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If you’ve been missing out on Ethereum’s recent surge, you might want to consider this new hottie in town.
In today’s post, I’ll discuss Solana, a cryptocurrency that’s creating waves in the crypto world, and its SOL token.
I’ll go through every single detail regarding this coin. So go ahead and read the whole thing to see whether this is something you want to include in your portfolio or not.
Before I begin, if you want to learn more about cryptocurrencies and related topics, you can always visit my blogs and read anything you want to know about them.
What is Solana
Solana is a decentralized blockchain that supports smart contracts and decentralized apps and is open source. It was started in the year 2017 by a man named Anatoly Yakovenko.
Solana is based on the proof of stake protocol, which is used in conjunction with proof of history. Proof of History helps to solve the scalability and time issues associated with reaching consensus on transaction orders.
What is Solana (SOL) token and how it works
Solana SOL is the native currency of the Solana blockchain. The SOL token is used to validate the network transaction. It’s also used to keep the network safe, and it’s used for staking.
Solana’s operation is a little complicated. It is not as straightforward as it is with Ethereum or Cardano. Solana is used in combination with the Proof of History (PoH) concept. It also created its own innovations, such as the Gulf Stream, Turbine, Byzantine, and many others.
So, in order to demonstrate how Solana works, I’ll provide an example. Assume that there is a decentralized college with highly qualified professors but no established principle.
So, Professors, are the nodes, and Principal is the leaders who validate the transactions. Let’s imagine that each professor is an expert in their core subject area and that all of the professors are equally knowledgeable in all of the College’s departments.
Departments have been divided into D1, D2, D3, D4, and each department has its own set of teachers. Now, consider how a system operates in a decentralized college or, for example, in Solana, a decentralized blockchain.
As a result, each professor is allocated to be the principal for 1.6 hours at a time, during which time he must complete all of the assigned documentation from all other departments.
|pic credit: Google Images|
Why did I choose 1.6 hours? It’s because a block in the Solana blockchain takes 400 milliseconds to construct, and each appointed leader or principle is entrusted with rotating four blocks at a moment. Let’s take an example.
He’s working on four pieces of paperwork at once, which takes 1.6 seconds in the blockchain, which I’ve converted to 1.6 hours in this case. It’s only for the purpose of understanding.
The idea is that the selection process is quite random, which means that the selection of the leader, or which professor will become the next principle, is quite random.
Every Professor, on the other hand, has a separate tablet that contains a list of ten upcoming Principals or leaders for the current period.
Now that this information is available to all other principles or departments, each department can deliver the papers ahead of time to speed up the process.
It’s known as Gulf Stream in Solana, and it’s utilized for transaction caching. This is the one that helps in network speed improvement.
Solana will be able to process 50,000 transactions per second as a result of this. Now, whenever the in-charge principal completes and signs the paperwork.
|pic credit: Google Images|
Each department can conduct its own processes in parallel without causing confusion because every activity is time-stamped. In the Solana language, this is referred to as Sealevel.
Now that everything is in action, each professor is responsible for storing and reviewing the papers. He must ensure that the Principal is carrying out his responsibilities effectively and without delay.
The Solana blockchain functions in this manner. Now that you know how the Solana blockchain works,
Ethereum versus Solana
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Is this the next Ethereum? Solana was launched in March of 2020, while Ethereum was introduced in July 2015. The second topic is total supply. Solana has a 500 million SOL token supply, whereas Ethereum has an unlimited supply.
Of course, you’re limited to 18 million ETH tokens per year. Then there’s TPS, which stands for transaction per second. Solana can handle 50,000 transactions per second, which is the highest of any blockchain at the moment.
Ethereum currently supports just 15 transactions per second, but following the upgrade, it will be capable of 1000 or more.
The protocol comes next. Solana uses the POS protocol, which is a proof of stake protocol that is assisted by PoH, which is a proof of history protocol that I mentioned previously.
The next version is Ethereum 1.0, which supports POW (proof of work) and will most likely switch to a POS mechanism following the upgrade.
After that, we’ll discuss the Storage Wallet. Solana is exclusively available on the Ledger Nano S, whereas Ethereum is supported by all major cryptocurrency wallets.
Solana has a medium level of popularity, whereas Ethereum has a very high level. You can see this by comparing their market capitalizations. That’s all there is to it when it refers to the differences between Solana and Ethereum.
Benefits and Drawbacks of Solana blockchain
The Benefits are very obvious, with high transaction speed being one of them. Solana is the only blockchain that can process transactions at a rate of 50,000 transactions per second.
There is no other blockchain that comes close to this figure. Second, from the founders to the founding members, it has a strong team. It has a solid team with a strong technical foundation.
Third, it is well-funded, indicating that it is financially sound. According to Crunchbase, the company has received $338 million in investment from 28 different investors. You may get an indication of how financially stable this project is by looking at this.
Then there’s a partnership. Solana has a well-known relationship with FTX, which is working on the Serum DEX project, which aims to establish the next-generation DeFi Exchange. It’s also working with Tether to develop a stable coin for the Solana blockchain.
Solana is still in its beta stages. Although the Mainnet was released in 2020, it is still in development. Before Solana becomes a fully functional blockchain, there is still a lot of work to be done.
That gets me to the next point: reaching a significant milestone. Since the launch of Whitepaper, Solana has repeatedly failed its target. The next and final drawback, in my opinion, is the increase in competitiveness.
Polkadot, Cardano, and Solana are all competing for the same position. Each has its own share of benefits, and only time will tell who will rise to the top.
Whoever rises to the top will have a full version launched, which means they must be fully functional and not just survive in the beta stage.
Solana Price Prediction
At the time the article was written. Solana is already among the top ten cryptocurrencies in terms of market capitalization. Now is the time. It is currently ranked number five, which is attracting a lot of investment interest.
It is currently trading in the $230 to $240 level. However, I am confident that during the next bull run and with the increased adoption rate of cryptocurrencies, it will surpass the $500 mark.
But that’s just my opinion. You must conduct due diligence and develop your own set of price forecasts. I believe it has the potential to break the $500 mark and then follow Ethereum’s path.
Should you invest in the Solana blockchain or not?
Personally, I find it tough to pick between various blockchains such as Polkadot, Cardano, Ethereum, and others that are competing for the same spot.
I’m currently neutral about Solana. It is currently in the early stages of development. Other blockchains, with the exception of Ethereum, do the same. If the content on this blockchain piques your attention, you may invest as you see fit.
That’s all there is to know about the Solana blockchain. In the next article, I’ll go through a new coin with new information. Thanks for reading.
Disclaimer: This essay isn’t meant to urge you to acquire any cryptocurrency or invest in any way. This is only an amateur viewpoint, not that of a professional financial advisor. Before investing in cryptocurrencies, I recommend speaking with your financial advisor and performing your own research.