If you’re looking to buy Stellar Lumens, one of the hottest cryptocurrencies on the market, you’ll need a wallet to store and manage your digital assets. With so many digital wallets available, it can be overwhelming to choose the right one. Picking a secure and reliable wallet is crucial for safeguarding your digital assets.
Lumens (XLM), the native token of the Stellar network, has gained significant traction since its introduction in 2015 and is now supported by many digital wallets. There isn’t a single best wallet for Lumens; the best choice depends on your cryptocurrency practices, trading habits, and how you plan to use Lumens in the future.
This guide will introduce you to the basics of Stellar Lumens, explain its mechanics, and suggest some options for storing XLM so you can make an informed decision.
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. The Stellar network was founded in 2014 by former Ripple Labs executive and co-founder Jed McCaleb and entrepreneur Joyce Kim after McCaleb left Ripple.
The Stellar Development Foundation, a non-profit organization, oversees the project’s growth. This sets Stellar apart from Ripple, which is a for-profit company currently facing legal issues for selling unregistered securities. While Ripple targets financial institutions and banks as an alternative to SWIFT payments, Stellar focuses on vendors and individual customers.
How Does Stellar Lumens Work?
The Stellar network uses its own consensus mechanism to validate transactions on the Stellar blockchain. Unlike most cryptocurrency blockchains that use the mining-based Proof-of-Work (PoW) protocol, Stellar employs the Federated Byzantine Agreement (FBA) as a consensus mechanism.
While PoW provides security to large decentralized networks, it has drawbacks in scalability and transaction speed since every node must validate every transaction before reaching consensus. In contrast, FBA functions by quorum: a minimum number of Stellar nodes must approve each transaction. Each node selects another trusted node to forward the transaction and receive validation. Once a quorum is reached, the transaction is validated.
Stellar has been criticized for being too centralized since its nodes are run by a few organizations, including the Stellar Development Foundation, encryption company KeyBase, payment companies SatoshiPay and Wirex, and Lobstr wallet. If these nodes become unusable, the network could freeze, causing transaction failures.
Despite these criticisms, Stellar remains more scalable and energy-efficient than PoW-based networks like Bitcoin and Ethereum. The number of Stellar nodes is expected to increase as more organizations use the network.
What Is Stellar Lumens (XLM)?
Lumens (XLM) is the native token of the Stellar network. It allows users to make fast cross-border transactions. Similar to how Ether (ETH) is needed for transactions on the Ethereum network, Lumens are required for transactions on the Stellar network. However, the amount of Lumens needed per transaction is minimal (0.00001 lumen) compared to the higher Ethereum gas fees.
Lumens serve as both a utility token and a cryptocurrency. For example, if you want to send money to a friend in another country through Stellar, you would buy Lumens, send them to your friend’s XLM address, and they would convert the Lumens to fiat currency (like USD or EUR) through an anchor or a cryptocurrency exchange.
Anchors are financial institutions or payment companies partnered with Stellar. If an anchor is not available in your region, 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’s decentralized exchange, StellarTerm, to buy XLM. To trade XLM on StellarTerm, you need to sign up for a Stellar account, which is a quick and easy process.
Where to Store Stellar Lumens?
Before buying Stellar Lumens, you need to choose a wallet to store your assets. There are many options, but narrowing them down starts with deciding which type of cryptocurrency wallet you prefer.
Some people prefer the convenience of web wallets (exchange wallets like Coinbase or Binance), while others favor non-custodial wallets such as desktop, hardware, or mobile wallets. Each has its advantages and disadvantages. For example, hardware wallets are known for their security but are less convenient than mobile wallets for quick transactions.
If you already use a multi-currency wallet, check if it supports Lumens (XLM). If it does, you can continue using it for XLM. If not, or if you don’t have a wallet yet, read on to find the best wallet for your needs.
Web Wallets
Web wallets are online wallets hosted on the internet, accessible from any device with an internet connection. They are convenient, especially since most exchange services provide web wallets. For example, a Coinbase wallet allows easy transactions on the Coinbase exchange.
However, web wallets are frequent targets for hackers, posing a risk of losing funds. Cryptocurrency owners are generally advised to keep only a small amount of digital currency in web wallets.
Hardware Wallets
Hardware wallets provide cold storage, disconnected from the internet. These USB-like devices connect to your computer through a USB cable or Bluetooth in newer models. Hardware wallets keep your private keys safe from hackers.
They are best for people who own large amounts of cryptocurrency. However, if using a hardware wallet, be careful not to lose it and securely store the wallet’s seed phrase, which allows you to regenerate your wallet if needed. Losing the seed phrase means losing access to your funds. Hardware wallets can be challenging for the disorganized.
Desktop Wallets
Desktop wallets run on your computer and let you access your crypto funds through software. These wallets usually provide your own security keys, unlike custodial web wallets. Desktop wallets are convenient for those who frequently use their computers for trading. However, since your computer is connected to the internet, it is vulnerable to hacking attempts.
For example, if a hacker infects your computer with a key tracker program, they could learn your login info and make transactions in your name. Desktop wallets are best for tech-savvy users who can set up their own security measures.
Mobile Wallets
Mobile wallets are apps for your mobile devices, offering great convenience as you can make transactions from anywhere. However, mobile devices often have poor security.
If using a mobile wallet, choose a reliable service and download it from a trusted source. Store your wallet’s seed phrases securely, as you’ll need them to access your funds if your phone is lost or broken.
The Best Stellar Lumens Wallets
Now that you have an idea of which wallet type suits you best, here are some top picks for storing Lumens. Whether you prefer web, hardware, mobile, or desktop wallets, there’s an option for you.
Coinbase Wallet
The Coinbase Wallet, from the well-known exchange, is a great multicurrency web wallet for storing XLM and other coins. Coinbase supports many digital currencies and allows easy buying and converting of XLM. It’s regarded as safe and secure, being one of the oldest and most regulated exchanges. It’s free, easy to use, and has a mobile app for access anywhere.
Atomic Wallet
Atomic Wallet is another multicurrency wallet that supports over 300 digital currencies, including Stellar Lumens. It offers both a desktop client and a mobile wallet, suitable for everyone.
Atomic Wallet has a user-friendly interface and runs on Windows, Linux, macOS, Ubuntu, Debian, and Fedora. The mobile wallet is available for Android and iOS devices. It is password-protected and supports seed phrases.
Lobstr Mobile Wallet
Lobstr is an XLM wallet recommended by Stellar network users. It partners with the Stellar network and runs several Stellar nodes. Focusing exclusively on XLM, Lobstr isn’t suitable for other digital currencies like Bitcoin (BTC) or Ethereum (ETH).
Lobstr has mobile and desktop support for both iOS and Android devices and is easy to set up.
Ledger Nano S and Ledger Nano X
Ledger produces top hardware wallets. Both the Ledger Nano S and Nano X models store XLM securely. The Ledger Nano S, the basic model, connects via USB and supports over 1,000 digital currencies.
The Ledger Nano X, the more expensive model, connects via Bluetooth and offers additional features. To manage XLM from a Ledger wallet, use the Stellar Account Viewer app. Both models provide good value, especially for those holding multiple cryptocurrencies.
XLM Wallet to Avoid: Stargazer Mobile Wallet
Stargazer was once recommended for XLM by the Stellar Foundation but is no longer considered a good wallet. It’s a browser-based web wallet for Google Chrome, but support for other browsers like Firefox is coming. Despite its user-friendly layout and support for multiple currencies, Stargazer no longer supports XLM.
Conclusion
Stellar Lumens (XLM) is the native token of the Stellar network, aimed at fast and easy money transfers for businesses and individuals. If you’re interested in the Stellar project and want to invest in XLM, start by opening a wallet to store your assets. Whether you choose a web wallet like Coinbase, a multicurrency wallet like Atomic or Ledger, or a focused XLM wallet like Lobstr, make sure it meets your needs and security preferences.