Despite a Record-Breaking 2021, Solana Is Just Getting Started

If you’d invested just $500 in Solana (CCC:SOL-USD) at the start of 2021, you’d have roughly $47,500 at the end of the year. You read that right — that’s approximately a 9,500% gain.

Concept art of the Solana (SOL-USD) blockchain.

Source: Shutterstock

Having been in the game since 2017, no one would’ve predicted such massive gains for SOL. However, with such humongous profits last year, many would wonder whether there’s any upside left to investing in Solana.

The short answer to that is a big, “YES!” Any cryptocurrency with a good amount of use cases is likely to be attractive over the long term. Solana has been arguably one of the hottest cryptocurrencies in the past year and will continue its bull run for the foreseeable future.

Solana is a disruptive platform that offers its users unbelievable speeds and robust security. Moreover, its throughput of 60,000 transactions per second trumps other stalwarts in the space, including Ethereum (CCC:ETH-USD) and even payments giant Visa (NYSE:V).

Additionally, the use cases of Solana’s ecosystem extend beyond the financial realm with developments in non-fungible tokens (NFTs), gaming and decentralized finance (DeFi). Therefore, SOL remains a top bet in the crypto space.

Solving the Pain Points With Solana

Solana excels where most crypto giants have faltered since their inception. Solana’s platform boasts incredibly high speeds, low transaction costs and remarkable energy efficiency. Its throughput far outpaces blockchain giant Ethereum, which can process just 30 per second. Moreover, its transaction fee is a tiny fraction of a cent.

One of the main reasons for its speed is that it operates on a proof-of-history method, where data is processed in line with timestamps. Accordingly, validators can sort through information much more efficiently than other blockchains.

Solana currently has upwards of 1,000 validators, but in comparison, Ethereum has more than 200,000. However, as the platform scales, the number of validators can quickly multiply over time.

With the lower costs and fast speeds, the entry barriers for new users are significantly lower. Users could start an account with a small amount of funds to purchase NFTs, but that same amount wouldn’t nearly cover energy costs on Ethereum. Moreover, the lower costs also leave more room for innovation for developers as well.

Investments Are Paying Off

The investments in speed and security seem to be paying off for Solana-based development teams. The platform now has more than 350 projects built on its blockchain, ranging from gaming to finance.

Though that is still significantly fewer projects than those built on Ethereum, Solana could catch up to its rival soon. It has generated a whopping $12.1 million in revenue from decentralized applications (dApps) in 2021 alone.

Furthermore, Solana is killing it in the NFT game as well. From August to November, secondary sales of NFTs reached half a billion dollars. This includes a record month in September, where it generated a total of $189.4 million. Moreover, it has been one of the top blockchains by NFT volume in the past few months.

Solana’s growth in dApps and NFTs is just beginning, with an incredible growth runway ahead. Its speed, efficiency and low costs will compel users to flock to its platform in huge numbers for the foreseeable future. Low-cost blockchains such as Solana will have the upper hand over their peers — at least, until Ethereum launches its 2.0 update later this year.

The Bottom Line on Solana

Solana has been among the best-performing cryptos in the past year, which gives us a glimpse of its future. Its growth story is just starting to unfold, with robust fundamentals and a growing list of use cases.

The crypto has emerged as a top player in DeFi and the NFT business as it continues to refine its platform for its growing user base. Hence, I expect SOL to emerge from the recent bear run to climb to new heights in 2022.

On the date of publication, Muslim Farooque held a LONG position in Solana and Ethereum. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. 


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