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Crypto Explained: Solana

Updated: May 30, 2022

What Is The Importance Of Solana?

While Solana remains a lesser-known cryptocurrency, it peaked at $78 billion on the fifth of November, 2021. Solana’s rapid rise is a direct result of its supersonic speed. Solana is capable of processing close to 50,000 transactions per second. With Solana’s growth in its speed, it's also speeding in its growth. This year, Solana is up over 10000%.

What is Solana’s Purpose?

According to Genesis Block, “Solana is a web-scale blockchain that provides fast, secure, scalable, decentralized apps and marketplaces.” While Solana has similar goals to most cryptos like Ethereum, it tries to be faster and cheaper in every way. Fees for transactions are low compared to inferior cryptocurrencies at $0.00025.

What is Solana’s History?

In 2017, Anatoly Yakovenko created Proof of History (PoH). In blockchains like Bitcoin and Ethereum, one of the limitations to growing in scale is the time required to reach a consensus on transactions. He created Proof of History to shrink the time for processing transactions. After collecting $20 million in funds from 2018 to 2019, Solana launched in March 2020. Solana has established partnerships and projects with smaller cryptos like Circle, Audius, Wormhole, and Tether.

Should I Invest In Solana?

While Bitcoin and Ethereum make up over 60% of the entire crypto market, other cryptos like Solana that are faster and have lower fees have serious room to grow. Also, transacting NFTs, otherwise known as non fungible tokens, is becoming a big part of Solana’s platform because there is a growing demand for platforms that support NFTs. Solana is a lot less energy-intensive than Bitcoin and Ethereum, which could be a long-term benefit for Solana.

Solana is only one year old, which means that it has not had enough time to prove itself. Also, Solana's funds are volatile because they are made–mostly–of a handful of investors. With Solana's young age and small size, it has not yet made a significant contribution to the market compared to Ethereum. While Solana states it has over 300 projects and collaborations, Ethereum has contributed to 2900 projects. This can be a deciding factor for investors because it shows how established cryptocurrencies are. Also, while Bitcoin has a cap on its volume, Solana continues to inflate and could cause your coins to lose a lot of value.

Overall, Solana has a lot of potential but it needs to prove that it can compete with the large cryptos––like Bitcoin and Ethereum––and the small cryptos, too. There are so many new cryptos coming out and most of them are dying out. Take caution in investing in small cryptocurrencies.

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