It’s clear that Solana (CCC:SOL-USD) is starting to gain popularity among crypto investors.
With so many meme-coins out there, finding the “next big thing” can be a challenge. However, Solana does have legit accolades to make it worth your consideration.
According to the blockchain’s website, Solana is a decentralized blockchain that is scalable and lightning fast. Developers are currently using this technology to build out user-friendly apps with over 400 projects spanning DeFi, NFTs, and Web3.
The number of developers in Solana’s network still pales in comparison to Ethreum’s. But this cryptocurrency is slowly but surely gaining more appeal.
Solana is unique and I believe it is a legit competitor to the dominance of Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD).
Solana operates on both a proof of history (PoH) and proof of stake (PoS) model. Both Bitcoin and Ethereum currently operate on a proof of work model with the latter switching to a proof of stake sometime in 2022.
Solana and Other Cryptos
I’ve written about in my previous article on Cardano (CCC:ADA-USD) the weaknesses of a proof of work (PoW) model. But here is a quick recap.
The PoW models have serious issues when it comes to scalability. The more altcoins are mined the difficulty of solving the equations necessary increases exponentially.
This is not a linear increase but an exponential one putting a cap on the possible growth of the network.
While a PoS model is a marked improvement, PoH is even faster. According to a white paper by Solana founder Anatoly Yakovenko “Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events.”
In simple terms, a PoH model uses timestamps in order to verify transactions quickly. This results in much faster transaction speeds that blow its competition out of the water.
For comparison, Ethereum does between 15 to 45 transactions per second while Solana can reach speeds of 50,000 TPS.
There are other advantages of a PoH model as well. The Solana blockchain contains a timestamping mechanism that disables the ability for “front running” adding an extra layer of security.
In the current models, miners and bots could theoretically manipulate the order in which transactions get recorded onto the blockchain. Considering that security and fairness are some of the appeals of cryptocurrencies in general, I’d say this is a pretty big deal.
The advantages of the PoH model could lead to Solana overtaking its much larger rivals in the future. This is especially true as DeFi and NFTs increase in importance.
Solana Gaining More Mainstream Appeal
Solana is slowly getting more popular and increasing its mainstream presence. Initially, this alt-coin was only well known and regarded among crypto enthusiasts. However, I’ve been seeing more “mainstream” outlets cover this lately.
Sam Bankman-Fried, a well-known crypto-billionaire, recently came out in support of the currency. He essentially billed the currency as an “Ethereum killer” for its transaction speed as mentioned above. Sam is a person worth listening to as he accumulated a net worth of $22.5 billion largely from his crypto business. He is one of the youngest people to enter the Forbes rich list. Hearing a public vote of confidence from him is huge news for Solana.
Solana rose by 70x since the start of this year and seems to only be gaining steam. Right now Solana is on an uptrend with support firmly in the $220 price range.
It is currently the 5th largest cryptocurrency in the market upstaging rival Cardano. Solana currently has a market cap of $71.8 billion.
For reference, Bitcoin and Ethereum have market caps of $1.21 trillion and $542 billion respectively. Assuming this uptrend holds, I believe, there is still plenty of upside for investors at these price levels. Investors should consider adding Solana into their crypto baskets.
On the date of publication, Joseph Nograles held a LONG position in Bitcoin and Solana. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.