Solana is the fastest blockchain in the world and the fastest growing ecosystem in crypto, with over 400 projects spanning DeFi, NFTs, Web3 and more.
- Price$ 49.28
- Marketcap$ 16.71 B
While many folks in the cryptocurrency world have heard of Bitcoin and Ethereum, Solana is a lesser-known project. Founded on the idea to increase transaction speeds for everyday use, Solana has been developed for years to solve some of the problems the bigger cryptos have.
However, how does Solana offer these solutions? Do those solutions make Solana a wise investment for the future? The proof is in their history.
What is Solana (SOL)?
Solana is a blockchain platform similar to Ethereum. Solana focuses on providing a platform on which decentralized apps, or dApps, can be produced. The platform tries to offer faster transaction times and lower transaction fees compared to Ethereum.
The Solana blockchain is its own standalone blockchain. Unlike some other projects that create tokens using another blockchain like Ethereum, Solana validates and circulates its coins using its blockchain.
Thus, the infrastructure supporting Solana is related to Solana itself, rather than another blockchain or platform.
As a user of the platform, you use the Solana coin (SOL) to interact with the different apps on the platform. The SOL coin is the currency for the platform, which the apps accept as payments or validation for the different functions they serve.
Solana currently has 400 projects on its platform, with that number growing more and more over time.
Who Are The Founders of Solana?
Anatoly Yakovenko and Eric Williams founded the Solana project back in 2017. The Solana name comes from the name of a beach in San Francisco that these two founders, as well as another friend named Greg Fitzgerald, used to surf at.
Anatoly and Eric were both workers at Qualcomm, Inc., a computer chip manufacturer based in California. Anatoly drafted and wrote a white paper in 2017 describing a variation of the Proof of Stake (PoS) method of validating transactions called Proof of History (PoH) meant to solve the timing issues that can happen with PoS blockchain validation techniques used at the time.
Since then, the Solana project has developed into two entities: the Solana Labs in San Francisco and the Solana Foundation in Geneva, Switzerland.
Solana Labs is where the development of the Solana blockchain and environment takes place. Meanwhile, the Solana Foundation acts as a non-profit organization dedicated to the growth and security of the Solana platform.
How Many Solana Coins Are in Circulation?
Currently, there are 297.4 million Solana coins in active circulation, which is about 59% of the total amount of Solana that has been minted so far.
388.7 million Solana are actively staked or used in validating the blockchain’s transactions. These coins sit in masternodes, where they are used as proof of validation for transactions on the blockchain to confirm coins are moving on the blockchain.
In total, Solana has a current market cap of $2.7 billion. This placement makes Solana the seventh-largest cryptocurrency by market cap, putting it behind big names like Bitcoin and Ethereum but ahead of many stablecoins like USDC.
How is the Solana Network Secured?
The Solana network is secured using a variation of the Proof of Stake consensus model. In this validation model, people with the Solana coins commit those coins to hardware running Solana transaction masternodes.
Once a masternode reaches its maximum capacity for coins, that node is then authorized to confirm transactions on the Solana blockchain.
Proof of Stake came into being as a solution for the issues with Bitcoin’s Proof of Work (PoW) model. In PoW, a miner, or someone running hardware dedicated to opening new blocks on the blockchain, confirms transactions and moves the blockchain forward with processing power.
This process can be slow and use a lot of energy. With PoS, miners commit coins or tokens instead of hardware.
This model allows for transactions to confirm faster and with less energy, at the cost of reduced decentralization if the masternode can only be run on expensive computers. In Solana’s case, the hardware needed to run a masternode is much higher than other PoS blockchains.
Proof of Stake also removes the possibility of a Tragedy of Commons event from happening on the blockchain like what can happen on a Proof of Work model.
In this event, someone gains control of at least 51% of the blockchain through hardware power and then starts creating fraudulent transactions that give them more funds than they otherwise should.
Since this individual now controls a majority of the blockchain, no one can stop them and the ecosystem tanks.
Proof of Stake makes it so, if someone controls 51% of the blockchain, they also have to control 51% of the currency. Tanking the blockchain also takes the value of their token, harming their finances at the same time.
What Makes Solana Unique?
What sets Solana apart is their Proof of History (PoH) staking model. In this model, transactions on the Solana blockchain have their sequential order validated first before the transaction is fully confirmed.
If you can verify the order of the transactions first, then you can prevent anything fraudulent from happening on the chain.
Because the order is much easier to handle than transaction and address data, Solana can handle thousands of transactions per second. Since it has an increased transaction capacity compared to Ethereum or Bitcoin,
Solana has a lower fee associated with its transactions. Between this increased processing rate and reduced cost, Solana becomes an attractive platform to develop for and use for financial transactions.
Also, because of its association with Solana Labs, the Solana ecosystem is under constant development. While Solana Labs can’t force updates, they can offer changes to the ecosystem for the validators to vote on implementing or not.
Should I Invest in Solana?
Because of its rivalry with Ethereum as a platform and currency, Solana makes for an interesting hedge against Ethereum. In their current states, Solana and Ethereum both have reasons to exist.
Ethereum offers much more in the NFT space, while Solana makes for a much cheaper option to move funds in a cryptocurrency ecosystem. Check out what both of these platforms offer and see which one you believe will win out in time.
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I’m Donny. I’m a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.