Solana is inching towards closing the gap with Ethereum as it triples in value in roughly three weeks.
Seeing Ethereum’s only serious rival finding itself on the seventh spot among the world’s top 10 largest digital coins amid the rise of blockchain technology and cryptocurrencies, could we be witnessing a new Ethereum?
A year and a half after its mainnet beta launch, Solana is undoubtedly one of the hottest and most trending blockchains at the moment. Known best as the world’s first web-scale blockchain, Solana (SOL) boasts one of the fastest blockchain networks in the world, and thanks to its speed, it’s crushing its rivals with a throughput of 50,000 transactions per second.
Its native token, SOL, has found itself ranked seventh among the top cryptocurrencies in the world, with a market cap of over $41 billion. So, what is Solana? And could we see it replacing Ethereum?
Table of Contents
- 1 What is Solana?
- 2 Solana vs Ethereum
- 3 Solana’s Features
- 4 How does Solana Work?
- 5 Future of Solana
- 6 Where to buy it
- 7 Closing thoughts
What is Solana?
Like Ethereum, Solana is a cryptocurrency and a blockchain platform that hosts decentralized apps. It’s an open-source project developed by Solana Labs and maintained by its Geneva-based foundation.
SOL is a fourth-generation blockchain that aims to solve the blockchain trilemma — establishing a fast and scalable network without affecting its security or decentralization. It introduces eight core technologies that allow its transactions to scale proportionally with the bandwidth, resulting in some of the fastest transaction speeds and robust security in the industry.
Thanks to its impenetrable security and lightning-fast transaction speeds, Solana rivals Ethereum, the largest decentralized app hosting platform, by promising faster operation with minimal transaction fees.
Compared to Ethereum’s occasional $5,000 gas fees and roughly 15 transactions per second, Solana handles about 50,000 transactions per second with an average cost of $0.00025 per transaction, making it the fastest and the cheapest blockchain in the market.
To put everything into perspective, the platform’s tendency to handle that many transactions means that it can offer a decentralized platform for DApps with global scaling potential. What’s more is that, unlike Ethereum, you don’t have to worry about network congestion or high gas fees.
Solana’s high-performance blockchain provides a completely decentralized, secure, and highly scalable infrastructure that is necessary for Decentralized apps and marketplaces.
Solana vs Ethereum
Although SOL was first conceived in 2017, it was only launched last year by the Solana Foundation. Ethereum launched in 2015 as an open-source blockchain platform that hosted Decentralized apps.
Ethereum was the first of its kind, heralding a new era of finance for the world. One of the innovations introduced by Ethereum was Decentralized Finance (DeFi), where anyone with an internet connection and a smartphone could access an array of diverse financial services and products.
However, the Ethereum network could barely handle the rise of DeFi and the increasing number of people joining the crypto space, which led to network congestion, high network fees, slower transaction confirmation times, and a slew of other problems.
On the other hand, it solves many of the drawbacks Ethereum had, notably its ability to scale and its skyrocketing network fees. Solana solved these drawbacks with its unique consensus architecture and technology to drastically reduce confirmation times and handle significantly more transactions.
Compared to Ethereum’s 15 transactions per second, Solana can handle about 50,000 transactions per second. What’s interesting is that it can handle a higher number of transactions per second than both VISA and Mastercard combined, something almost every cryptocurrency project is struggling to achieve.
Its potential to handle that many transactions for little to no fee enables the project to dominate the DeFi space. As of September 2021, SOL supports billions of dollars’ worth of assets. It’s home to some of the most popular NFT marketplaces, DEXs, and lending apps. And on top of it all, it has issued almost a billion dollars’ worth of USD coins.
To understand how the platform works, we need to understand its architecture. Below are the eight innovations that helped Solana establish itself as the first web-scale blockchain.
1) Proof of History (PoH)
Proof of History protocol is a cryptographic clock that allows nodes on the Solana network to collectively agree on the time order of the events on the chain without interacting with each other because each node has its own clock. What PoH does is that it helps the network to efficiently keep track of the order of events that happen on the chain.
2) Tower BFT (Byzantine fault tolerance)
Optimized for PoH, Tower BFT is Solana’s version of pBFT. It leverages the cryptographic clock to reach an agreement without going through every node’s messages, which significantly improves transaction speeds.
3) Gulf Stream
The Gulf Stream mechanism is what helps SOL handle 50,000 transactions per second. It allows network validators to execute transactions ahead of time, significantly reducing confirmation times and memory requirements.
The Turbine mechanism essentially breaks the data down into smaller increments — making data transfer significantly easier and faster among the nodes. This mechanism helps the platform address bandwidth-related issues and increase the network’s overall transaction processing speeds.
In a nutshell, Sealevel enables concurrent transactions on the same chain, resulting in a faster network runtime.
Pipelining allows quick transaction information to be replicated and validated across network nodes more quickly.
Cloudbreak is a data structure that is required for network scalability and throughput. It organizes the account database, allowing concurrent reads and writes between the network’s threads.
Solana’s validators outsource the data to a network of nodes called Archivers. Archivers are essentially basic computing devices that the network can leverage for data storage.
How does Solana Work?
Solana is a very powerful and high-performing permissionless blockchain with a network of around 1000 distinct nodes that generate a throughput of 50,000 transactions per second while running with GPUs. The network achieves this due to its unique consensus architecture.
It uses the Proof of Stake (PoS) consensus protocol, a much more environmentally friendly protocol than the Proof of Work (PoW) consensus protocol used by Bitcoin and previously by Ethereum.
Solana leverages all of its core features such as the Proof of History, Tower BFT, Gulf Stream, Turbine, and more to drastically reduce processing power for transactions and optimize the network’s resources usage for better scaling.
Future of Solana
Solana is still a young project, with its mainnet beta launching last year in March. Nonetheless, Solana’s native coin, SOL, has already risen to the top ten cryptocurrencies in terms of market capitalization. Despite providing full functionality to its users, the mainnet is still officially in beta, indicating that the team is still working to improve the network’s features and stability.
With partners such as USDC, Chainlink, Kin, BSN, Exodus, and Serum, a decentralized exchange that surged 1,500% only 12 hours after its launch, the network already hosts several great projects. With over 250 projects in the ecosystem, more developers are choosing to build on Solana because its blockchain offers some of the lowest latency and gas costs on the market — two of the most important factors for decentralized applications.
With the network’s speed, low-cost transactions, and industry-leading throughput, it’s not surprising that the Solana ecosystem will attract more projects in the future, promoting global blockchain adoption.
Where to buy it
If you’re interested in getting your hands on it, you can get SOL on Binance, Kraken, Coinbase, and many other popular exchanges.
In terms of volume, Binance is the largest platform for SOL-USD. Transfer some cash to your Binance account, buy your SOL tokens, and transfer it to your preferred wallet.
Although Binance offers slightly lower fees, you can also get your hands on Solana via Kraken, which is known for its high-security standards.
Lastly, if you’re a U.S. or U.K. citizen, then Coinbase is the best place for you to start investing in Solana, as it’s one of the oldest and most established cryptocurrency exchanges out there. Moreover, since Coinbase is a publicly traded company, you can rest easy knowing your crypto funds are in good hands.
Solana shows a lot of promise both as a technology and an investment. Considering Solana is significantly faster and cheaper to operate than Ethereum proves that it’s highly likely to be accepted as a great investment.
The growing prevalence of NFTs and smart contracts gives blockchain technologies like Ethereum and Solana a very bright future in the market.
While Ethereum has the advantages of being first, Solana could very much prove itself to be faster and better.