How to Buy Stellar Lumens (XLM): Quick Guide

How to Buy Stellar Lumens (XLM): Quick Guide

DISCLAIMER: None of the following is intended to be investment advice. This is only meant to be a description of what has worked well for me so far, and my own opinions. Also, full disclosure, my links to Coinbase and Binance include referrals. It actually benefits you to use them because we will both get an extra $10 worth of BTC for free if you deposit at least $100 to Coinbase. Thanks in advance if you follow the links when you make your accounts — and even if you don’t, I hope this guide helps you out!

This guide will teach you how to buy Lumens or “XLM” from square one (i.e., all you have is fiat money, no cryptos). Most of this is applicable to other cryptocurrencies, but some isn’t — for example, I will also teach you how to use one of the XLM wallets. Since this is an XLM-centric text, I am going to write a quick foreword about the coin and then we’ll get right into the meat of the guide.

A Little About XLM — Why Buy?

There is a massive subset of people who are new to the crypto-space entirely but have only heard of Bitcoin. Then they go online and they search around and figure out there are actually many, many cryptocurrencies out there with many different use cases. When it comes to the Stellar, the idea is to create, in their words, “a worldwide financial network open to anyone.” The Stellar network essentially plans to become a sort of hyper-advanced version of PayPal. It uses something called “anchors” which hold your money and issue credit in order to to allow different currencies to be converted into Lumens. Stellar seems to be very focused on fungibility and upholding the fundamentals of what a currency should be — something that is easy and quick to send and receive. I could talk a lot more about multi-currency transactions or their fascinating on-chain “distributed exchange” concept, but I will save all of this for another time and instead discuss what you’re probably here for: the coin itself and its potential value.

When talking about a coin’s value, I often like to look at recent news and partnerships. This gives me a high level view of the public perception of the coin, and might give me some insight into the future. Stellar has had some very positive news lately. They were even featured in Forbes! I’ll bet you’ve heard of Kik — it’s one of the most used messaging apps in the world. In a stunning move, their founder Ted Livingston verbally eviscerated Ethereum, calling it “the dial-up era of blockchain”. While Kik is currently based on Ethereum, scaling issues appear to be pushing them in a different direction. In fact, according to Livingston, Kik intends to move its Kin token network over from Ethereum to Stellar. The Stellar network has only been around since 2014; it is quite promising that a relatively new coin is already getting this kind of big league attention. One should also take into account that Jed McCaleb was a co-founder of Ripple, and he’s the one who founded Stellar. Considering how well Ripple is doing these days, that’s a good sign.

Let’s take a quick look at the price math for XLM. At the time of this writing, XLM is listed in the 12th place on coinmarketcap with a market capitalization of $4,689,048,930 and a circulating supply of 17,852,638,004 XLM. It therefore costs $0.26 per XLM, and the price has been rising rapidly over the last few months (in October you could get a Lumen for under two cents).

I try not to focus on numbers too much because it tends to put people to sleep, but if XLM had the market capitalization of Ripple (the 4th ranked coin on coinmarketcap right now), it would be worth about $1.53. That’s almost 6 times the current price. At first glance this may not seem like it has as much potential for insane growth as some other coins, but on the other hand XLM has already proven itself more than most other coins— nothing is ever certain, but I personally believe XLM is here to stay. I therefore believe it to be less of a risk than investing in a lower-cap-coin.

Taking things one step further, if Stellar Lumens had even half the market cap of Bitcoin you’d be looking at a Lumen price of $8.6, almost 33 times its current value. If XLM were to displace even a tenth of the old-world credit card system, you’d likely see prices reaching into the three figures. It’s not as crazy at it sounds — after all, if Stellar succeeds, it’s essentially going to bring credit into the crypto world. Furthermore, as long as the Stellar network accomplishes its intended goals, you’re looking at a system that’s capable of connecting every financial institution around the world — doesn’t that sound like something that could potentially surpass Bitcoin? If that idea excites you, then you’re ready to buy some XLM.

Buying XLM: Basic Strategy

To date I’ve had no problems with the following basic strategy:
  1. Create and sign into a Coinbase account. I recommend Coinbase because they are the most straightforward exchange.
  2. Purchase some ETH. At the time of this writing, this currency transfers the fastest and cheapest out of anything Coinbase offers. Litecoin competes here, but will cause hiccups later in the process — more on that later.
  3. Create and sign in to a Binance account. I recommend Binance because they have been reliable and convenient for me and they offer many different lesser-known cryptocurrencies with trading pairs on both ETH and BTC. An added bonus is that you can withdraw up to 2 BTC/day worth of funds with no verification at all.
  4. Move your ETH to Binance. Once it has confirmed, you can now easily use the ETH/XLM trading pair to buy as much or as little XLM as you want. More on trading pairs later.
  5. Send your coins from Binance to a safe XLM wallet for long term storage if you intend to hold for awhile. This is not strictly necessary but it is considered a safer option than keeping ANY coin on ANY exchange long term. I personally believe Coinomi to be the safest and most convenient wallet for many cryptocurrencies. Unfortunately, they don’t support Stellar at this time — so instead, we’ll be using one of their recommended wallets.
Now, if you’re a power user or someone with some existing familiarity with cryptocurrency, you can probably stop here or skip to the XLM wallet and voting sections at the end. The rest of this guide is just going to be a more in-depth description of the preceding steps. If you’re completely new to cryptocurrencies, you might be a little lost — that’s fine! You won’t be by the time you finish this guide. I’ll go step by step:

Starting Out On Coinbase

This is arguably the most trusted exchange currently on the market. You can think of them as the PayPal of the cryptocurrency world, with all the good and bad connotations that come along with that. There are some countries where this is not the case! For example, in Canada, one would probably want to use QuadrigaCX instead. Unfortunately, that’s outside the scope of this guide, but I may do a country-by-country guide for acquiring coins later.

All you have to do here is go to Coinbase’s website and create an account. Security is incredibly important here — remember, in cryptocurrencies you are your own bank and so it is absolutely crucial that you follow good security practices. This means your password should be strong — and it should be a password you aren’t using anywhere else (including other exchanges). Google has a pretty good guide with some tips on choosing strong passwords. Keeping security in mind, it would also behoove you to turn on two-factor authentication once your account is created.

Once you are up and running there are a number of options when it comes to actually paying for coins via Coinbase. It is possible to link your bank account to Coinbase but actually transferring coins out of Coinbase will be impossible for a few days while the funds are clearing. This is obviously not ideal if you want to move quickly, as you would now have to wait several days to move your coins to an exchange where you can trade them for XLM (or any other coin).

Instead, I would recommend you link a credit or debit card to Coinbase. This will allow you to purchase some amount of coins immediately, and then immediately send them off wherever you want — your wallet, another exchange, etc. At the time of this writing Coinbase offers three coins: Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).

What to Buy First?

In my opinion if you intend to buy lesser-known coins like XLM, ETH is the best choice to buy here. Why? Well, with regards to LTC, the reason is clear: other exchanges like Binance offer direct trading pairs for BTC and ETH, but not LTC or any other currency. What this means is that you could directly exchange your ETH for XLM, or your BTC for XLM, but you’d have to perform another step if you wanted to trade your LTC for XLM (and that means more fees!). Obviously we don’t want to waste even one cent if we can avoid it, so LTC is out.

With regards to BTC, at the time of this writing there have been a lot of rumblings about high transaction fees, slow transaction times, etc. Exchanges often overpay these fees as well, and that means that you are again risking missing out on more money than you need to.

ETH is therefore currently the best choice for our purposes by default — fastest transaction speed, lowest transaction cost. So, to review: create a Coinbase account, link your credit or debit card, and purchase ETH.

I Bought ETH: What Now?

Now is the time for you to make your Binance account. Follow the link and create an account using a strong password (this should be different than the one you used for Coinbase!). There are other places to buy XLM (Changelly, Bittrex, Cryptopia, HitBTC, etc.). I cannot directly recommend any of these exchanges as I don’t have much experience with them at this point — however, I can say that I have used HitBTC and it seems decent so far. This guide focuses on Binance because my experience there has been 100% positive — I have transferred coins in and out of their system many times with no problems.

Once your account is made, you should set up two-factor authentication here via Google Authenticator. It’s safer, and you will need it to transfer coins out of Binance anyway. More on this later.

After your Binance account is made, click “Funds” at the top right, then “Deposits Withdrawals” beneath it. Find Ethereum in the list and click the “Deposit” button on the far right. You should end up with something that looks like this:

Depositing To Binance
Unlike the picture, there will be an “ETH Deposit Address” listed in the box at the bottom left. This is a very long series of letters and numbers, and is the fundamental basis of most if not all cryptocurrencies. An “address” is simply the destination for funds — think of it like the account and routing numbers at the bottom of your checks. For many cryptocurrencies such as Bitcoin it is possible to have multiple “receiving addresses” which point towards the same wallet.

The address listed here is Binance’s “receiving address” for your Ethereum. To the right of it is a “copy address” button — use it to put the address into your copy/paste buffer. Then, in your Coinbase account, navigate to the Accounts tab and then to your ETH Wallet. Paste in your address. You should double check that the pasted address is the same one you saw on the deposits page in Binance — you can never be too sure when it comes to security! Once you’re sure you’re sending to the right place, input the amount of ETH you’d like to send (if you just want to buy some XLM, you should send all of it) and click “Send.”

I Sent ETH to Binance — Now What?

Once you click Send, you will need to wait a little while. Without getting too technical about it, exchanges want to be as secure as possible. Thus, when you make a deposit, they wait for multiple “confirmations” from the network before allowing you access to your funds. You can view the progress in your Binance account by clicking Funds and then History. Do not be alarmed if nothing shows up at first! There are many reasons there might be a slight delay. In general you should see the transaction show up within a few minutes, with the current number of “confirmations” next to the number of required “confirmations” next to it. Be patient — your XLM is nearly in hand!

Once you have the required number of confirmations, it’s time to trade your ETH to XLM. This is blessedly simple. In the front page of Binance, click “ETH Markets”. Search for “XLM/ETH” in this list, and click it. Now you are on the trading page. In the bottom left under “Buy XLM”, click “100%” below the “Amount” field.


This indicates to Binance that you’d like to trade all of your ETH for a commensurate amount of XLM for no more than the price listed above. The price field is automatically listed based on the current market. If you like, you can change it to a different price, but like any market it’s not guaranteed that someone will buy at the price you’d like. Your order will remain open until it’s been fully filled or you cancel it. There are several options here such as Stop-Limit orders, etc., but this is outside the scope of this guide. In this case, you are simply placing a “Limit” order for some XLM.

 I Placed My Order! Am I Done?

If you want to be done now, you can be — but there are more steps if you want to be security-conscious. You may want to check under the “Orders” and “Order History” tabs that the order went through — if you placed a Limit order at the default price, it probably did. Once you have your XLM in your Binance account, you can see them under “Funds” → “Deposits Withdrawals”. You can click “Hide 0 Balances” at the top to clean up the screen of coins you don’t own, and you can see an estimate of the overall converted BTC and USD value of your account at the top right.

For maximum security, I wouldn’t leave any coin in the exchange. I like and trust Binance, but ANY site can be hacked or experience downtime — even massively established trusted sites like PayPal. You want to have full control of your coins.

How Do I Move My Coins to a Private Wallet?

Let’s start by setting up your wallet. Now, normally I recommend Coinomi when possible for small-cap coins, but unfortunately they do not support XLM yet. Several wallets are available — for all you Ledger fans out there, Stellar is supported. A Ledger Nano is probably the safest/most trusted option for Stellar right now, though obviously there is a barrier to entry here if you don’t currently own the device. Even so, I chose the Stellar Desktop Client in Linux and this guide assumes you do the same — but personally I will probably move my coins to a Coinomi wallet as soon as it supports XLM.

I’ll be honest: I don’t like the current iteration of Stellar Desktop Client wallet very much and I will be trying some of the alternatives soon. It lacks some basic quality-of-life features such as wallet backups via a word-phrase. You’re instead prompted to write down a lengthy secret key — while I respect the fact that convenience can often be the enemy of security, this seems unintuitive and quaint. Regarding security, I do not have enough experience with this wallet to fully endorse it —however, it is open source and I haven’t seen any reports of serious issues with it.

Don’t be discouraged — this wallet is fully functional, even if it feels a little clunky to me, and there are alternatives available. I have yet to experience any sort of bug or unintended inconvenience with it. My complaints about the wallet are mostly subjective, so I suggest you try it out yourself — your mileage may vary. On a positive note, every single one of my transactions have appeared in the wallet incredibly quickly. Not only is the Stellar network fast, this particular wallet is no slouch about swiftly updating its UI with new transactions.

Start by downloading the appropriate desktop wallet for your operating system. There will be a “StellarWallet” executable — run it. If you’re in Linux you may need to add executable privileges to the file. You should now have a screen with a login prompt that looks something like this:

Click the “Create new account” button and then the “Create an empty account” button — we are starting from scratch rather than importing anything. You’ll be prompted to save a wallet file somewhere — do so. This is where the wallet software will store information about your wallets. You’ll then put in a password — make sure it’s another strong password that you aren’t using anywhere else. This password will encrypt your wallet, so make sure you know it by heart or have it written down somewhere safe. Likewise, once you get to the appropriate screen, you’ll want to click the button to reveal your secret key and then store it somewhere safe — as I mentioned before, it was a real disappointment that this wallet does not offer a word phrase option. Just remember that this secret key is your wallet for all intents and purposes. If your computer falls into an active volcano tomorrow, and you have this secret key written down, you will still be able to rebuild your wallet and control your XLM. Likewise, if you let someone else have access to that secret key, they have access to your XLM. Keep it safe!
 Dashboard — After Wallet Creation

Once your wallet has been created, you’ll arrive at a screen like the above. I’ve edited this slightly — in the red rectangle you will instead see your receiving address. This is a long line of numbers and letters which directs transactions into your wallet; if you want someone to send you XLM, they need this. It is just like the ETH address we used earlier, only a different format. If you click the address, you will be taken to another screen.

Uh oh! What’s this warning popup? Basically, this relates to some specific functionality with the Stellar network which is a little outside the scope of this guide — so, to make a long story short, for now just do what it says and make sure you send at least 41 lumens from Binance to your wallet.

Moving on, you’ll see your full address where I’ve again placed a red rectangle in this image. This one is copy and pasteable, so put it into your copy buffer now.

Actually Moving Your Coins

In Binance, go into the “Deposits & Withdrawals” tab, then click “Withdrawal” to the far right of the “XLM” row. By now it should be clear what you’re looking at — fields that let you input the address to send the coins to, and how many coins to send. Naturally, you’ll paste your XLM receiving address into the address field. Click the “No MEMO” box, and put anything you like in the label field.

For your convenience, there is a “Max” button to the right of the Amount field. Note that once you click “Submit” you will need to use your two-factor authentication via Google Authenticator, an Android app. I recommend you do not use your actual day-to-day phone for this purpose. These days you can get a cheap Android phone for around 30 dollars — this is an investment worth making for security purposes. You can keep the battery removed from the phone when you’re not using it, and connect it to a network only for cryptocurrency purposes. As a bonus, if you’d like, you can use this phone for the Coinomi wallet when dealing with other cryptocurrencies (and XLM in the future, once it’s supported).

Now your coins are either in your wallet, or on the way. Congratulations — you are now holding Stellar Lumens! You can verify this by clicking the “History” tab in your wallet — your transaction should show up. If you want to send your coins back to Binance, just go to “Funds → Deposits Withdrawals” in Binance, then click “Deposit” on the row corresponding to Stellar Lumens. Once you click through, you’ll be presented with both a deposit address and a memo. Because XLM is a little different than some other cryptocurrencies, the memo is just as important as the address here. In the Stellar Desktop Client, click “Send” at the top, then click the green “Choose XLM” button. You’ll be presented with a recipient, an amount to send, and a field marked “Memo: Text”. Copy the “XLM Deposit Address” from Binance into the field marked “Recipient” and the “XLM Deposits MEMO” from Binance into the “Memo” field. If you fail to include the correct address or memo, your funds will be lost, so be careful! After this, just click “send” and your funds should be present in Binance after a short wait.

Be advised that the information here only scratches the surface on XLM and cryptocurrencies in general. I say this sort of thing about any cryptocurrency I review, but it goes double here — with Stellar there are a ton of features and functionality that I didn’t have time to touch on. I recommend you read as much as possible. Cryptocurrencies are the future, and if you’re reading this guide you are already lightyears ahead of the curve.

Leave your comment!

Best of luck, and happy trading! Team.

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