Gareth Johnson
Gareth Johnson
Updated on September 13, 2021

There are many different cryptocurrencies in circulation today. Most of us are familiar with Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), the world’s top three favorites, but there are other altcoins on the market that offer different benefits and unique use cases.

One such innovative blockchain network is Stellar and its native token lumen (XLM). This article aims to answer all of your questions about Stellar, how it differs from other altcoins and how to use it, what are the different ways to store its token, and what are the best digital wallets available on the market.

What Is Stellar?

Cryptocurrencies are digital assets of a decentralized nature that aren’t prone to inflation like government-issued fiat currencies such as the US dollar (USD) or Euro (EUR). They also offer more secure payments and lower fees compared to traditional payment mechanisms. After the launch of Bitcoin in 2009, many cryptocurrencies like Stellar itself popped out of the blue and took over the market.

Stellar is an open-source cryptocurrency network created by the Stellar Development Foundation. Its co-owner and creator Jed McCaleb has been involved in cryptocurrency projects for years and was one of the co-founders of Ripple (XRP), which served as a model for Stellar. For instance, both networks focus on improving cross-border payments across the globe.

XLM icon rocket heading to the moon on galaxy background

The Stellar blockchain network also has its own token called lumen that’s traded under the sign XLM. These lumens can be traded, purchased, and sold by users on the Stellar network that works very much like the Bitcoin network, i.e. as a blockchain-operated network. The name Stellar is sometimes used to refer to the lumen token as well, so don’t get confused if you see it listed as “Stellar (XLM)” on crypto exchanges.

The Federated Byzantine Agreement

The Stellar platform works similarly to other decentralized payment networks. It’s operated by decentralized nodes that run its distributed ledger and update it every 2 to 5 seconds. However, the main thing that distinguishes Stellar from Bitcoin is the consensus protocol.

Unlike Bitcoin, which uses the Proof of Work (PoW) consensus mechanism, Stellar uses the Federated Byzantine Agreement (FBA) instead. This protocol doesn’t require the whole network to verify transactions because its algorithm only uses portions of the network called quorum slices to validate transactions at a greater speed. 

The total supply of lumen has been hard-capped at 50 billion XLM, out of which more than 22.5 billion are in circulation. Originally, there were 100 billion XLM, but their number was later cut in half. This cut made the price of lumen jump a bit for a few months but quickly came down to its original price after the hype died down.

Types of Wallets to Store Lumen

Cryptocurrencies are not physical money, you can’t hold them in your hand or put them in your pocket. They are digital money so the wallets that are used to store them are also digital. Every wallet has its own public key that acts as a transaction card number and a private key that acts as a password that gives you access to the wallet. 

You have to make sure to keep your private keys somewhere really private, lest you end up with nary a coin in your wallet. Most of the digital wallets are available for Windows, Android, iOS, and some are even available on Linux and Mac OS.

Stellar lumen icon on white background

There are two main types of digital currency wallets with their own subcategories as you’ll see below.

Hot Wallets

Hot wallets are wallets that are constantly connected to the internet. You can use them for your day-to-day transactions in more or less the same way you would use a debit card. However, their convenience is also their main weakness. The fact that they store your keys online makes them an easy target for hackers. Some popular cryptocurrency exchanges like Coinbase, Kraken, Binance offer their own hot wallets where you can buy and store stellar lumens knowing that they employ state-of-the-art security measures.

Cold Wallets

Cold wallets are offline wallets known as cold storage and are basically hacker-proof. They are more secure than hot wallets due to the fact that they have to be physically stolen for you to lose your crypto. Even in those cases, most cold wallets have a recovery seed you can use to reclaim your assets.

For people that have larger amounts of cryptocurrency, a hybrid approach might be the best solution. This way, you can keep the majority of your crypto in a cold wallet, with only a small amount of crypto stored in a hot wallet for when you want to make purchases on the go.

Best Stellar Lumens Storage Wallets

There are many different cryptocurrency wallets for you to choose from, each with different features,  prices, and availability.

Ledger Nano S and Ledger Nano X

Both Nano S and Nano X are cold wallets designed by Ledger, a leading company for hardware wallets. The Ledger Nano S is one of the most high-end wallets you can purchase on the market. The price is hefty but it offers larger coin storage and an overall premium feeling. 

Hand holding ledger with market trend on background

It sports an O-LED screen for users to check on their transactions and can be connected via USB to a PC. It’s supported on Windows 7, Windows 10, Linux, and even as an extension on Google Chrome. The wallet can be connected and synchronized with Stellar Account Viewer to ensure the security of your private keys because they are not stored on the device but are tracked from the blockchain and operate through the wallet instead. 

The Ledger Nano X is the newest wallet from the Ledger company and a spiritual successor to the Ledger Nano S. It sports the same functions with more modern features such as better connection to the blockchain, better screen, and an overall better style and premium feel. Ledger Nano wallets are top of the line and the best option for hardware wallets on the market.

Atomic Wallet

The Atomic Wallet is a multi-currency mobile and desktop wallet that also offers storage for over 300 different cryptos. You can securely store, buy, or trade XLM through its slick user-friendly interface. This wallet is available for most operating systems including Windows, Linux, iOS, and Android.

With Atomic wallet, you have total access and control over your funds. It uses what’s called on-device intelligence and stores your private keys on your device or PC. Your assets are safe thanks to the unique password and the 12-word mnemonic seed phrase.

Stargazer Mobile Wallet

The Stargazer mobile and web wallet are available for desktop PCs and mobile devices. Stargazer is available for download on Windows, Linux, Mac OS X, and Android, but unfortunately, it’s not available for iOS devices. This wallet is designed to be simple to use with a friendly UI for new users. 

You can conduct instantaneous lumen transactions through the easy-to-use user interface and make use of its multiple accounts in multiple languages. Moreover, the wallet features a multisignature security system and allows you to create federated addresses.

StellarTerm Desktop Wallet

StellarTerm is a desktop wallet that can be downloaded on Windows, Mac OS, and Linux. This wallet is considered best for beginners in Stellar lumens trading due to its effortless usage and friendly user interface. It sports an integrated decentralized exchange and accepts credit card purchases. 

Stellarterm wallet homepage

Lobstr Mobile Wallet

If by any chance you’re looking for a simplistic and easy-to-use wallet, then look no further from Lobstr. All of the wallet features are very straightforward, from creating your account to conducting day-to-day transactions, everything is at the tip of your fingers. This wallet is available both on Android and iOS. Lobstr is also a beginner-friendly wallet sporting a smooth user interface that appeals to every beginner in the crypto ecosystem. 

Moreover, the wallet includes an XLM price converter for your convenience. Its safety features include two-factor authentication, fingerprint access, and PIN protection. It’s worth pointing out that this is a hot wallet, so it doesn’t have the same security levels as cold storage wallets do. Another drawback is that this wallet is a lumens-only wallet so if you want to trade other cryptos other than Stellar, you might be disappointed.

Stellar Desktop Client

The Stellar Desktop Client is a hybrid wallet meaning that it acts as both a hot wallet and a cold wallet based on whether it’s connected to the internet or not. The wallet is free to download and is very easy to use. It’s a great pick for beginners because it gives them a taste of both worlds of digital wallets.

The vulnerability of the wallets has to do with how protected the user’s computer is. If the computer doesn’t have a valid antivirus program, it might be prone to attacks from the internet and the wallet might be compromised. If the wallet is used without an internet connection, it will act as cold storage instead.

A Few Words Before You Go…

Cryptocurrency trading is without a doubt an interesting and profitable experience. Whether it’s Bitcoin or lumen, the principle is the same – you have to keep your assets safe at all costs. Always remember to buy crypto from valid, secure exchanges and keep your private keys all to yourself if you want to stay protected. Investing in a cold wallet is also a wise choice. All that remains now is to choose your desired wallet and buy the lumens you’ve always dreamed about.