If you are looking to buy Stellar Lumens, one of the hottest cryptocurrencies on the market, you need to find a wallet that allows you to store and manage digital assets. While there are many digital wallets on the market, the sheer number of options can be paralyzing, especially because the stakes are high: picking a secure and trustworthy digital wallet is incredibly important when it comes to digital assets ownership.
Lumens (XLM), the native token of the Stellar network, came a long way since its introduction to the crypto sphere back in 2015 and is now supported by many digital wallets, which means you have ample options to choose from. There is, of course, no single best wallet to store Lumens. As always, your choice will depend on your cryptocurrency practices and general trading habits, as well as how you plan to use Lumens in the future.
In this guide, we will walk you through the basics of Stellar Lumens, explore some of its mechanics and give you a couple of suggestions on storing XLM so that you can make the final decision for yourself.
Who Is Behind the Stellar Network?
The Stellar network is a blockchain-based open-source project that aims to make value transfers across borders and payment systems easy, fast and inexpensive. If cheap cross-border payments sound like a familiar premise, you might find it unsurprising that Stellar network is the brainchild of former Ripple Labs executive and co-founder, Jed McCaleb, and entrepreneur Joyce Kim. The duo founded the Stellar network in 2014 after McCaleb left his role at Ripple.
The Stellar network is overseen by the Stellar Development Foundation, a non-profit organization that oversees the project’s growth. This is one of Stellar’s main differences with Ripple, as the latter is a for-profit company that has landed in hot water after being sued by the SEC for selling unregistered securities. Also, while Ripple is marketed to financial institutions and banks as an alternative to SWIFT payments, Stellar is geared towards vendors and individual customers.
How Does Stellar Lumens Work?
The Stellar network uses its own consensus mechanism to validate transactions on the Stellar blockchain. While most cryptocurrency blockchains like Bitcoin and Ethereum depend on mining-based Proof-of-Work protocol, Stellar uses Federated Byzantine Agreement (FBA) as a consensus mechanism.
While PoW provides security to large decentralized networks, it has its own drawback in terms of scalability and transaction speed, as each node has to accept the validity of every transaction before consensus can be reached. Federated Byzantine Agreement, on the other hand, functions by quorum: a minimum number of Stellar blockchain nodes have to approve every transaction but each node picks another trusted node to forward the transaction and receive validation. Once a quorum is reached, the transaction gets validated.
That brings us to criticisms about Stellar’s status as a centralized network. Stellar nodes are typically run by a combination of organizations, including Stellar Development Foundation, encryption company KeyBase, electronic payment companies SatoshiPay and Wirex, and Lobstr wallet. If the majority of these nodes become unusable for some reason, the entire network could freeze, causing transaction failures.
As such, the Stellar network has been criticized for being too centralized, unlike Bitcoin and Ethereum networks, which consist of millions of nodes. But those criticisms fail to take into account just how much Bitcoin and Ethereum networks have become centralized in recent years as more hashing power is pooled in mining pools. While Stellar doesn’t have millions of validator nodes, it isn’t susceptible to a 51% attack; it doesn’t require immense electricity as PoW-based crypto assets do, and it remains more scalable. The number of Stellar nodes is expected to increase as more organizations start using the Stellar network.
What Is Stellar Lumens (XLM)?
Lumens is the native token of the Stellar network. Lumens (XLM) fulfills a specific need on the Stellar network: it allows users to make across-the-border transactions with speed.
You can think of it as the Stellar equivalent of Ether: Just like you need ETH as gas in order to make transactions on the Ethereum network, you need Lumens to make transactions in the Stellar network. However, the amount of Lumens you need to make a transaction is truly minimal (minimum 0.00001 lumen per transaction) compared to the higher Ethereum gas fees.
Lumens is basically a utility token as well as a cryptocurrency. Let’s give an example. You want to send money to a friend or relative in another country through the Stellar network. You buy Lumens (XLM) through an exchange and send it to your friend’s XLM address. Then, they would convert their XLM to fiat currency (like USD or EUR) through an anchor or a cryptocurrency exchange.
Anchors are financial institutions or payment companies partnered with Stellar. Depending on your region, you may or may not find an anchor company, so make sure to check out the list of anchors on Stellar’s official page. If you can’t use an anchor, you can use a centralized cryptocurrency exchange to convert Lumens to fiat currency.
Where to Buy Stellar Lumens (XLM)?
Stellar Lumens is listed on many cryptocurrency exchanges, including popular centralized exchanges like Coinbase and Binance. You can also use Stellar network’s own decentralized exchange StellarTerm, to buy the digital asset. You need to sign up for a Stellar account in order to trade XLM on StellarTerm, though it is a quick and easy process.
Where to Store Stellar Lumens?
You need to pick a Stellar Lumens wallet to store your assets before you go off and make your first purchase. As we said before, you have a lot of options to choose from, but it is possible to narrow down the options if you first consider what type of cryptocurrency wallet you want to use.
While some prefer the convenience of web wallets (exchange wallets like Coinbase or Binance wallet), others prefer using non-custodial wallets such as desktop wallets, hardware wallets, or mobile wallets. Each one has its advantages and disadvantages – for example, hardware wallets are known for their increased security, but they are not as convenient as mobile wallets when you want to make rapid transactions.
If you already have a multi-currency wallet you enjoy using, check whether it supports Lumens (XLM). That way, you could simply continue to use your digital wallet without having to establish a new wallet just for XLM.
If you don’t have a digital wallet yet or your wallet doesn’t support Stellar Lumens, check out the next section to see what type of crypto wallet is best suited to your needs.
Web wallets are online wallets that are hosted on the internet. You can access them anywhere and from any device as long as you have an internet connection. Since most exchange services provide web wallets, it is all the more convenient to use them. For example, with a Coinbase wallet, you can easily make transactions on the Coinbase cryptocurrency exchange.
The trouble with web wallets is that they are targeted quite often by hackers, so there is always a risk of losing your funds as a result. This is why cryptocurrency owners are generally advised to keep only a small amount of digital currency in their web wallets.
Hardware wallets provide cold storage that is not connected to the internet. These are USB-like devices you can connect to your computer through a USB cable, or in newer models, through Bluetooth. These wallets keep the private keys you need in order to interact with cryptocurrency blockchains safe outside the reach of hackers.
Hardware wallets are best suited to people who own large amounts of cryptocurrency. While they are quite secure, if you are using a hardware wallet, you have to pay attention to two important things – you should be careful not to lose it, and you must write down the wallet’s seed phrase somewhere safe. Seed phrases allow you to regenerate your wallet in case of an emergency like theft or device corruption, but you can’t access your crypto funds if you lose your seed phrases. Hardware wallets can be hard to use for the disorganized or the faint-hearted.
As the name implies, desktop wallets run on your computer and allow you to access your crypto funds through software. These wallets typically provide you with your own security keys, unlike custodial web wallets. Desktop wallets are a convenient choice for people who live and trade by their computers but there are some security risks – since your computer is connected to the internet, it is vulnerable to hacking attempts and other malicious attempts.
For example, suppose a hacker manages to infect your computer with a key tracker program. In that case, they could easily learn all your emails and passwords, your login info to your wallet, and so on, and use the info to make transactions in your name through your own computer. Therefore, desktop wallets are best suited to people who understand the technology and who are able to set up their own security measures.
Mobile wallets are wallet apps for your mobile devices. They are incredibly convenient since you can make transactions from pretty much anywhere with a mobile wallet. But mobile devices don’t typically have the best security.
If you want to use a mobile wallet, pick a reliable service and make sure you download it from a trusted source. It is important to store your mobile wallet’s seed phrases in a secure location as well since if your phone is lost, or broken, you need the seed phrases in order to access your funds.
The Best Stellar Lumens Wallets
Hopefully, you have a better idea about what kind of wallet suits your needs the best after reading about these different wallet types. Now, you can take a look at our best picks for storing Lumens. Whether you want to store Lumens in a web, hardware, mobile, or desktop wallet, we have something that will suit your needs.
The Coinbase Wallet, offered by the cryptocurrency exchange by the same name, is a great multicurrency web wallet that lets you store XLM and other coins. Coinbase offers support for many more digital currencies, and you can easily buy and convert XLM to other assets on the exchange. Coinbase is generally regarded as a safe and secure option as it is one of the oldest and well-regulated exchanges on the market. It is free and easy to use, so both beginners and experienced traders can benefit from it. Coinbase has a mobile app, so you can access your crypto wallet from anywhere.
The Atomic Wallet is another multicurrency wallet you can use to store XLM. The Atomic wallet supports over 300 digital currencies, including Stellar Lumens. It comes with a desktop client and provides a mobile wallet, so it has something to offer to everybody.
Atomic wallet has a friendly user interface despite its robust cryptocurrency support. You can run the Atomic wallet desktop client on Windows, Linux, macOS, Ubuntu and Debian and Fedora operating systems. The mobile wallet is also available for Android and iOS devices and you can download it from Apple Store, Google Play and Atomic wallet website.
Atomic wallet is password-protected and comes with seed phrase support.
Lobstr Mobile Wallet
Lobstr is an XLM wallet that comes highly recommended by Stellar network users. Lobstr has a partnership with the Stellar network and runs several Stellar nodes, so using this wallet is a good idea if you are serious about Stellar Lumens. As Lobstr focuses on XLM exclusively, you won’t be able to use it to store and trade other digital currencies like Bitcoin (BTC) or Ethereum (ETH).
Lobstr wallet comes with mobile and desktop support, and it is available for both iOS and Android devices. You can download and set it up easily.
Ledger Nano S and Ledger Nano X
Ledger produces some of the best hardware wallets available on the market, and you can use both Ledger models Nano S and Nano X to store XLM. The Ledger Nano S is the more basic model, but it still has all the features you need to easily store multiple cryptocurrencies. Nano S connects to your computer with a USB cable and supports over 1,000 digital currencies.
Ledger Nano X is the more expensive of the two, and it can be connected to your computer through Bluetooth. It has a few more features than Ledger Nano X, but it is much more expensive.
In order to manage XLM from your Ledger wallet, you need to use The Stellar Account Viewer app available on the browser. (You can use the Stellar Account Viewer to connect other hardware wallets like Trezor wallets).
Overall, both models offer good value for the price. If you own many different cryptocurrencies you want to keep secure, Ledger hardware wallets are a good choice.
XLM Wallet to Avoid: the Stargazer Mobile Wallet
The Stargazer was once a Stellar Foundation recommended wallet for storing XLM, but that is no longer the case. Stargazer is a browser-based web wallet for Google Chrome, though support for other browsers such as Firefox is on its way. Stargazer has a user-friendly layout, and it allows you to access and control multiple digital currencies but it is no longer considered a good wallet for storing your Lumens as it ceased supporting XLM.
A Few Words Before You Go…
Stellar Lumens (XLM) is the native token of the Stellar network. It is often compared to Ripple (XRP) because both cryptocurrencies are marketed as utility tokens aimed towards fast and easy money transfers. However, Stellar Lumens is marketed towards businesses and individuals, unlike Ripple, which is more bank-oriented.
If you are interested in the Stellar Lumens project and want to invest in XLM, start by opening a crypto wallet that can store your assets. You can choose a web wallet like Coinbase wallet, or go with multi-currency wallets like the Atomic wallet or Ledger Wallet if you own many different digital assets. If you are looking for an XLM wallet, you can pick the Lobstr wallet that focuses explicitly on the Stellar network.