In today’s world where cryptocurrency is more popular than ever, some names like Bitcoin, Ethereum, or Dogecoin might be familiar even to those who are not ardent followers or traders of the cryptocurrency. Given how popular cryptocurrency is, it does not come as a surprise to see new cryptocurrencies coming up every day. Solana (SOL) is one such cryptocurrency that has recently entered the market showing great promise. Ever since the boom in decentralized finance (DeFi), Ethereum has faced major scalability issues. Vitalik Buterin, the founder of Ethereum, introduced the concept of “blockchain’s impossible triangle” or the “Blockchain Trilemma” to highlight the underlying problems of blockchain. The 3 corners of the triangle represent Scalability, Decentralization, and Security.
When we look at Ethereum, it has decentralization and is very secure but lacks scalability. Another example would be the Binance Smart Chain (BSC), which was considered the best alternative to Ethereum. BSC is secure and scalable but lacks decentralization. This is where Solana has been quietly making strides in the Crypto-space. Solana falls right in the middle of the triangle, implying that it meets all 3 criteria. This means that Solana is a cryptocurrency that beats out Ethereum and BSC in all the key variables that put Solana in the centre of the triangle. Solana joins a long list of so-called “Ethereum Killers” like Cardano, Tron, Cosmos, Polka Dot, etc. but Solana has a list of factors with enough financial backing why it could justify this title.
You may also like: Blockchain Technology and Legal Issues
What is Solana?
Solana is a web-scale blockchain that provides fast, secure, scalable, decentralized apps and marketplaces. The Solana platform was founded by Anatoly Yakovenko, a former Qualcomm employee, back in 2017. Yakovenko, with the combined efforts of Eric Williams, Raj Gokal, and Greg Fitzgerald, set-out on a mission to address the existing problems of the Ethereum and Bitcoin blockchains. They wanted to create a distributed and trustless protocol that would provide more scalability. The Solana project is also backed by a lot of huge players in the field including the likes of Sam Bankman-Fried, one of the founders of the popular crypto-exchange FTX, and A16z, one of the biggest venture capital firms in the world.
As popular as Ethereum is right now in the crypto-space, most people, including the ones working on Ethereum themselves, know that it has been lagging behind in many aspects ever since DeFi has been popularized. As of right now, Ethereum can handle 15 transactions per second (TPS) which seems like it is pretty fast to a layman. But, BSC is considered a good alternative because of its ability to handle 100 transactions in a second. Solana blows these two blockchains out of the park by offering a whopping 65,000 transactions per second. Another major factor to consider while buying cryptocurrency is the gas fees or the fee to be paid for the computational efforts required to make a transaction successful. The average gas fees payable for a transaction for Ethereum is around $15 and this fee can go up to even $30-$50 sometimes. However, Solana raises the bar to new highs by boasting an average gas fee of around $0.00001. With the clear technical advantages, it is no wonder that Solana has attracted huge amounts of investment.
Solana – The edge over competitors
Solana achieves this technical edge over most of its top contenders mainly due to one particular innovation; Proof of History (PoH). As per the original “Blockchain Trilemma” concept, every blockchain can maximize only 2 out of 3 qualities, at the expense of the 3rd. Both BSC and Ethereum compromise on decentralization and scalability respectively. But Solana claims to solve this trilemma through its proof of history technology. Unlike its predecessors, Solana’s PoH algorithm creates a more efficient and higher throughput rate within the Solana Network. Simply put, the algorithm has the ability to keep track of the sequence of events and easily track transactions by keeping a historical record of these transactions. This whole process of continuously recording each transaction (Transaction Latency) takes about 0.4 seconds, while BSC takes about 75 seconds and Ethereum takes 5 minutes!
Solana is a platform that does exactly what its founders claim; address the fundamental issues that exist in blockchains right now. With its technical specifications tried and tested, it definitely has the potential to compete with the top cryptocurrencies like Ethereum and Bitcoin. The platform has already achieved so much at such a nascent stage and this will only improve in the years to come. So, it will be interesting to watch how the crypto-space will develop and adapt to these advancements in the years to come.