When Ethereum was launched back in 2015, it introduced the concept of smart contracts which could be binded to certain conditions in order for them to be exercised.
However, the roadmap to its second iteration is still quite long and the transfer speeds are getting a little rusty after so many years of launch.
Solana aims to amplify just this!
This cryptocurrency has been gaining huge press lately due to its skyrocketing growth rate. While it stood at a meagre $1.50 in January 2021, it now lies between $150-$200 mark in October 2021.
Keep on reading to know more about this potential gold mine.
Table of Contents
What is Solana, and How Does It Work?
Solana or SOL is a PoH based cryptocurrency that relies upon the permissionless nature of blockchain technologies to facilitate decentralized finance solutions. Currently the 6th largest cryptocurrency by market cap, many also expect it to topple Ethereum which sits at the second position.
In simpler terms, this cryptocurrency allows users all over the world to carry out transactions at a faster rate as compared to other platforms.
Working: This network aims to enhance the scalability of blockchain transactions by combining two methods known as Proof-of-stake and Proof-of-history.
- General perspective: Suppose you had a contract with your bank and a friend stating: On a certain date when you get your salary, X amount of money will be debited from your account and transferred to your friend.
Now, in case your employer delays the payment by one day, the order will already be carried out from your bank’s end, which will disrupt the chain of events. Solana deploys a smart node-based system that is capable of taking such factors into account before exercising a financial transaction.
- Technical perspective: Blockchain ledgers have a node-based network, which helps verify transactions and identifies the order in which the transactional events have to occur.
Solana deploys something called a Tower Consensus in which the nodes need not communicate to each other but rather be governed by a singular PoH generator. This significantly reduces the processing power needed and keeps the network from getting congested.
To give you a better idea of its speed, here are some stats:
- The Ethereum network can process 15-45 transactions per second.
- VISA has the ability to process as many as 24000 transactions per second.
- The Solana system is capable of carrying out an astounding 28.4 million transactions per second! (provided the system is able to access a 40-gigabit network)
Who Founded It and What is The Origin Story?
In the latter half of 2017, Anatoly Yakovenko (one of the lead developers in Qualcomm) introduced a new technique called Proof of History (PoH) to facilitate timekeeping in distributed systems.
Unlike Bitcoin and Ethereum, which required a significant amount of time to reach a consensus for a given order of transactions, Anatoly’s technique was aimed at automating the transaction ordering process for blockchains.
Later on, a team of former Qualcomm veterans and Apple engineers joined hands with Anatoly to create a blockchain network in Rust that used PoH as its internal clock. The project was initially called project Loom but was later switched to Solana in order to differentiate itself from Ethereum’s Loom network.
The core team included: Anatoly Yakovenko (Co-Founder & CEO), Eric Williams (Co-Founder & Chief Scientist), Greg Fitzgerald (Co-Founder & CTO), Raj Gokal (Co-Founder and COO).
They began to raise funds with the help of multiple private token sales and managed to raise a little over $20 million between April 2018 and July 2019. The founding team also kept working on their protocol alongside the funding and ran several permissioned testnet phases before announcing the public testnet in Q3 of 2020.
They hosted a public token auction on the coin list in March 2020, shortly after which they launched their first-ever mainnet beta. The 29-year-old billionaire Sam Bankman-Fried (founder of FTX exchange) backed Solana openly by rolling out SerumDEX on Solana instead of Ethereum.
Some other notable investors include Foundation Capital, Multicoin Capital, SLOW capital, Abstract Ventures, etc.
What is The Solana Coin Used for?
The main function of Solana is to perform micropayments, also known as lamports. These tokens pass through nodes in the Solana cluster and validate transactions.
Furthermore, you can also stake SOL coins to receive additional rewards. If you are someone who is looking to hold crypto for a long term, this could be a great way to generate some passive income.
All you need to do is transfer your tokens in a staking-compatible wallet and delegate your stake to a validator.
What Makes Solana Unique?
Owing to the lower transaction speeds, frequent congestion zones can often be found on the Ethereum network. This leads to higher processing charges which go as high as hundreds of thousands of dollars in certain cases.
The lower operational costs and increased efficiency are what make Solana so unique. SOL coin can achieve high speeds without compromising on security and decentralization. Since there is no inter-communication involved between nodes and all the data is only transferred by a node leader of the semi-centralized structure, the operational costs are often as low as $0.0001.
The founders also claim that the speeds will continue to increase as the network grows faster.
Is Solana Coin A Good Investment?
While we may not be as lucky as the initial investors who got their hands on this coin for just $0.22, followed by seeing a 95000% raise, Solana still continues to grow.
The coin is still technically in its beta and is known for being one of the most stable investment options in the market. Some projections carried out by investors also suggest that this coin may reach the $300 mark by February of 2022.
What is The Current Price of Solana in CAD?
The current price of SOL coin stands at CAD 241.90 as of October 2021, with an all-time high of CAD 270 in mid-2021. Strong backing by leading financial institutions is the reason behind the pumping price of this coin. Don’t put all your eggs in one basket if you are looking to make a quick buck.
Since the price has constantly been surging since the past month (October 2021), experts suggest an oncoming dip. Ideally, you should wait for the dip and accumulate such assets in parts rather than going with the hype.