As Ethereum’s demand, which is the most widely used blockchain, has increased this year, other projects have evolved in an attempt to compete with Ether. Among these projects, Solana cryptocurrency which is a blockchain that has a native crypto known as SOL.
Let us see why this crypto is from other altcoins, and how this poses a threat for Ethereum, the second largest crypto in the world. Here is a Solana crypto review.
What Is Solana Cryptocurrency?
Solana is a blockchain platform that is created to host scalable, decentralized applications. This crypto was developed in 2017, and it is an open-source project that presently operates by Solana Foundation that is based in Geneva, while its blockchain was constructed by San Francisco-based company Solana Labs. Solana is much quicker in respect to the number of transactions it can conduct and has considerably lower the fees on transactions compared to its rival blockchains like Ethereum.
The digital currency that operates on the Solana blockchain and is also named Solana (SOLUSD) and with the token symbol SOL has increased to almost 12,000% as of now in 2021, and with a market cap of more than $66 billion, this crypto is the fifth-largest cryptocurrency by this initiative.
Decoding The Concept Of Solana
Now that you know what this Solana cryptocurrency is, let us talk about the technologies and also the concept that is associated with this crypto.
Proof Of History Concept
The co-founder of Solana, Anatoly Yakovenko released a whitepaper in 2017 November illustrating the PoH (Proof of History) idea. Proof of History is a proof that is used for verifying passage and order of time among events, and it is employed to encode trustless passage of time into a digital ledger.
In the published whitepaper, Yakovenko states that the blockchains that were then available publicly did not depend on time, with every node in the network depending on its own local time without any idea of any other participants’ clocks who are there in the network. The lack of a reliable source of time, which is a standardized clock, implied that when a message timestamp was used to reject or accept a message, there was no assurance that every other user in the network would choose the exact same option. PoH gets past this hurdle, with each node in the network able to depend on the recorded period of time in the digital ledger on the trustless basis that is the prime thing to the functioning of the blockchain.
Technology Behind The Solana Cryptocurrency
The aim of the architecture of Solana is to illustrate that there exists a section of software algorithms that, when employed in combination to apply a blockchain, discards software as an execution bottleneck, allowing transaction output to increase proportionally along with network bandwidth. The structure of Solana satisfies all three wanted attributes for any blockchain: secure, scalable, and decentralized. Solana’s structure illustrates a theoretical upper limit of 710,000 transactions every second (tps) on a conventional Gigabit network along with 28.4 million tps on a 40-Gigabit network.
The blockchain of Solana cryptocurrency functions on both a Proof of Stake (PoS) and Proof of History (PoH) model. PoS allows validators to verify their transactions that is based on how many tokens or coins they hold; PoH on the other hand enables those transactions to be time stamped and get verified very quickly. As per Solana price prediction, it is going to be $600 by the end of 2025.
Solana Vs Ethereum: A Quick Comparison
Even though Ethereum is older and more prominent, Solana is a viable competitor to Ethereum. One reason for this is because the fundamental capacity of Ethereum is restricted for global scale operations because of the small number of transactions every second that it supports. On the other hand, Solana is capable of supporting tens of thousands of transactions every second.
SOL also has significantly lower fees on transactions and one of the major complaints about Ethereum is its sudden high fees on transactions. Still, Ethereum has its own benefits. It has more users, applications, and is more stable than Solana.
Risks Associated With Solana Cryptocurrency
Generally, financial enthusiasts warn to invest only as much as one can afford to lose in digital currencies because of their high risk and fluctuating market conditions. Solana to be precise holds its own risks. First, it has been comprehended considerably in a short span of time. Just like with other cryptos, the possibility for large price fluctuations should be taken into account and assumed before investing. As quickly as it attains a new high, it could again go back down.
Critics are also concerned about the decentralization of Solana after it experienced a 17-hour outage in September when the network could not process transactions. The developers of Solana later blamed it on something called “resource exhaustion.”
The Bottom Line
Similar to other cryptos, Solana is a digital currency that operates in its own blockchain and functions with PoH and PoS. Its functionality poses a threat to one of the most popular cryptos, Ethereum. This is also known as “Ethereum Killer”. In the above article, we have spoken about the Solana cryptocurrency and everything you need to know about this crypto before you start to make any investment.
Frequently Asked Questions On Solana Cryptocurrency
The fundamental capacity of Ethereum is restricted for global scale operations because of the small number of transactions every second that it supports. On the other hand, Solana is capable of supporting tens of thousands of transactions every second. So it is a good investment option for 2021 and upcoming years.
Solana is a blockchain platform that is created to host scalable, decentralized applications. The digital currency that operates on the Solana blockchain and is also named Solana (SOLUSD) and with the token symbol SOL has increased to almost 12,000% as of now in 2021.