What is behind Solana’s meteoric rise?

Solana has recently become the fourth-largest cryptocurrency on the market, with a market cap of $26 billion, making it one of the fastest-growing cryptocurrencies.

A cryptocurrency called SOL, which uses the Solana blockchain, has been compared to the Ethereum of the future. As Solana and Ethereum are more than just coins, they have gained support from coders who have created features such as digital currencies and NFTs.

What is Solana?

SOL is the currency of the Solana network. Solana was created as an open-source platform for smart contracts and other decentralised financial applications. Borrowers can use it for everything, from short-term borrowing to long-term lending. Exchanges on Solana are relatively inexpensive and ultrafast, unlike its main competitor, Ethereum. This has caused SOL to soar. Solana’s belief is that blockchains don't have to be expensive, slow and inefficient, and based on this potential, the coin's value has risen circa 14,000% year-to-date.

What is one of the most significant advantages of Solana?

The cost of a transaction on Solana's blockchain is incredibly low. Solana's miners charge significantly less than Ethereum's, as Solana's technology supports tens of thousands of transactions per second - compared to less than 100 for Ethereum. This means that the Solana blockchain has less competition for space.

However, Solana hasn't had an easy time with it. Transactions were halted for 17 hours in September, due to a massive outage. Cryptocurrency enthusiasts who supported Bitcoin and Ethereum saw the network's rapid growth as evidence of the value of staying with established projects; whereas those who supported the cause thought that this was a period of transition.

SOL has emerged as a standout in the massively competitive search for the next ‘big thing’. New projects, campaigns and investors are emerging daily, and the crypto industry has been saturated with loads of new coins this year - however, most of these lack the functionality or complexity of the huge coins like SOL.
‍

Why is Solana being accepted so quickly?

‘Gas fees’ is a term to describe the money paid to crypto miners to complete individual crypto transactions. Solana's transaction fee is the cheapest among all cryptocurrencies. The Gas fees for a Solana transaction can average at 0.00025 dollars, while the average Gas fee for an Ethereum transaction can be in the hundreds of dollars.  Most people would not be able to afford hundreds of dollars each day for these transactions. For example, those in the NFT industry would have to pay a huge amount in Gas fees each time they bought an NFT or a part of it. 

Solana provides a solution to this by introducing a super-fast transaction system, along with the elimination of any Gas fees. 

As a new technology, Bitcoin and Ethereum have been criticised for their environmental impact. Bitcoin's current carbon footprint is nearly the same as that of the whole country of Greece, due to the computer power required to mine and authenticate its transactions through its PoW algorithm. Elon Musk's decision earlier this year to no longer accept Bitcoin as a form of payment for Tesla Inc., was also motivated by Bitcoin's carbon footprint.

"Cryptocurrency is a good idea on many levels on and we believe it has a promising future, but this cannot come at a great cost to the environment."

This could make Solana a more environmentally friendly crypto alternative.
‍

Conclusion

The price of Solana can fluctuate wildly, so if you are thinking about buying it, be prepared for it to rise and fall. Only invest money that you can afford to lose.

As you weigh up the benefits and drawbacks of investing in Solana, keep an eye on the long term. Although Solana has recently reached a series of record highs, there may be good as well as bad times in store for it in the future.