Solana (SOL)

Solana has taken the crypto world by storm as a fast blockchain capable of smart contracts. But what is Solana?

Developers can build decentralized apps on Solana, just like they can with Ethereum. Solana is currently much, much cheaper than Ethereum, with network fees being a fraction of the cost. Perhaps it’s Solana that will be the Ethereum killer.

Unlike Bitcoin which uses a proof of work algorithm or Cardano which uses proof of stake, Solana uses proof of history.

Solana is super quick

Simply put, proof of history is a hybrid of proof of work and proof of stake. It uses timestamps to validate transactions on the network. Solana is the first blockchain to implement this type of consensus model. Remember, all the computers that keep these blockchain networks running must “agree” that transactions are valid (no duplicates etc) before they are added to the blockchain. This is known as consensus.

Proof of history is highly efficient. It makes Solana super quick, allowing the network to process 50,000 transactions per second. To compare, Bitcoin processes seven transactions per second, Ethereum can process 30 transactions per second, and Visa is capable of processing 5,000 transactions per second.

Creating an NFT on Ethereum can cost hundreds of dollars in fees due to the Ethereum network being highly congested. It can only process 30 transactions per second, which is causing the fees to skyrocket. Creating an NFT on Solana, however, costs mere cents on the dollar, because the network can process thousands of more transactions than Ethereum.

Solana Downsides

The downside to proof of history is that in order for someone to participate, their computer setup must meet strict requirements. Unlike proof of stake where anybody who owns the cryptocurrency can stake it to help run the network, proof of history limits the number of people who can participate. Some people argue that Solana is therefore not decentralized enough.

Is Solana the Ethereum killer?

Despite decentralization concerns, Solana has risen in price significantly lately and is one of the top 10 most valuable cryptocurrencies.

Investors see great potential in Solana’s proof of history innovation. If Ethereum cannot implement Ethereum 2.0 soon, then more and more developers might start using Solana instead. Solana already has many decentralized projects built on it, and that number continues to grow.