Stellar is one of the platforms that use the blockchain to make moving money fast and reliable. This hybrid blockchain is decentralized and completely open-source, so anyone can benefit from it. With the infrastructure behind Stellar, it is easy to transfer assets between users regardless of country. Users only need to integrate with the network to use the system. Best of all, in contrast to traditional money-transfer systems, banks, payment networks, and people all have the same economic participation and access.

Stellar provides nearly all the types of services you want from a banking institution, but on a decentralized network with no greedy bank taking your money in the form of fees. Remittances are simple, letting you send money across various borders for a fraction of what a traditional bank would charge. This makes multicurrency transactions nearly as simple as those in the same currency.

Stellar also provides specific benefits for micropayments by decreasing the cost and increasing the efficiency. This lets businesses offer customers incremental payment options without any downside. In fact, a fee of just $0.01 will handle about 600,000 transactions. Agency banking companies can also get mobile branches to expand their retail operations without having to worry about overhead costs, like rent and electricity. Branches aren’t the only thing that is mobile with Stellar; customers can send and receive mobile money to others, regardless of provider. Each of these use cases for Stellar will appeal to a different financial institution.

What Other Benefits Does Stellar Provide?

In addition to the main use cases for Stellar, the network provides the benefit of a real-time transaction settlement of just two to five seconds. All transactions are cryptographically secure. It also features an automatic currency exchange, regulatory compliance, payments that move similar to email, and international reach in just one integration.

How Does Stellar Help the Unbanked?

Because of its use of the blockchain, Stellar also provides unique benefits to those who are currently unbanked, offering them the chance to finally open an account with a financial institution. By reducing costs, Stellar lets companies reach new customers. This helps those who are typically unbanked, including those who need low-cost accounts, micro-savings, or loans.

Stellar.org is actually a nonprofit, further aiding the unbanked and the goal of expanding access to the low-cost financial services needed around the world. The team behind Stellar understands how important these services, particularly the ability to save and get loans, are to maximizing each person’s potential and fighting poverty. If you want, you can also make a tax-deductible donation to Stellar.org.

Understanding the Stellar Network

To help Stellar appeal to everyone around the world, the team offers a very straightforward explanation of the network and how it lets users send money in one currency for a friend to receive in another currency in a different country. This is possible via the Stellar network, which has decentralized servers across the world that power the distributed ledger. This ledger records every single transaction, as it does with other systems on the blockchain to provide transparency.

The servers on the Stellar network communicate between themselves to sync the ledger and verify transactions. Your money shows up in the ledger as credit issued by anchors, which are the bridges connecting the currency to the network. (A real-world anchor would be a payment processor or bank.) When you make a deposit, you get credit on the online account, essentially a virtual wallet. You trust the anchor to hold money and honor withdrawals like you would a physical bank.

You can send or receive this credit across the network. Thanks to the distributed exchange, Stellar automatically converts between currencies using the lowest possible rate. When you receive money, you can withdraw it via an anchor in that currency.

What Are Lumens?

A lumen, or XLM, is the digital currency unit behind Stellar. These are the native assets, meaning they are built right into the network. At the launch in 2014, there were 100 billion stellars, which were the original lumens. When the upgraded network launched in 2015, stellars became lumen to help separate the currency from the name of the network and the nonprofit.

Lumens are necessary for multiple reasons, including preventing spammers from flooding the network. This discouragement is possible due to the minor fee of 0.00001 lumens per transaction. Lumens also help ensure accounts are authentic since account-holders on the Stellar network must have at least 20 lumens.

Additionally, lumens make it easier to conduct transactions in multiple currencies. If there isn’t a big enough direct market between the two, lumens can be a bridge. Of course, that does require a liquid market between the given currencies and lumens. You can buy lumens on multiple exchanges.

Stellar Lumens Wallets

Lumens are supported by a number of different wallets, there are desktop, mobile and web wallets available to download from the official website. Lumens are also supported in the Ledger Hardware wallet which is the safest way to store your cryptocurrencies for the long-term.

How to Buy Stellar Lumens XLM

You are not able to purchase XLM with “Fiat” currency so you will need to first purchase another currency – the easiest to buy are Bitcoin or Ethereum which you can do at Coinbase using a bank transfer or debit / credit card purchase and then swap that for XLM at an exchange such as Binance.

Register at Coinbase

For first time buyers of crypto currency, we recommend that you use Coinbase to make your first purchase – its easy to use, fully regulated by the US government so you know it is one of the safest and most reputable places to purchase cryptocurrency from. Coinbase offers the ability to purchase Bitcoin, Litecoin and Ethereum with a credit or debit card or by sending a bank transfer. The fees are higher for cards but you will receive your currency instantly.

You will have to carry out some identity verification when signing up as they have to adhere to strict financial guidelines. Make sure you use our link to signup you will be credited with $10 in free bitcoin when you make your first purchase of $100.

To get started, click the “Sign up” button where you will be taken to a registration form where you will need to enter your name, email and choose a password.

Purchase Ethereum

For this guide, we will be purchasing Ethereum to swap for our target cryptocurrency. The reason for this is that it has far cheaper fees than bitcoin for sending and the transaction also happens a lot faster. So in Coinbase, visit the “Buy / Sell” tab at the top, select “Ethereum”, choose your payment method and enter the amount you wish to purchase – you can either enter a US Dollar amount or a number of Ether.

You will then be asked to confirm your transaction, if paying with a card you might have to complete a verification with your card provider. Once that’s complete, your Ethererum will be added to your account.

Purchase XLM at Binance

You can now send your Ether over to Binance to make your purchase of XLM, take a look at our review of Binance here to see how to signup and purchase on their exchange.

Once you have purchased your Lumens, we recommend you store them off the exchange if you plan to hold them for a while.

How Do You Use the Stellar Network?

Using the Stellar Network is incredibly simple. You just have to create an account. Then, you are able to send or receive money. There are step-by-step instructions available on the website to clear up any doubts.

What Does It Cost to Use Stellar?

The Stellar network is completely free to use. The license allows for commercial modification, use, and/or distribution. Just keep in mind that to integrate it, you will need to dedicate your own technical resources. The average integration requires between 120 and 200 hours’ worth of technical development based on experience and size.

How Does Stellar Get Enough Money to Run?

Since Stellar.org is a nonprofit and is free to use, it needs to get resources somehow to keep running. Donations (which are tax deductible) and the initial lumens sale cover the operating costs. Five percent of those lumens are designated to cover the operational costs. Stripe, the startup, also provided initial funding to help Stellar. There are numerous corporate donors, as well, including FastForward, Google.com, and BlackRock.

Conclusion

Stellar.org and the Stellar network should do wonders for helping those who are currently unbanked while simultaneously providing benefits for those who already have bank accounts. The low-cost transactions, transparency, ease of use, and open-source nature of Stellar all allow us to assume that this network will do great things.