Frequently asked questions
XLM, also known as Lumens, is the native cryptocurrency of the Stellar network, which is a blockchain-based platform designed to enable fast, affordable, and secure cross-border payments. It aims to connect financial institutions, businesses, and individuals, especially in regions with limited access to traditional banking services.
Purpose:
XLM acts as a “bridge currency” to facilitate quick and low-cost transactions between different fiat currencies (like USD, EUR, and JPY).
It also powers the Stellar network, covering transaction fees and ensuring smooth operations.
Fast and Cheap Transactions:
Transactions on Stellar settle in 3-5 seconds.
Costs are extremely low, often a fraction of a penny.
Focus on Financial Inclusion:
Stellar aims to provide affordable financial services to unbanked and underbanked populations, especially in developing countries.
Decentralized and Open Source:
Stellar is governed by the Stellar Development Foundation (SDF), a non-profit organization.
The network is decentralized, meaning no single entity has control over it.
Cross-Border Payments:
XLM enables instant currency conversion without needing pre-funded accounts or intermediaries.
Example: If Alice in the U.S. wants to send money to Bob in Nigeria, Stellar converts USD to XLM, sends it across the network, and then converts XLM to Nigerian Naira for Bob.
Anchors and Issued Assets:
Anchors are institutions (like banks) that provide fiat-to-crypto conversions on Stellar.
Users can deposit money (e.g., USD) with an anchor, receive a digital version of the currency on the network, and transfer it globally.
Accessibility:
Designed for everyone, from banks to individuals with basic smartphones.
Micropayments:
XLM supports microtransactions, making it ideal for remittances and small business payments.
Partnerships:
Stellar has partnered with organizations like MoneyGram, IBM World Wire, and various financial institutions to expand its reach.
Cross-Border Remittances:
Individuals can send money internationally at a fraction of the cost compared to traditional methods.
Micropayments:
Enables small, efficient payments for online content, tipping, or in-app transactions.
Token Issuance:
Businesses can issue digital tokens (like stablecoins) on the Stellar blockchain.
Smart Contracts:
While not as robust as Ethereum, Stellar supports basic smart contract functionalities.
Remittance Companies: To lower the cost of international money transfers.
Developing Nations: For affordable access to financial systems.
Crypto Enthusiasts: As an investment or tool for secure, quick transactions.
In a Nutshell:
XLM is a cryptocurrency with a mission to make money move faster and cheaper across borders. It’s particularly focused on financial inclusion, targeting those who lack access to traditional banking systems while still appealing to businesses and institutions looking for efficient payment solutions.