLM Coin?

To get exposure to this project, you will need to buy the XLM coin. We show you our top ways to buy Stellar Lumens via our extensive walkthrough.

The Bottom line

Stellar Lumens is already used or is being built on by various large companies around the world. However, the main focus of the platform is empowering the average person who has been excluded from the traditional financial system.

Indeed, Stellar has the potential to right many of the wrongs imposed by banks. Many people would agree that every human has the right to work their way out of poverty and should have the opportunity to add value. Traditional financial institutions have created a system where they have robbed two billion people of this opportunity. Instead of helping, they have focused on exploiting the most vulnerable with high fees.

XLM offers another way. A world of financial inclusion. An inclusive platform open to everyone, that offers fast and low-cost cross-border payments. Ripple is commonly seen as a method of saving banks money and increasing their profits. Whilst Stellar is all about unlocking the potential of people throughout the world.

Further Reading At TotalCrypto.io
1) Think That Low Fee Cross-Boarder Payments Could Be Better Used By Banks? Learn How Ripple Is Making That Happen.

2) Billions Of Dollars In Institutional Money Is Just Waiting To Go Into Crypto. Learn How A Bitcoin ETF Could Make Crypto Prices Skyrocket.

3) Heard About Crypto Trading & Have No Idea How To Get Started? We Have Your Covered With Our Beginners Guide.


Below we’ve listed some key resources relevant to Stellar Lumens coin.

? Safest XLM Wallets

Hardware wallets are the safest crypto storage solutions available. Maybe you should treat your crypto like the million dollars it could well be worth one day?

? Best Free Wallets

XLM uses the Stellar blockchain and this means you will need to use a compatible wallet.

? Best Crypto Tracking App For XLM

Useful Links



DISCLAIMER: Be aware that the activity of cryptoassets mentioned in this article is unregulated. This article must not be construed as investment advice. Always do your own research.

Project Team

Jed McCaleb Stellar Team
Jed McCalebCo-founder & Developer
Nicolas Barry Stellar Team
Nicolas BarryCTO
Bartek Nowotarski Stellar team
Bartek NowotarskiDeveloper
Boris ReznikovPartnerships
David MazièresChief Scientist
Ella Qiang Stellar team
Ella QiangPartnerships China
Lisa Nestor Stellar Team
Lisa NestorPartnerships
Rafał MalinowskiDeveloper
Scott FleckensteinDeveloper
Tunde LadipoPartnerships
Keith RaboisStellar Board Member
Shivani Siroya Stellar Board Member
Shivani SiroyaStellar Board Member
Greg BrockmanStellar Board Member


Patrick Collison Stellar advisor
Patrick CollisonCEO of Stripe
Greg SteinDirector of Apache Software Foundation
Matt Mullenweg Stellar Advisor
Matt MullenwegFounder of WordPress.com
Naval Ravikant Stellar Advisor
Naval RavikantAngelList Fodunder
Ronaldo LemosDirector, Institute for Technology & Society of Rio de Janeiro
Sam Altman Stellar Advisor
Sam AltmanPresident of Y Combinator
Dan Kaminsky Stellar Advisor
Dan KaminskyChief Scientist at White Ops
Bhagwan Chowdhry Stellar Advisor
Bhagwan ChowdhryProfessor at UCLA Anderson

Want to learn more about the Stellar XLM project? Why not jump into the Stellar white paper?

DISCLAIMER: Be aware that the activity of cryptoassets mentioned in this article is unregulated. This article must not be construed as investment advice. Always do your own research.
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