What is the Solana Blockchain & Its Pros & Cons?

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Solana is a blockchain network created in 2017 that has seen significant growth in value and interest. It has drawn the attention of both developers and crypto enthusiasts. Developers are interested in the platform for building decentralized applications for sectors such as art, finance, and computer science.

Solana had a great year in 2021, as it recorded price growth of 13,300% since the start of the year. It continues to grow and its growth has been supported by the announcement of new integrations.

So, what is Solana (SOL), and what are the pros and cons of considering it for investment? Find out in this guide.

Solana is a 4th generation blockchain and crypto that relies on an open infrastructure to bring a high degree of scalability. The platform introduced many new technologies to speed up transactions while enhancing enterprise-level security.

What Does Solana Do?

Solana is designed to address a wide range of problems in the market. Its architecture was designed to be scalable while being resilient to censorship. It is a distributed and trustless blockchain. Its design allows it’s to handle bandwidth and speed concerns related to transaction settlement.

Should You be Buying SOL?

There are risks associated with buying any cryptocurrency. Solana (SOL) is a relatively new entrant in the market. Blockchain may take much longer than expected to achieve its potential or may never develop into the economic system it was claimed to be. Even when a cryptocurrency like Solana achieves all this, it will have to compete with some big names.

Many investment experts believe that Solana is highly likely to deliver on its potential. The following tips are recommended to those seeking to purchase any crypto on a trading platform like bitqt:

  • The speed of adoption of the digital coin
  • The number of active wallets
  • The number of transactions over a period of time
  • Check how tokens get distributed to get insights into the risk of inflation

Benefits of Considering Solana

Scalability is a big factor working in the favor of Solana. This feature allows it to scale up and meet the demands of the global economy. It also makes it an ideal blockchain for decentralized apps (DApps).

Some key features working in the favor of the Solana blockchain include:

  • Resistance to Censorship: Solana is perfect for day-to-day commerce due to its distributed and trustless form. Global transactions can be conducted for a much smaller fee compared to the popular cryptos.
  • Delegated Staking: Solana is a delegated staking blockchain. It provides SOL owners an edge. For example, you can generate passive income by staking your SOL on the network. These protocols are becoming increasingly popular as they are simpler for new users and offer more stable rewards.

Pros of Solana

There are many features that allow Solana to make a positive impact. This includes:

i. Speed & Transaction Fee

Solana can be considered to be the best Ethereum alternative due to its speed. Ethereum can support 13 transactions per second, while Solana can complete tens of thousands.

Solana works on a proof-of-history (PoH) and proof-of-stake (Pos) model while Ethereum works on the proof-of-work (PoW) model. The latter requires miners to complete complicated calculations for verifying transactions.

The simpler validation process also brings down the transaction costs. The average transaction fee with Solana is just 1 cent.

ii. Smart Contracts & NFTs

The credit for the introduction of smart contracts in the crypto ecosystem goes to Ethereum. Smart contracts enable blockchain networks to run DApps. The growing popularity of smart contracts has created the congestion that the Ethereum platform is now dealing with.

Solana is also making its growing presence felt in the high-growth non-fungible token (NFT) market. Its NFT marketplace, known as Solanart, offers faster transaction speeds to NFT buyers at much lower fees.

iii. Environment Friendly

Highly popular cryptocurrencies are often criticized for their negative impact on the environment. The computing processes that go behind Bitcoin mining currently produce a carbon footprint equivalent to what is produced by the entire nation of Greece. On the other hand, Solana’s processes are much more environmentally friendly.

Cons of Solana

There are a few cons that discourage users from investing in it. Some of the most notable ones that you should be wary of are as follows:

i. Lack of Stability

Solana is backed by a small community of users. Its track record is much shorter than that of Ethereum. Recently, the Solana Foundation announced ‘intermittent instability’ with the blockchain. Reliability is a critical factor in the crypto investment and Solana seems to have a long way ahead to build trust.

ii. Inflation

Investors are drawn to cryptocurrencies to overcome the general inflation challenge that affects fiat currency. Many cryptos overcome this challenge by having a cap on the total number of coins that can be produced. However, Solana doesn’t have any such cap. Its inflation rate is planned to decline by 15% every year until it becomes fixed at 1.5%.

Solana has around 350 projects on its network while Ethereum has close to 2,900. These include:

  • DeFi
  • Gaming apps
  • NFT projects

While Solana is currently limited in its utility, it is expected that its low transaction fees and high speed is expected to attract more new projects to its network.

Given all these features, possibilities, and limitations, Solana is still in its early stages to be ruled out or considered a success. It has demonstrated dramatic growth last year and with the addition of new projects, it may be able to sustain it in the future as well.

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