Solana Coin: Emerging Ethereum’s Competitor

Source: Goodreturns

Solana coin is a cryptocurrency launched in 2015 by Solana labs in San Francisco. It was initially offered in ICO (Initial Coin Offering) at a mere 0.22 USD. Since its launch and journey of over 5 years, Solana has grabbed the attention of investors and retail traders and has provided profits of more than 95% in 5 years. Its native cryptocurrency is also called Solana and has the ticker SOL.

What is Solana?

Source: The Face

Solana is a cryptocurrency that is used as a platform for creating decentralized apps, NFTs (Non-fungible Token). It is an open-source project maintained by a Geneva-based foundation and developed at San Francisco-based Solana labs.

Solana has its own blockchain which is currently in beta version (as of January 2022 while writing) and is expected to launch in full version soon. It is positioned to rival Ethereum as its blockchain mechanism is based on Proof of Stake (POS) whereas Ethereum has a Proof of Work (POW) mechanism.

The unique advantage of Solana coin is that being operational on a POS mechanism, it can process more transactions per second than Ethereum and it also requires fewer gas fees (only 20% of Ethereum gas fees). 

From the end user's perspective, Solana is where one can interact with decentralized apps. Most of the apps are related to finance that provide financial services related to trading, contracts, and other services. Also, users can purchase, trade NFTs on their website, and trade SOL coins.

What Makes Solana Unique?

Source: Medium

Solana coin provides a platform that provides decentralized service and the ability to provide users with an entire digital ecosystem. Being an open-source blockchain, anyone can create their crypto tokens, NFTs, and apps. Solana coin has another advantage of operating on a POS mechanism that consumes less electricity and has larger scalability than Ethereum.

Being a POS blockchain, it outranks POW blockchain in terms of security and efficiency. Solana also provides smart contracts that make it more reliable for people to create their NFTs and earn rewards. Having so many use cases Solana coin has been an emerging altcoin and has the potential to probably beat leading altcoin Ethereum in terms of market share and reliability.

However, in POW, a bad act can be achieved if someone is powerful enough to acquire more than 50% nodes or add their device that gives false transactions. This is prevented by making nodes work harder to compute the puzzle that requires some time until which fake transactions can be detected. This process of validation and computing transactions consumes a lot of electricity and adds higher gas fees that are compensation to miners or validators.

In POS, validators (miners) have to put something at stake; in Solana's case, they need to stake their SOL coins. On successful transaction validations, validators are rewarded with SOL coins and their staked amount multiples. 

Both POW and POS mechanisms give rewards to miners for their efforts. In the case of Bitcoin mining, miners get Bitcoins for adding the block and successfully validating the transactions while Solana miners get Solana coins as their reward. The unique thing to note about Solana is that it requires less processing power compared to bitcoin, making it a better choice.

The Bitcoin POW mechanism has a clock or timer to validate transactions across nodes and stores the time required to validate. This consumes more energy. Whereas in the case of Solana, apart from the POS mechanism, it uses the Proof of History (POH) mechanism to record the validation time of each transaction in its blockchain. This ensures efficiency and security and better blockchain. 

Solana: The Emerging Future Coin

Source: Cointelegraph

With decentralized platforms and open source, developers looking to have their NFTs or apps in the crypto-verse, and from a validator perspective, Solana has higher advantages. Paying low gas fees, scalability and a higher amount of transactions per second make this coin unique and worth investing in.

In the long term, analysts predict that the cryptocurrency future will be competitive in terms of projects handled by every blockchain network and dominance of particular currencies like Bitcoin and Ethereum will reduce. So, to have experience with Solana coin, buy some SOL coins and hold for the long term as the market for altcoins is relatively more bullish than Bitcoin.

Written By - Prajwal Barate