What is Stellar (XLM)? A Beginner’s Guide to Fast and Affordable Crypto Transactions
What if sending money across the world was as fast as a text and cost next to nothing? This would be a great alternative in a world where sending money or even making payments comes with additional costs that pile up when done frequently. Additionally, these bottlenecks prevent many from accessing the formal financial system.
That’s where Stellar (XLM) comes in—a crypto shaking up how we move money and breaking entry barriers. Curious to learn more? Let’s dive into what makes Stellar (XLM) a standout in the crypto crowd.
Key takeaways
Stellar (XLM) is designed to make fast, low-cost cross-border transactions easier.
Stellar Lumens (XLM) is the native cryptocurrency of the Stellar network—an open-source, decentralized payment system.
Stellar was launched in 2014 by Jed McCaleb—best known for founding Mt. Gox and co-founding Ripple.
Stellar stands out in the crowded crypto space by combining speed, affordability, and versatility.
What’s Stellar?
Stellar is an open-source, decentralized payment network designed to facilitate the transfer of digital assets, including fiat-backed tokens and its native cryptocurrency, Lumens (XLM), across borders.
🎯 Stellar’s primary goal is to enhance financial inclusion, especially for those without traditional banking access by making cross-border payments more accessible and efficient.
What is the origin of Stellar?
Stellar was launched in 2014 by Jed McCaleb—best known for founding Mt. Gox and co-founding Ripple—along with lawyer and entrepreneur Joyce Kim who has since left the organization.
Their vision? A blockchain-based platform that could cut through the inefficiencies of traditional finance and make money transfers faster, cheaper, and more accessible.
“I believe the best and most impactful use of crypto is as digital money. Which means it must be a good and useful means of payment. ”- Jed McCaleb.
From the start, Stellar aimed to help those often left out of the financial system, particularly unbanked and underbanked communities worldwide.
By bridging the gap between traditional banking and blockchain technology, the network makes it easier for individuals and institutions to send and receive money across borders.
Stellar Development Foundation (SDF)
To drive Stellar’s growth, the Stellar Development Foundation (SDF) was created as a non-profit organization.
The SDF helps maintain the Stellar protocol, builds strategic partnerships, and pushes innovation across the ecosystem. More than just a tech initiative, the foundation aims to create equitable access to the global financial system through blockchain technology.
Thanks to its open-source nature and focus on real-world impact, Stellar continues to evolve—not just as a network that connects currencies but also as a platform that connects people to financial opportunities.
How does Stellar work?
Unlike Bitcoin’s proof-of-work (PoW) model, which consumes massive amounts of energy through mining, the Stellar Consensus Protocol (SCP) uses a more efficient method called the Federated Byzantine Agreement (FBA).
Instead of relying on miners, Stellar’s network reaches consensus through a group of trusted nodes that validate transactions. The result? Faster, cheaper transactions without sacrificing decentralization. It’s an energy-efficient, high-speed alternative to many traditional blockchain systems.
Another key piece of the puzzle is anchors—trusted entities like banks, payment processors, and financial institutions that issue digital tokens backed by real-world assets.
Let’s say an anchor holds U.S. dollars; it can issue a USD-backed token on Stellar, allowing users to send, receive, and trade value without direct access to the banking system.
Lumens (XLM) is the native cryptocurrency of the Stellar network, used to pay transaction fees and prevent spam.
Key features of Stellar
Here’s the rundown of some key features:
Fast transactions
Stellar is built for speed, with transactions settling in just 3–5 seconds. That’s a game-changer for real-time applications like remittances, payments, and trading.
Unlike networks that make you wait minutes (or even hours) for confirmations, Stellar keeps things moving instantly, making for a smoother, more efficient experience.
Ultra-low fees
One of Stellar’s most significant advantages? Dirt-cheap transaction costs are just a fraction of a cent per transaction. This makes it ideal for microtransactions and cross-border payments, giving people and businesses a way to move money without getting buried in fees.
For those who can’t afford the high costs of traditional banking, Stellar opens up new financial opportunities.
Multi-currency support
Stellar isn’t just for crypto—it supports various currencies, whether fiat (like USD, EUR) or digital assets (like Bitcoin, Ethereum). You can transfer and exchange value across borders without needing banks or middlemen.
This makes Stellar a universal bridge for global finance, helping connect people to a more open and inclusive financial system.
Custom tokens & smart contracts
Stellar isn’t just for payments—it’s also a flexible platform for custom tokens and smart contracts. Businesses and developers can create tokens for stocks, loyalty points, commodities, or even digital collectibles.
With built-in smart contracts, Stellar can automate agreements, streamline escrow services, and power new blockchain innovations.
Stellar vs. Ripple(XRP): Key differences
Stellar and Ripple might seem like close cousins in the crypto world—and in a way, they are. Jed McCaleb co-founded both. However, despite their shared roots, these two platforms have taken very different paths, each catering to distinct audiences.
Shared roots, different paths
The most significant difference between Stellar and Ripple is who they’re built for. Ripple is designed for banks and financial institutions, helping them move money across borders more efficiently.
On the other hand, Stellar is all about financial inclusion, making it easier and cheaper for everyday people—especially those without access to traditional banking—to send and receive money.
While Ripple focuses on streamlining big-money corporate transactions, Stellar aims to break down barriers for the unbanked and underbanked worldwide.
Governance: non-profit vs. for-profit
Stellar operates under the Stellar Development Foundation (SDF), a non-profit organization focused on open access and social impact. Ripple, by contrast, is a for-profit company that works closely with banks and payment providers to improve their infrastructure. In short, Stellar prioritizes inclusivity, while Ripple optimizes for institutional efficiency.
Consensus mechanism
Both platforms ditch traditional mining, but they use different consensus mechanisms:
Stellar relies on the Stellar Consensus Protocol (SCP), a decentralized, energy-efficient system where a network of nodes quickly agrees on transactions without needing heavy computing power. This keeps the network open and accessible to everyone.
Ripple uses a Unique Node List (UNL), where a select group of trusted validators approves transactions. While this system is still more efficient than proof-of-work (PoW) models, it’s more centralized than Stellar’s approach. This makes sense for Ripple since it’s built for large institutions, prioritizing reliability and speed over decentralization.
How to use Stellar crypto for everyday transactions
Whether paying for something, splitting a bill, or transferring funds internationally, Stellar makes the process fast, affordable, and hassle-free.
Sending money instantly
Here is how to send XLM:
Open your Stellar wallet and select “Send.”
Enter the recipient’s wallet address (and memo, if required).
Choose the amount to send and confirm the transaction.
Making cross-border payments
Forget slow, pricey bank transfers. Stellar uses anchors to swap currencies fast:
Here’s how it works:
Deposit your local currency (e.g., USD) with an anchor that supports Stellar.
Convert it into a stellar-based digital asset.
Send it instantly to the recipient, who can withdraw it as their local currency.
No middlemen and no excessive fees—just a smooth, low-cost transaction.
Paying with tokenized assets
Stellar isn’t just about XLM—you can also use stablecoins like USDC for everyday transactions without worrying about crypto price swings. Furthermore, Stellar supports tokenized assets like stocks and commodities, making it a flexible digital-value payment network.
Who uses Stellar? Real-world adoption
Stellar has gained significant traction through key partnerships and real-world use cases:
MoneyGram: Enables crypto-to-fiat cashouts using Stellar’s blockchain.
IBM World Wire: Uses Stellar for cross-border payment solutions.
Circle (USDC on Stellar): Stellar integrates
USDC stablecoin: for global payments and remittances.
How to calculate the value of Stellar (XLM)
Understanding the value of XLM Stellar in real-world transactions is easy once you break it down. Whether you’re factoring in transaction fees, exchange rates, or using conversion tools, here’s how it all works.
Cross-currency exchange rates
Stellar’s Decentralized Exchange (DEX) automatically finds the best way to swap currencies. Whether converting directly or using XLM as a bridge, the network ensures smooth, cost-effective transactions.
Example: Sending USD 100 to someone in EUR
Stellar converts USD → XLM at the current rate (e.g., $1 = 10 XLM).
Then, it converts XLM → EUR (e.g., 1 XLM = €0.09).
Final amount received: 100 USD × 10 XLM/USD × €0.09/XLM = €90 (minus a tiny fee).
Using conversion tools
To make calculations even easier:
In-wallet tools: Many wallets (like Lobstr) show real-time rates for accurate conversions.
External calculators: Use Stellar’s official tools or crypto price trackers to estimate exchange values and fees.
How to calculate Stellar blockchain fees
One of Stellar’s biggest perks? Ultra-low fees. Each transaction costs just 0.00001 XLM—so even if you made 10,000 transactions, you’d only spend 0.1 XLM.
Example calculation:
If 1 XLM = $0.10, then the fee per transaction is: 0.00001 XLM × $0.10 = $0.000001
What if sending money across the world was as fast as a text and cost next to nothing? This would be a great alternative in a world where sending money or even making payments comes with additional costs that pile up when done frequently. Additionally, these bottlenecks prevent many from accessing the formal financial system.
That’s where Stellar (XLM) comes in—a crypto shaking up how we move money and breaking entry barriers.
Curious to learn more? Let’s dive into what makes Stellar (XLM) a standout in the crypto crowd.
Stellar’s global impact: more than just a blockchain
Stellar isn’t just another blockchain—it’s a game-changer for global finance. By making transactions fast, affordable, and accessible, Stellar is breaking down barriers and helping people around the world connect to the financial system.
Financial inclusion
Currently, over 1.4 billion adults don’t have access to a bank account (World Bank stats). That means no way to send, receive, or store money securely.
Stellar helps solve this by offering a decentralized platform where anyone with an internet connection can participate in the global economy.
Through partnerships with companies like MoneyGram and Circle (USDC), Stellar is making remittances cheaper and cross-border payments easier—especially in places where traditional banks are either too expensive or completely unavailable.
What’s the future outlook?
More businesses, NGOs, and even governments are starting to take notice. The Stellar Development Foundation (SDF) is working with major players to explore new financial innovations, including:
Central Bank Digital Currencies (CBDCs: Governments are testing ways to digitize national currencies on Stellar.
Tokenized assets: Stocks, commodities, and other real-world assets could soon exist on Stellar’s network.
Decentralized finance: (DeFi) – Smart contracts and other DeFi applications make financial services more open and efficient.
Bottom line
Stellar (XLM) is revolutionizing global payments with its fast, low-cost, and inclusive blockchain network. Whether you’re looking to send money internationally, trade digital assets, or explore decentralized finance, Stellar provides a reliable and accessible solution.
