Solana, a blockchain network that launched in 2020, is being seen by many as a competitor to Ethereum. The cryptocurrency has grown about 16,000 percent since January. At the start of this year, one SOL cost $1.51 (roughly ₹ 112) and Solana’s market cap was around $86 million (roughly ₹ 639 crores). Today, it is trading around $241 (roughly ₹ 17,900) and has gained a market capitalisation of $73 billion (roughly ₹ 54 lakh crores), according to CoinMarketCap. This means people have invested heavily in the relatively new cryptocurrency that has become the sixth biggest by market capitalisation.
Here’s what you need to know before investing in Solana:
1) It has shown an extreme appetite to grow this year. A rise of 16,000 percent is stunning. It is available on most top cryptocurrency apps and exchanges.
2) Many people see it as the “Ethereum (ETH) Killer”. One of the biggest factors that pushed Solano’s value is that people want alternatives to Ethereum, the second-largest cryptocurrency in the world and hence working a congested network. Like Ethereum, Solana too offers smart contracts.
3) Solana has great speed. It’s one of the fastest-growing cryptocurrencies on the block, processing around 50,000 transactions per second (TPS), far greater than Ethereum which does between 15 and 45 TPS currently.
4) Bitcoin uses a proof-of-work validation model and some others use proof-of-stake. But Solana uses a proof-of-history model. Solana integrates timestamps into its proof-of-history validation model, which is how it is able to process transactions so quickly.
5) A key measure of the battle between Ethereum and its competitors is the number of projects running on each network. While Ethereum has the first-mover advantage, its competitors, including Solana, are catching up. Solana reportedly has over 350 projects in its ecosystem.
Even if Solana has increased stunningly this year, cryptocurrency investments are extremely volatile. If it has gone up, it also carries the risk of going down quickly. Financial experts advise all potential investors to not have a cryptocurrency exposure of more than 5-10 percent of their overall portfolio.