WTF is Solana (SOL)?
Decentralized applications, or simply dapps, are often considered one of the fundamental use cases when it comes to blockchain technology.
The last several years have seen decentralized applications come on in fast progress. Generally speaking, dapp developers have been launching things like games and decentralized finance (or DeFi) platforms on blockchain. However, there is an issue.
More often than not, these decentralized applications run on Ethereum. And Ethereum has been struggling to keep up with the huge demand - resulting in congestion on the network as well as soaring transaction fees.
That is where Solana comes in. Although it is a blockchain platform that was founded in 2017, it is always focusing on stepping into the breach, and take over where Ethereum seems to be struggling. So, what is Solana? What makes it so special? And how can you participate?
Solana is a high-performance cryptocurrency blockchain that supports decentralized applications and smart contracts. It typically adopts a proof of stake consensus mechanism with a relatively low barrier to entry as well as timestamped transactions to optimize efficiency.
It enables Solana to process around 50 - 65,000 transactions/ sec.with a theoretical limit of 70,000+ transactions/ sec. (in comparison to Ethereum’s 15 TPS and Bitcoin’s 7 TPS). When compared to other similar projects - for example, Ethereum 2.0 and Polkadot - Solana is a single blockchain and never delegates operations to any other attached chain.
Anatoly Yakovenko founded the Solana (SOL) platform back in 2017. He originally worked at Qualcomm prior to founding Solana. Yakovenko has a wide range of expertise when it comes to compression algorithms after he gained experience at Dropbox where he worked as a software engineer. Together with Greg Fitzgerald, Solana’s CTO, and Eric Williams, they came up with a new procedure of handling traditional throughput issues that were being experienced in the Bitcoin and Ethereum blockchains.
They were focusing on creating a distributed and trusted protocol that would enable more scalability. As of now, the team is backed by experiences from well-recognized organizations in the world, such as Dropbox, Twitter, Microsoft, Google, Intel, Qualcomm, Apple, etc. What’s more, the impact created by Solana has also brought the attention of numerous investors, such as Abstract Ventures, CMCC Global, SLOW Capital, Foundation Capital, Multicoin Capital, etc. (More on this later).
What Makes Solana Exciting?
You might be wondering what makes this blockchain platform so special, or exciting to many users? Keep reading.
When it comes to dapps, speed is of the essence. This is proved by the bottlenecks presently experienced by the Ethereum network. Nevertheless, Solana does not presently suffer from these problems because of its relatively high throughput architecture.
According to Solana, its blockchain can actually sustain 50,000+ TPS, or, transactions per second, at peak load. This would make it generally the fastest blockchain presently functioning. To put this into clear perspective, this is almost 1,000 times faster compared to Bitcoin - which has a maximum throughput of around 5-7 TPS. It is also 3,000+ faster compared to Ethereum, which has a maximum throughput of around 15 TPS.
What’s more, Solana claims a block time of an average of 400-800 milliseconds and a transaction fee of averagely 0.000005 SOL (or just a tiny fraction of 1%). This, along with its powerful scalability allows it to be well-positioned to serve up dapps that can support a huge number of simultaneous users without experiencing buckling under the load.
The blockchain platform attains this scalability without resorting to off-chain or second-layer technologies and does not utilize any kind of sharding. As a result, it is one of the very few layer 1 blockchains that can achieve 1,000+ TPS.
Practically anyone can get started with a Solana validator and assist to secure the network - this is unlike certain platforms. Although the process is entirely permissionless, users will require to preserve some basic hardware in order to participate - this is a server that satisfies the minimum specifications. Generally speaking, the network presently boasts almost 1,000 validators, which makes it one of the most widely distributed blockchains.
Have you ever heard of Solana’s Proof of History?
All Solana transactions and events are hashed through the SHA256 hash function. Basically, the function takes an input and then creates a distinct output that is very hard to predict. Solana typically takes a transaction’s output and applies it as the input for the next cash. The transactions’ order is currently inbuilt into the hashed output.
The hashing process forms a long and unbroken chain of hashed transactions. Generally, this feature allows a concise and verifiable order of transactions that are usually added to a block by a validator, without the need for a traditional timestamp. Furthermore, hashing demands a certain duration to complete. That means that validators can easily prove the amount of time that has passed.
This Proof of History is quite different from the procedure that Bitcoin adopts as its Proof of Work consensus mechanism. When it comes to Bitcoin, blocks are big groups of unordered transactions. All BTC miners add the date and time to the blocks they mine depending on their local clock. Generally, the time might vary depending on other nodes or probably be false. Therefore, nodes need to find out whether that timestamp is valid.
Validators process and send less information in every block by ordering their transactions in a chain of hashes. Applying a hashed version of the recent state of transactions significantly decreases the time needed to confirm a new block.
It is worth noting that Proof of History isn’t a consensus mechanism. Instead, it is a method of improving the time used to verify the order of transactions. Once combined with proof of stake, choosing the next validator for a particular block is much easier. More often than not, nodes require less time to verify the order of transactions. That means that the network selects a new validator faster.
In short, apart from its great scalability, Solana is also exciting to many users because it offers low cost, and is composable.
Who Is on the Solana Team?
The team at Solana has uniquely made their blockchain bearing in mind a long-term vision. This originates from the personal experience of Anatoly Yakovenko when he was watching telecommunications technologies nearly double in capability annually during his period at Qualcomm.
Solana is built by a company with a similar name which is currently based in San Diego, California. As previously stated, the Solana team generally comprises the former Qualcomm, Microsoft, Apple, Google, and Dropbox employees. And apart from being based on the same database technologies utilized by Microsoft and Google, Solana’s architecture is inspired by Filecoin, which is a decentralized data storage crypto project.
Who Are the Venture Capital Firms That Funded Solana?
Solana, or SOL, boasts of a few partners when it comes to the crypto industry, and many are the smartest and best in the crypto industry. Some of these firms include Tempest, Kin, Stardust, Formatic, dfuse, civic, Chainlink, akash, Terra, FTX, Project Serum, and much more.
How to Participate in the Solana Network?
Here’s a breakdown of how you could participate in this network:
1. Open an online account
As of now, many common crypto trading platforms haven’t yet added support for Solana. But with such a promising project, there is a high chance that Solana will be included in more crypto exchanges soon. The best option you could use to invest in Solana right now is Crypto.com. Before opening an account with Crypto.com, you will require to input your email address and set up a password. You will also most likely have to issue personal identification details to the website for tax purposes. After your identity has been verified, then you are ready to start investing.
2. Buy a wallet
Although this is optional, before investing in any cryptocurrency, you’ll need to think about where you will store your assets. It wouldn’t be prudent to store your crypto on an exchange primarily because exchanges are big targets for cryptocurrency hackers. You should remember that most exchanges have been previously hacked. Therefore, the only way you can store your crypto on an exchange is when you are trading in the short term.
You should rather store your cryptocurrency in the software or the hardware crypto wallet. Hardware wallets are generally the safest method to store cryptocurrency since they keep your assets offline on a particular physical device.
3. Make your purchase
You can purchase Solana on Binance using Bitcoin or USDT. Since Tether (USDT) is a stablecoin that’s pegged to $1, it impacts investing with fiat currency. Other cryptocurrency investors prefer to trade against Bitcoin since this offers a metric for how great investment does in regards to Bitcoin.
You could place your purchase order as a limit order or a market order. Although market orders will usually fill your transaction immediately at market price, limit orders are often filled when the cryptocurrency gets to a certain price that you specify. Nevertheless, if that crypto doesn’t fall to that price, your order will not be filled.
You can get to learn more at https://solana.com/
Solana, although a relatively new project, has offered the advantages it promises in scalability and speed. It also has a well-performing token price, which piques the interest of investors.