Stellar Lumens (XLM) is one of the top ten cryptocurrencies in terms of market cap. It is often regarded as Ripple's (XRP) competitor since they have similar technologies and offer similar services to financial institutions. The Stellar network is one of the most widely used in the crypto space since it connects financial institutions, payments systems, and people to facilitate low-cost, cross-asset transfers of value, including payments.
However, shortlisting the best Stellar exchanges in 2021 is not an easy task. This article discusses some of the top exchanges where you can buy and sell XLM.
Compare the Best Stellar Exchanges
Due to Stellar's position in the market, we looked at the crypto exchanges that support it and the features they offer to the traders. Here is our selection of the leading XLM exchanges and what they have to offer.
Understanding Stellar Exchanges
XLM is one of the most useful digital currencies in the crypto space, thanks to the Stellar network. Lumens and its network is widely used by financial institutions and individuals, thanks to their numerous features.
Lumens is available on a wide range of exchanges. You can easily buy and sell XLM at any time of the day and week since the crypto market is open 24/7.
How to get started on a Stellar exchange?
Finding the right cryptocurrency exchange to trade Stellar Lumens is the first step you will need to take. Open an account with the Stellar exchange and fund it. Usually, the exchanges support a wide range of payment options, and they allow you to trade XLM against some fiat currencies and cryptocurrencies.
If you are dealing with centralised exchanges, ensure that the details you provide are accurate since you will have to verify your ID by uploading relevant documents. Some exchanges demand that you upload your proof of ID, proof of residence, bank statement, and more.
However, when dealing with decentralised exchanges, you don't need to verify your identity. This comes with some negatives as you might be dealing with scammers.
The Stellar exchanges accept numerous payment methods, including debit cards, credit cards, e-wallets, bank transfers, and more. You can withdraw funds at any time by placing a withdrawal request.
XLM is popularly traded against BTC and USD. You can buy or sell XLM via the 'Buy' or 'Sell' orders'.
Different types of Stellar exchanges
- Centralised exchanges: These are the main platforms to buy/sell XLM. They offer the highest liquidity and provide better security, thanks to their regulatory status. You can trade numerous XLM pairs on centralised exchanges than on other platforms.
- Decentralised exchanges: These exchanges allow traders to trade cryptocurrencies anonymously, providing security and privacy to the users. You can buy/sell XLM with ease on these platforms without revealing your identity.
- Derivatives exchanges: These exchanges offer alternative investment vehicles such as futures, options and CFDs, allowing you to invest in XLM without buying the physical coins.
- P2P exchanges: The peer-to-peer exchanges help to connect buyers and sellers directly. The buyers and sellers negotiate and transact directly, with the platforms providing escrow services to the users.
- Fiat vs. crypto exchanges: Fiat exchanges accept deposits or withdrawals in fiat currencies. Meanwhile, the crypto-only exchanges are those that accept deposits or withdrawals in cryptocurrencies.
How to Choose a Stellar Exchange?
Choosing a Stellar exchange can be a daunting task for anyone due to the hundreds of exchanges that support the cryptocurrency. Finding the best Stellar exchanges in 2021 is crucial for your trading success as you are ultimately affected by aspects of the platforms like fees and more. All exchanges share some common features that you can use to compare them. These features include:
- Usability – The best exchange is the one that is easy to use. The ease of use of a platform will attract both expert traders and amateurs.
- Payment methods – An exchange with minimal payment options shouldn't be on your list. It would help if you select a Stellar exchange that offers you a wide range of payment options for deposits and withdrawals.
- Liquidity – The best Stellar exchange needs to have substantial liquidity to make it easy for you to buy/sell XLM.
- Fees – If the transaction fees on an exchange are high, then avoid such an exchange. They must have a competitive and transparent fee structure.
- Transaction speed – An exchange that processes buy/sell orders slowly will ultimately lead you to lose valuable trades. The order processing speed on an exchange has to be fast if you intend to enjoy buying/selling the asset.
- Type of trades – You have to know the type of trades the crypto exchange offers. Don't use a derivatives exchange when you intend to buy and hold XLM for a while.
- Account verification – Verifying your account is essential if you are using centralised and P2P exchanges. It ensures the safety of your funds and personal data. However, it is not a necessary step when using decentralised exchanges.
- Reputation – To avoid getting scammed, kindly use Stellar exchanges that are reliable and have an excellent reputation.
- Security – Security should be at the top of your list when comparing exchanges. The ideal exchanges should have adequate security measures such as 2FA and SSL certifications on their sites to help protect your funds and data.
Advantages & Disadvantages of Using a Stellar Exchange
Should I Buy or Trade Cryptocurrency?
Buying or trading cryptocurrencies is entirely the choice of the trader or investor. Market knowledge and objectives usually determine a trader's decision. Leveraging the cryptocurrency's price volatility and making money daily makes you a trader while holding XLM for the long-term, and profiting from price increase means you are an investor.
Experts recommend learning about the cryptocurrency markets as you grow your investments. Having adequate knowledge of the markets will allow you to make smart investment decisions. The presence of derivative products like futures, options and CFDs (Contract for Difference) have changed the crypto space. They allow traders to profit from XLM trading without owning the cryptocurrency. The alternative XLM trading products you can access on derivative exchanges include:
- Options: These are contracts between buyers and sellers of XLM where the buyer has the right to buy the crypto asset at a later date and an agreed-upon price.
- Futures: This is another contract where a trader agrees to buy or sell XLM at a strike price at a specified time in the future. Similar to options, futures is a highly risky investment product but has a high reward.
- Contracts for Difference (CFDs): CFDs are financial contracts between buyers and sellers that allow users to profit from XLM without owning the cryptocurrency.
3 Steps to Using a Stellar Exchange
Step 1: Choose a Stellar Exchange
Start by choosing a reputable and reliable Stellar exchange. You can use the criteria explained above to find a suitable exchange. Compare the features of different exchanges and find the best one.
Step 2: Signing up with a Stellar Exchange
Open a trading account with the Stellar exchange of your choice. Complete the sign-up and account verification process to gain access to XLM and the other cryptocurrencies they offer to their users.
Step 3: Deposit the initial amount and start using the Stellar Exchange
After opening your Stellar trading account and verifying your account, you can fund it. Choose from the available payment methods on the exchange and fund the account using fiat currencies or cryptocurrencies. Most exchanges accept fiat or cryptocurrencies, and you can use the deposited funds to buy XLM on the platforms.
Stellar Lumens is a top cryptocurrency and can be traded on a wide range of crypto exchanges. Investors and traders can buy/sell XLM on numerous trading exchange, making it difficult to find the best ones. This guide looked at Stellar exchanges' basics and the metrics you can use to judge them. We also discussed the best Stellar exchanges in 2021 and the unique features they offer.
Frequently Asked Questions
Register with the exchanges, fund the trading account and use the funds to buy XLM or any other cryptocurrency available.
XLM can be easily moved from one platform or wallet to another.
Choosing a reputable and reliable exchange will save you from potential scammers.
ID verification is an important part of trading with centralised and P2P exchanges. It makes it easier for the platforms to protect your funds and private data.
Most cryptocurrency exchanges allow you to store XLM on their platforms.
Leaving your XLM on a crypto exchange isn't an advisable strategy if you are a long-term investor. However, day traders can store XLM on exchanges since they trade with the coins every day.
XLM isn’t available on all exchanges as some platforms only trade a certain class of cryptocurrencies.
XLm exchanges are legal in virtually all parts of the world but check your local laws before investing.