When it comes to investments- cryptocurrency, in particular, diversifying your portfolio is always recommended. And more so, most cryptocurrency investors are hoping that their portfolios will sail to the moon. However, perhaps, they should be aiming for the sun instead. We’re talking about Solana, or more popular for its ticker name SOL, the Spanish term for sun.
What Is Solana?
Solana is a relatively newbie crypto that, until this past year, didn’t garner much attention. With its recent surge, however, Solana is now on most crypto enthusiasts’ radars— whether they’re trading or just starting to think about how to stake Solana to earn more.
So, if you’re looking into investing in Solana, here are some things you should know about this rising cryptocurrency:
- Solana Is Called “Ethereum Killer”
Solana is one of the more popular competitors and alternatives to Ethereum, thus the name “Ethereum killer.” Take note, however, that there are several so-called Ethereum killers out there other than Solana.
Generally, Solana earned its nickname thanks to its speed and scalable ecosystem. This cryptocurrency supports the sealevel, a method for running concurrent smart contracts. Ethereum first introduced smart contacts, however, as its network is heavily congested and transactions became so expensive, Solana has become the preferred choice for a cheaper and faster way of running smart contracts.
- It Carries Significant Risks
It’s a no-brainer that all cryptocurrencies carry significant risks on their own. And in terms of Solana, the most significant risk is that it’s relatively new. This crypto is still in its beta stage, and yet it has appreciated substantially in just a short period.
Like with other cryptos, the potential for large price swings should be considered before you invest. Since Solana is quick to reach new highs, it could also easily go back down.
In addition, Solana is also criticized for its frequent network outage, with the latest occurring in January and lasting for over 30 hours. The network congestion issue coincided with the crypto market slump and prevented DeFi users from topping up their loan collateral and caused a flurry of liquidations.
The long and frequent network outage can be pretty alarming and may cause investors to swap Solana tokens over other larger and more established blockchains.
- Solana Is Super-Fast And Cheap
Among the biggest pros of Solana is that it’s crazy fast and cheap, too. This crypto can process over 50,000 transactions per second (TPS), while on the other hand, other cryptos such as Ethereum can only process 15 – 45 TPS. However, Ethereum 2.0 project is said to be much, much better. But, until its release, Solana is currently the third-fastest cryptocurrency on the block.
In addition to that, it’s believed that Solana was designed so that the cost per transaction remains as cheap as 1 cent, which can significantly benefit both investors and developers.
- It Uses Proof-Of-History Model
Blockchain technology generally takes the middleman out of all kinds of transactions. But without these middlemen, blockchain networks need other methods in order to keep them secure and avoid fraud—validation models.
For instance, Bitcoin has a series of network validators contributing huge amounts of computing networks. With this method, it takes too much processing power to create false records, making it impossible which keeps the network secure. However, it’s not that energy-efficient. Meanwhile, Ethereum 2.0 and Cardano use a proof-of-stake model. It restricts the number of validators to those who own enough of the specific token. This makes the process more sustainable and quicker.
Then, there’s Solana. It takes the validation model even further and uses the proof-of-history model. It integrates timestamps into its validation model, which allows it to process transactions much faster and more reliably.
- Solana Has Over 300 Projects
Aside from being considered the fastest blockchain, Solana, being a newbie Ethereum alternative, also has over 300 projects in its growing ecosystem. These projects include DeFi applications offering intermediary banking services, gaming apps, NFT projects, and more. In particular, it has a good number of NFTs and DeFi projects— the types that are booming right now— which is another factor that fuels Solana’s growth.
Should You Invest In Solana?
Solana is indeed enjoying the limelight lately. That said, while this crypto is currently buzzy, it’s important that you research and understand its basics before investing. After all, all cryptocurrencies are generally deemed risky, speculative, and volatile investments.
We hope that this article has helped shed more light on this particular native cryptocurrency. And with the insights presented, you’ll be more empowered to make a well-informed decision on whether or not it would be worth investing in Solana.