As is the case with most currencies, to truly understand a coin one must first know where it is used - and what purpose it holds.

What is $XLM?

XLM represents the currency or ‘native asset’ of an open-source, distributed payments infrastructure known as Stellar.

XLM is similar to BTC (Bitcoin) — a digital token of exchange that works through blockchain technology. Unlike BTC, however, XLM has a unique name that distinguishes it from the network it runs on and from the organization that created it.

Currently, Lumen is the 20th most popular cryptocurrency in the world with an approximate market cap of $662,000,000.

XLM - STELLAR

What is the history of $XLM?

To know the history of $XLM, lets dive into the story of Stellar. Founded in early 2014 by Jed McCaleb and Joyce Kim, Stellar was originally a hard fork in the Ripple protocol.

After making a few changes to the all-important consensus code, the network forked creating “Stellar-core.”

Stellar Development Foundation (SDF) was formed around this time and an updated version of the protocol featuring a new consensus algorithm was released.

The aim of stellar is to connect people, payment systems, and banks.

The original asset on the Stellar network was referred to as “stellars” (launched with 100 billion units in 2014); the name was changed to Lumens (XLM) following the 2015 upgrade.

Why does Stellar use XLM in its network?

The Stellar system uses its built-in currency for 2 major reasons.

  1. Lumens keep the XLM ecosystem free from spam. Each transaction has a tiny fee (0.00001 XLM) associated with it. This fee works as a preventive measure against nefarious users flooding the network (a DoS attack). Lumens function as a security token that eliminates this large-scale transactional attack.
  2. Lumens allow for multi-currency transactions. They enable transactions between currencies that don’t have an existing market or one that’s difficult to access. This is only possible when there is a liquid market between XLM and each currency involved.
XLM Network

Future plans

XLM is a leading digital asset in the rapidly populating field of cryptocurrencies. It appears to be a necessary solution for the developing world, but has been flying under the radar of most financial watchdogs in the past few years.

Major firms like Deloitte, Stripe and, most notably, IBM have created partnerships with Stellar. A big step in the right direction.

We'll only know its future as cryptocurrencies see wider adoption in 2019.