Intro To How To Buy Stellar (XLM) In Canada
If you want to know how to buy Stellar (XLM) in Canada, you’re in the right place. Of all the altcoins currently trading on the open market, Stellar is easily one of the more exciting projects investors and enthusiasts alike are looking at. Stellar essentially aims to build a peer-to-peer payment system that functions faster and more efficiently than Bitcoin’s. Many altcoins promise that. After all, there are over 2,500 different digital currencies currently on the market according to coinmarketcap.com. But seriously, Stellar is just different.
Consider this. Many cryptocurrency investors think that a project like Ripple is a good investment because it offers a lot of the main features and benefits of many other cryptocurrencies, yet the project is backed by a centralized company doing business with central banks. Thus, supporters of Ripple think that if something really bad happens in the market and cryptocurrencies go belly up, Ripple will still make people rich because it’s tied to institutions. The same ones that respected grandfathers like Bitcoin are trying to get away from.
Stellar is often compared to Ripple, but it’s not because Stellar serves central banks. It’s because the coding structure for Stellar’s blockchain is based on the structure Ripple implements. The coding is so similar, backers of both projects are constantly debating the merits of their weapon of choice at the expense of the other.
No need to add fuel to that fire here though. Instead, learn about Stellar’s mission and value proposition. If it becomes clear that some altcoins out there do indeed serve the world better than Bitcoin can, Stellar might just become the king of the hill and have lots of traders in Canada buying in.
What is Stellar…and what are Stellar Lumens?
Like Bitcoin, the Stellar network is a decentralized payment system operating on top of a blockchain that keeps track of who owns what. It aims to cut out the middleman. Specifically every institution that takes part in the correspondent banking system. Think wire transfer companies like MoneyGram or Western Union. They charge significant fees to end users and can take a long time to transfer money across borders.
Stellar’s network allows both banks and individuals to communicate directly with one another, so there’s no need to have the international remittance services facilitate the process. Just removing those stakeholders makes things faster and more efficient.
Stellar Lumens are the universal tokens that make exchanging value on the Stellar network global. Someone looking to send a friend in Columbia money can make a transfer with Canadian dollars and know that the recipient will get pesos. The best part is, transactions on the Stellar network cost as little as one millionth of a penny. Literally almost nothing. On top of that, it only takes a maximum of five seconds to complete a transaction.
Bitcoin vs. Stellar: What Makes Them Different
Stellar wants to be faster and cheaper than Bitcoin. The average transaction fee via the Bitcoin blockchain is $1.63 USD and it takes almost 10 minutes to validate an exchange. As noted in the section above, Stellar is winning the fight in both the speed and cost department. So why is that?
In the blockchain world, all nodes in a network must reach a consensus before a transaction is deemed valid. Bitcoin challenges nodes to solve cryptographic puzzles as a way to prove the validity of transactions. The nodes earn a reward for solving those equations. In the early beginnings of Bitcoin, a participant could do this using only a laptop. Today, the perpetually increasing difficulty of solving these cryptographic puzzles makes it varies expensive to earn bitcoins and makes the network slower.
Stellar on the other hand uses the Stellar Consensus Protocol. All Stellar Lumens are pre-mined, meaning there is no need to solve puzzles to validate transactions on the blockchain. There is no incentive for nodes on the network and the release of Stellar Lumens is totally independent of the consensus protocol. This saves both time and energy, but it also means there still has to be a way for nodes on the Stellar network to reach a consensus that validates transactions accurately. Every blockchain, regardless of its approach, must solve a problem very common to all kinds of decentralized networks. That problem is known as the Byzantine Generals Problem.
The Byzantine Generals Problem
Picture a war taking place in medieval times. Several groups of soldiers are defending a castle. A different general leads each division of soldiers. The groups must communicate between one another, but the common medieval communication style of shouting across and around the castle walls leaves many instructions lost in translation. Some soldiers in the group are willing to turn on the castle to take a chance at stealing treasure or overthrowing the king. Any and all breakdowns in communication can result in absolute catastrophe. That’s the Byzantine Generals Problem.
How does that relate to decentralized blockchains? Well in a blockchain, nodes validate transactions. But since public blockchains are for everyone, there’s no guarantee that every node wants to do good by the network. Some may want to spam it or try to duplicate or hack the network. Every blockchain has to be able to reach consensus without knowing for sure which nodes are good and which or not. The only way to make a decentralized database safe to use is to find a way to reach consensus without knowing which nodes are up to no good.
The Stellar Consensus Protocol addresses this based on principles surrounding flexibility and speed. As outlined in Stellar’s whitepaper, those principles are as follows:
- Decentralized control: there are no restrictions as to who can be a validator on the network.
- Low latency: consensus is reached in seconds.
- Flexible trust: participants decide which nodes to trust with no restrictions.
- Asymptotic security: digital signatures and hash families are organized in a way that defends against high-level computing power.
Stellar still maintains security, flexibility and trust as key principles without many of the issues that plague Bitcoin. This means that at the moment, Stellar is the more scalable blockchain. That doesn’t mean however that Stellar is without its pitfalls.
The Downside of Stellar
Since we’re on the topic of consensus algorithms, here are some of Stellar’s limitations:
- There is no mechanism allowing users to mine coins. They can only be acquired in transactions.
- There is no incentive for nodes on the network to be do-gooders.
- There is nothing telling nodes who to trust, meaning they can trust the wrong party and negatively impact consensus.
Technical lingo aside, Stellar faces many of the challenges that other altcoins face when it comes to adoption. That includes the fact that the average investor isn’t going deeper into the rabbit hole beyond Bitcoin. In fact, the price of altcoins is declining faster than the price of Bitcoin at the moment.
Another challenge facing Stellar is the fact that Bitcoin core developers tend to take the best processes found in altcoins and implement them on the Bitcoin blockchain. Again, that’s a challenge every altcoin is facing as the race to innovate the fastest and most useful blockchain evolves.
Stellar’s Long-Term Outlook
Stellar is already responsible for 60% of all cross-border payments in the South Pacific. The banking network includes 12 different “currency corridors” that cover countries like Australia, New Zealand, Tonga and Fiji. Just as important as these innovations is the fact that Stellar is teaming up with IBM to implement all of this. Cryptocurrency prices tend to spike upwards when a major partnership is announced. While this particular partnership is already running two years strong, it proves that Stellar has a real-world reason to exist. It’s not just a whitepaper. Investors agree. Stellar is currently the 10th most viable cryptocurrency in the world with a market capitalization of over $1.2 billion USD.
What’s also important to keep in mind is that while most Bitcoin maximalists don’t believe any alternative coin is necessary for exchanging value across international borders, they more than likely don’t hate Stellar as much as they hate Ripple. With Bitcoin dominance nearing 70% at the moment, Stellar may actually be the altcoin worth holding over XRP tokens once the altcoin blood bath is over.
Other Projects Similar to Stellar Lumens
We already covered the similarities between Stellar Lumens and Ripple. The coding structure is very similar but Ripple serves central banks while Stellar Lumens wants to cut them out.
Other projects that one might consider either direct or indirect competitors to XLM include OmiseGo. OmiseGo released its mainnet in 2017 right before the Bitcoin mania that took the world by storm. OMG aims to make paying for things seamless, meaning that users can choose to pay with any number of fiat or cryptocurrencies. OMG tokens are ERC-20 compliant meaning they’re associated with the Ethereum blockchain. OMG is a year into a partnership with McDonald’s in Thailand.
Nano is another competitor worth considering. The project is formerly known as RaiBlocks and aims to offer instant transactions with zero fees. Buyer beware though, Nano’s blockchain received a lot of heat due to its association with the exchange Bitgrail and a hack that saw $150 million go missing last year.
Buying Stellar Lumens in Canada (Bitbuy)
As of September 3rd, 2019 investors can buy Stellar Lumens instantly using Interac e-Transfer. Signing up for an account with Bitbuy is easy:
- Create a username and password.
- Verify credentials via email.
- Initiate Know Your Client verification. Bitbuy has automated KYC, or you can choose to be manually verified. This means uploading pictures of government issued identification through a smartphone or webcam and waiting a few business days for approval.
- In the meantime, set up two-factor authentication through text message or Google Authenticator.
- Fund your account with CAD via an Interac e-Transfer
- Click ‘buy’ Stellar Lumens (XLM) from the Bitbuy Express main page, or execute a limit order on Bitbuy Pro Trade.
- Enter the number of Stellar Lumens to be bought and click buy to confirm the purchase.
Buying Stellar Lumens with Existing Cryptocurrencies
Investors looking into purchasing Stellar Lumens are probably well-versed in Bitcoin and the basics of blockchain technology. Anyone who considers themselves a seasoned veteran may not need to worry about trading cash for coins.
Trading bitcoins or any other cryptocurrencies for Stellar Lumens is available here at Bitbuy as of September 2019. Sign up for an account by registering a username and password and submit government issued identification for KYC purposes. Once approved, confirm banking information and home address details in order to set up direct debit authentication. This allows serious investors to deposit larger sums of money onto the Bitbuy exchange in a single transaction. Direct debits usually take 3 to 5 business days to appear on a user’s account.
Now it’s time to trade. Since exchanges typically don’t allow users to trade for most altcoins using cash directly, trading for Stellar Lumens likely means trading Canadian dollars for Bitcoin, and then placing a separate trade for Stellar Lumens.
Creating orders on two different currency pairs are required to acquire XLM tokens:
Selling Canadian dollars means navigating to the CAD/BTC trading pair and placing a buy order for Bitcoin. The buy order can be a market order or a limit order. Placing a market order means the trade will execute as soon as there is a seller on the other end of the transaction willing to accept Canadian dollars in exchange for their bitcoins. Placing a buy limit order means triggering an order only when the price of Bitcoin goes above a certain threshold. If that threshold isn’t reached, the order doesn’t trigger.
With bitcoins in hand, buying Stellar Lumens follows the exact same process, only this time the user needs to change the currency pair to BTC/XLM. Once all of the transactions are settled, coins can be withdrawn to a hardware or cold storage wallet. While it is certainly not against the rules to leave tokens on an exchange, it’s strongly recommended to transfer them offline where hackers can’t steal them. Viola! That’s how to buy Stellar in Canada.
Whether or not the project will take off to the moon is anybody’s guess. Current market conditions show Bitcoin is still the world’s most popular cryptocurrency. That said, Stellar’s protocol has merit, and heavy hitters continue to lineup. Perhaps there is reason for optimism