What Is Stellar’s Lumen Token (XLM)?

Cryptocurrencies have revolutionized the financial world, offering a wide range of decentralized solutions for everything from banking to cross-border payments. Among these innovations, Stellar's Lumen (XLM) stands out as a crucial player, providing a unique platform that addresses some of the core challenges faced by the traditional financial system. This article dives deep into the Stellar network and its native token, Lumen (XLM). Let us examine how it works, its key features, and role in transforming global payments.

What Is Stellar?

Stellar is a decentralized, open-source blockchain platform created with the goal of simplifying cross-border payments and making financial services accessible to everyone, especially in underserved regions. Launched in 2014 by Jed McCaleb, co-founder of Ripple, and supported by the Stellar Development Foundation, the network was designed to enable fast, secure, and low-cost financial transactions. While Stellar initially shared similarities with Ripple, it evolved to focus more on individuals and small businesses rather than large financial institutions.

What Is Stellar's Lumen (XLM) Token?

At the core of the Stellar network is its native cryptocurrency, Lumen (XLM). Lumen acts as a bridge currency that facilitates transactions between different currencies on the network. By utilizing XLM, Stellar can streamline currency exchanges, significantly reducing the cost and time it takes to process transactions across borders. Lumen's role is critical because it ensures liquidity and mitigates the risks of currency volatility that often affect traditional financial systems.

How Does Stellar Work?

Stellar operates on a distributed ledger technology (DLT), which ensures that all transactions are verified and recorded across a network of nodes. This decentralized model eliminates the need for intermediaries such as banks, allowing users to send and receive money directly, regardless of their location. The network relies on its Stellar Consensus Protocol (SCP) to validate transactions quickly and securely. Unlike other blockchains that may rely on Proof of Work (PoW) or Proof of Stake (PoS) mechanisms, Stellar’s SCP enables faster confirmation times and lower energy consumption.

Key Uses and Features of the XLM Token

• Transaction Fees: XLM is required to pay for transaction fees on the Stellar network. The standard fee is 100 stroops, which is equivalent to 0.0000001 XLM.

• Multicurrency Transactions: XLM, as the native token of the Stellar network, facilitates transactions across different currencies by covering the required fees.

• Governance Rights: Holders of XLM can vote on proposed changes to the network and select validators within the Stellar Consensus Protocol (SCP).

• Account Maintenance: To create and maintain an account on the Stellar network, users must hold a minimum amount of XLM. This requirement helps verify account legitimacy and prevent spam.

• Market Liquidity: XLM provides liquidity to the Stellar decentralized exchange (DEX), allowing for the trading of various assets issued on the network.

How to buy Stellar (XLM) on Hata:

1. Create an Account: Sign up on the Hata platform by providing your email address and setting up a secure password. Verify your email to activate your account.

2. Verify Your Identity: Complete the KYC (Know Your Customer) process by submitting the necessary identification documents as required by Hata for security purposes.

3. Deposit Funds: Add funds to your Hata account.

4. Navigate to Stellar (XLM): Once your account is funded, go to the cryptocurrency marketplace on Market Instant Buy and search for Stellar (XLM).

5. Place an Order: Decide on the amount of XLM you wish to purchase.

6. Secure Your XLM: After purchasing, ensure your XLM is stored securely. You can keep it in your Hata wallet.

7. Monitor Your Investment: Keep track of your XLM investment through the Hata platform. Stay updated on market trends and news to make informed decisions.

Conclusion - The Future of Stellar and XLM

Looking forward, Stellar is well-positioned to play a pivotal role in the future of global finance. With growing interest in digital assets, stablecoins, and decentralized finance (DeFi), Stellar’s focus on financial inclusion and affordable cross-border payments could make it a leading platform for both individuals and businesses. The ongoing development of CBDCs (Central Bank Digital Currencies) and partnerships with major financial institutions may further enhance Stellar’s credibility and utility in the mainstream financial world.

DISCLAIMER & WARNING

The information provided here is presented "as is'' and is intended for general informational and educational purposes only. It does not come with any representation or warranty of any kind. This content should not be interpreted as financial, legal, or other professional advice, and it is not intended to endorse or recommend the purchase of any specific product or service. It is advisable to consult with appropriate professional advisors for personalised guidance. In cases where the article is contributed by a third-party author, please note that the expressed views belong to the author alone and may not necessarily reflect the opinions of Hata. For further details, we encourage you to read our complete disclaimer. Please be aware that the prices of digital assets can be highly volatile. The value of your investment may increase or decrease, and there is a risk that you may not recover the full amount invested. You are solely responsible for making your own investment decisions, and Hata cannot be held liable for any losses you may incur. This material is not to be construed as financial, legal, or other professional advice. For more information, please refer to Hata’s Terms of Use and Risk Warning.