Well well well, isn’t this an interesting shy coin…
So let’s imagine that you need to hire a hitman or hitwoman (no room for discrimination here), and you have two choices, one is a bulky warrior with a long sword, big shield, and heavy armor, the other is a freaking ninja! Both are going to get the job done, but one is likely going to take way more than the other. In this analogy the ninja is Solana, the warrior is Bitcoin – heeeeey, before any complaints and nagging, I’m a supporter of BTC, but we can all agree is not the most efficient. To give a better picture, the Bitcoin network, with all the different math enigmas it has to crack down to approve transactions, can only process 5 transactions per second whilst Solana network can process up to 50,000 transactions!
Now you are thinking, and why this is important? Why so many transactions are needed? It comes to scalability. If you want to have real-world applications, you need to be able to process as many transactions as possible and, of course, at the cheapest price.
How is Solana achieving this?
Some networks use something called a proof of stake consensus algorithm to validate transactions. Sounds fancy, but this basically means having people like you and me staking their coin in its network to keep it running efficiently and securely, per each coin you hold you help them validate transactions, the reason why the more money you stake the more rewards you receive.
Now here is where it gets “dirty”, networks, like Ethereum or Bitcoin, use something called proof of work, this means that the famous miners get to choose which transaction they want to process, and yes, you got it right, they will choose the most lucrative transactions first (and I think we all would do the same, catch those big whales).
Solana uses proof of stake with a fancy new addition called (drums, trrr,trrr,trrr) proof of history. Proof of history is a freaking time stamp machine, transactions are recorded in real-time, guaranteeing they are processed as they are received, making the whole network more efficient and reliable (no skipping line Mr. Moby Dick)
This results in one of the lowest transaction fees in the market – less than $0.001 per transaction.
So, why is this important?
Because then you can fight the big old dinosaurs that have the centralized finance market controlled. Solana is working to become a global system that can replace existing major data systems using decentralized blockchains. Which type of data systems? Like Visa, yes, Visa, this is the type of thing Solana is trying to replace.
Just imagine being one of the following companies and seeing what is coming, look at these fees! It’s ridiculous, that is why Decentralised Finance is going to kick ass!
|Company||Average credit card processing fees|
|Visa||1.29% + $0.05 to 2.54% + $0.10|
|Mastercard||1.29% + $0.05 to 2.64% + $0.10|
|Discover||1.48% + $0.05 to 2.53% + $0.10|
|American Express||1.58% + $0.10 to 3.45% + $0.10|
Are there existing real-world applications?
At the beginning of 2021, Solana partnered with Chainlink (another coin) that is specialized in smart contract networks, making a solid partnership that quickly got the attention of the chat app named Kik. Kik has its own crypto token named Kin and nowadays uses Solana for its transactions.
In case you don’t know, Kik is massive – this brought to the Solana network almost 59 million wallets with positive balance!
Not long ago, a stablecoin exchange named Saber raised almost $8 million for its development, this exchange uses the Solana network as its foundation.
So it’s out there! Is starting to crawl up the ladder, little by little, silent like a ninja, into the crypto ranks!
This project was started in 2017 by a former executive at Qualcomm, who also worked in compression algorithms for Dropbox, named Anatoly Yokovenko. He must have impressed some people with this project since in 2019 it secured $20M in funding.
If you are interested in being part of Solana, you can get some of their tokens called SOL, which can be sent to nodes in the Solana blockchain for validating purposes or running on-chain programs. Staking baby!
Solana is right now in the top 15 coins on the charts and with a price up by more than 6,000% from its all-time low a year ago, is worth keeping a good eye on. Not doing badly considering the coin launched in the spring of 2020! I just start adding some into my portfolio, and the plan is to keep adding for the long run, I see it as a keeper!