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Solana: The Ethereum competitor every investor should know about

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Solana has become very popular recently mainly due to its price gains. Launched less than two years ago, Solana ranks among the top 10 cryptocurrencies in market valuation with a market cap of $52 billion.

What is Solana and why is it growing in popularity?

It is a decentralized network that uses the Proof of History (POH) and Proof of Stake (POS)concepts. These are some of the concepts that Ethereum has been using to run its network. The Proof of History and Proof of Stake is key in the development of Decentralized Finance (DeFI) applications and Non-Fungible Tokens (NFT) applications.

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Decentralized Finance (DeFI)

Decentralized Finance is the use of blockchain technology to develop financial solutions such as investments, savings, and lending solutions.

Non-Fungible Tokens (NFT)

Non-Fungible Tokens are solutions developed through blockchains enabling transactions of items like art digitally. This concept is currently in use by millions of creators to trade their work.

Traditionally, developers have relied on Ethereum to develop these solutions. However, Solana is starting to gain some market on the same making it a direct competitor to Ethereum. Solana is leveraging on its faster processing speeds and cheaper transaction costs to win the market.

Decentralization

Blockchain solutions such as Solana are based on the concept of decentralization. It eliminates the aspect of central control enabling transaction openness. Decentralization have been around for over a decade now and are fast gaining acceptance.

Founded by the famous Anatoly Yakovenko, it continues to gain at price with a current market value of $160 per coin. Currently, there are at least 293 coins in circulation from a potential total supply of 504 Million coins.  This means that it has a capped supply limit just like some of its peers including bitcoin.

Solana has seen its price rise by over 300% in a matter of few months. This is an indicator of investor confidence in the network.

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Comparison of Solana to Ethereum

Transaction fees

Ethereum has gas fees making it more expensive to transact with. In comparison, Solana has an average transaction fee of $0.00025 per transaction. This is among the lowest fees in the industry. Lower fees are making it more lucrative to develop on Solana as opposed to Ethereum. This is one of the reasons more users and investors are joining Solana.

Transaction speeds

Ethereum also has lower transactional speeds in comparison to Solana. Currently, Ethereum processes about 30 transactions per second. This is very low compares to Solana’s 1000 transactions per second. Higher speeds mean that transactions are completed faster and hence customers don’t have to wait longer.

This makes Solana not only competitive against Ethereum, but also traditional channels as well.

Supply

Ethereum has no limitations in the total supply. There has been a suggestion to cap supply however, nothing has been adopted yet. Solana on the other hand has a supply cap of 504million coins. As an element of price, supply is a key factor to consider when predicting long-term pricing. Limitations in supply increase the probability of higher prices.

Uses

Both the Ethereum and Solana networks have and almost similar usage. They are used to support developments in

  • Decentralized Finance (DeFI)
  • Non-fungible Tokens (NFT)
  • Cryptocurrencies

Where to buy Solana

You can buy and sell Solana tokens on numerous cryptocurrency trading platforms. Due to the recent rise in demand, numerous platforms are rushing to make them available for investors. Some of the platforms include;

  1. Binance
  2. Bitfinex
  3. Huobi

With the growth in its popularity, more platforms are likely to include crypto on their assets list. This will make it easier for investors to trade in it.

Future of Solana

Solana is less than two-year-old in the market but it is already making big strides. Although there are numerous competing coins, it is clear the market leaders in this segment are Ethereum and Solana.

Affordability and faster transaction speeds are likely to attract more users both at the retail and corporate levels. Currently, Solana boasts of hundreds of partners who are already utilizing its platform.

There are expectations that success in uptake and usage will help drive its price further to the upside.

As an investor, it is critical to note that cryptocurrency prices remain highly volatile. Hence, you should ensure you have adequate market knowledge before investing.

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