Many people think of crypto coins as only a currency, but it is more than that. Crypto as a token empowering and enabling other applications over the blockchain platform. Solana, one of the fastest blockchains in the universe with the capacity to verify around 65,000 transactions per second at low cost, better showcases the potential of cryptocurrency. In addition to this, Solana also empowers smart contracts, NFTs, and decentralized finance applications.
Solana and its Exclusive Features
Solana, one of the most popular cryptocurrencies among more than 10,000 digital assets, was introduced by Anatoly Yakovenko in 2017. SOL is an individual unit of Solana and operates on a decentralized computer network using blockchain technology. The digital asset is one of the highly functional open-source projects offering a permissionless and high-speed layer-1 blockchain.
One of the key motives behind the introduction of Solana is to minimize the costs related to concerns with other blockchains along with offering high-speed transactions. The cryptocurrency is embedded with an innovative hybrid consensus model that engages a unique proof-of-history (PoH) algorithm with proof-of-stake (PoS).
In addition to this, the Solana platform is capable of processing around 710,000 transactions per second (TPS). The third-generation blockchain platform is designed to offer the creation of smart contracts and decentralized applications (DApps). Also, the Solana network supports Non-fungible token (NFT) marketplaces as well as DeFi.
The combination of security with speed, made Solana stand out from the crowd. Also, Solana is designed to solve the blockchain issues of Ethereum, created by Vitalik Buterin. Three major issues of Ethereum including security, scalability, and decentralization were mitigated by Solana.
The Complete Working of Solana
The overall working of Solana depends on the combination of Proof-of-history and delegated proof-of-stake algorithms. The main intention behind the blending is to process lots of transactions quickly.
It is a little bit challenging to process speedy transactions without centralization, but Solana made it possible to carry out quick transactions with decentralization. The speed at which blocks are combined into Solana’s network requires an additional level of security. The proof-of-history algorithm here plays a major role in the attainment of the motive. The algorithm simply timestamps each block in such a manner that sustains the system’s security.
In addition to this, the network uses a 256-bit secure hash algorithm (SHA-256) that results in a 256-bit value. The platform samples the number and SHA-256 hashes, offering real-time data as per the set of hashes involved on central processing units.
Afterward, SOL tokens are staked and used as collateral to carry out transactions over the network and include everything from validating smart contracts to using Solana in the NFT marketplace.
Looking at the current performance, SOL’s current price is $20.07 with a market cap of $8 Billion and 24 hours volume of $256 Million. The circulation supply of SOL is 412,843,784 SOL and the total supply is 558,633,904 SOL. Also, 60% of the tokens are managed by Solana’s founders and the Solana Foundation, and 38% are reserved for the community.
Want to buy one? Coinbase, FTX, Binance, KuCoin, and Huobi are some popular cryptocurrency exchanges you can visit.
How is Solana Distinct from Ethereum?
In a short time span, Solana received a lot of appreciation for its outstanding performance and speed. Solana emerged as one of the rivals of Ethereum. Can it be considered as a potential Ethereum Killer?
Well, it is difficult to say anything about this, but, in terms of processing speed, Solana has the potential to beat Ethereum. Solana is well developed to challenge the dominant smart contract platforms, as it is capable of reaching the speed of around 50,000 TPS. The combination of different consensus algorithms helps Solana in making faster transactions.
On the other hand, Ethereum, introduced in July 2015 uses a Proof-of-stake consensus mechanism that offers a high level of security but does not offer any assurance of speed. Ethereum can handle around 15 TPS, making Solana thousands of times faster in terms of transaction speed.
Another factor that distinguishes Solana from Ethereum is cost-effectiveness. Solana implements new tokenomics for lower fees and is more eco-friendly and sustainable.
Solana was hyped quickly after launch and emerged as one of the good investments. If you are thinking of investing in Solana, it can be a good investment when looking for long-term profits. If profit grows, the investment is to work out well.
However, the digital asset also holds some demerits that you need to consider before investing in it. Let’s take a look at the flaws possessed by Solana.
Demerits of Solana
Investing in Solana or any of the cryptocurrencies is up to you, as the currency totally depends on technology and possesses both visible advantages and hidden disadvantages.
Solana came up with two broad vulnerabilities which are essential to understand. The very first drawback is its vulnerability to centralization due to less number of blockchain validators. The blockchain allows any individual to become a Solana validator which requires a lot of computing resources. Also, the platform faces challenges associated with the security, making it less reliable to the crypto enthusiasts.
Despite these challenges, Solana is continuously evolving, reaching new heights, and has room to run.
Conclusion
Solana, one of the safest and fastest blockchain networks in the crypto space, was introduced by Anatoly Yakovenko in 2017. To offer unique and efficient services, the platform uses two consensus mechanisms including PoH and delegated PoS algorithms, making Solana enough capable to carry out around 50,000 TPS.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2023/10/02/all-you-need-to-know-about-solana-sol-crypto-and-its-working/