Solanais a cryptocurrency launched in April 2020. Its dramatic price
growth in 2021 caught the eyes of a ton of investors and propelled the
cryptocurrency into the ranks of the top cryptos based on market
capitalization.
But, as
such, what is Solana? How it works? And, is the current cryptocurrency price
too low or too high?
What is
Solana?
Solana is a
blockchain platform that was created with the purpose of hosting decentralized
applications. Hence the comparison of several between Solana and other networks
such as Ethereum or Cardano.
Solana is an
“open-source” project which is currently managed and developed by the Solana
Foundation which is based in Switzerland in Geneva (like several other projects
in the world of cryptocurrencies). However, initially the blockchain was
instead developed in San Francisco in the United States.
Solana is
gaining recognition in the cryptocurrency market by being a much faster and
cheaper alternative to Ethereum.
Unlike
Ethereum (before the migration to Ethereum 2.0), Solana is a blockchain that
validates transactions using the proof-of-stake protocol. Unlike proof-of-work,
which Ethereum, Bitcoin and several other cryptocurrencies use.
Slowly, the
proof-of-stake protocol is gaining popularity in the digital community, mainly
thanks to the fact that this protocol is much more ecological since it requires
much less energy than the proof-of-work protocol.
What future
for Solana?
Several
Solana investors believe that the blockchain will become the leader in the
field of decentralized finance, decentralized video games as well as NFTs.
Although
Solana has been able to prove to investors and the market that its growth is
not only based on the popularity (or hype) of cryptocurrency, but rather on its
innovation.
However,
although the future of Solana looks bright and the community around the
platform continues to grow, the arrival of Ethereum 2.0 complicates things and
will most likely affect Solana's current capitalization.
Solana vs
Ethereum what to buy?
As you
already know, Ethereum is currently the industry leader in smart contracts with
several tens of thousands of active nodes versus only a few thousand for
Solana.
However,
several investors see Solana's technological advancements as the
"killer" of Ethereum.
Unlike the
“proof-of-stake” protocol, Solana revolutionized the way blockchain works by
creating the “proof-of-history” protocol. This allows validators to be
responsible for their own “clocks”. This cuts transaction verification time on
the blockchain since nodes do not have to expend energy to verify transactions.
This allows
the Solana network to validate up to 60,000 transactions per second…
Yes, yes,
60,000 transactions.
This
gigantic number of transactions per second validated on the network surpasses
the validation capacities of Visa, Mastercard, Ethereum and Bitcoin combined
together.
In addition,
transaction costs are much (much) lower than on Ethereum. Indeed, Ethereum is
known for gigantic “gas fees” which can go up to several tens of dollars per
transaction. On Solana, the cost of transactions comes down to a tiny fraction
of a dollar!
How to invest
in Solana?
Now that you
know what Solana is and how it works, let's explore how you can buy it.
Step 1: Choose
a reputable cryptocurrency exchange
Choosing a
cryptocurrency exchange is a crucial step for all new investors interested in
getting into cryptocurrency.
Here are
some factors you should consider (in our opinion) when choosing a
cryptocurrency exchange:
1.
Expenses: The fees vary from exchange to
exchange and according to the different types of transactions (deposits,
withdrawals, transfers). Transaction fees can be very high. Be careful when
choosing your first cryptocurrency exchange and check that the trading method
you intend to use is affordable and will not lose you money in a vacuum.
2.
Security: Check the background and hacking history
of the exchange before depositing money on it. Look for an exchange that not
only has a good track record, but also has a good security protocol and
discloses its strategy of action in case a hack occurs.
3.
The availability of
cryptocurrencies on the platform: If you want to buy Solana, it is still important that the
cryptocurrency is available on the exchange. For example, exchanges such as
Wealthsimple Crypto don't really have a huge array of cryptocurrencies
available.
4.
Utilisation facility: Although this is not the most
important factor, it is still important to check that the exchange you choose
is easy to use.
Personally,
the majority of our publication's editors preferBinanceor
FTX to buy Solana.
Step 2: Create
an account and deposit money
Finally, the
second and last step is to create an account on the chosen exchange and deposit
money there.
Often, you
will need to confirm your identity to be able to buy and sell cryptocurrency,
so have a photo of your ID and sometimes proof of residence ready.
Note: We do not advise you to keep large
sums of cryptocurrency in your exchange account. To reduce the risk of hacks
and theft of assets, we advise you to keep your funds on an external
cryptocurrency wallet instead.
Which wallet
to use for Solana?
Here are our
selections of external wallets for Solana:
Solana wallets
for your smartphone
If you're
planning on using your smartphone to host your wallet with your Solanas, you're
in luck, as there are plenty of great options out there.
Here are
some of the most popular:
Trust Wallet
Trust Wallet
is an application available on Android as well as iOS which allows its users to
send and receive SOL tokens.
Exodus
Exodus is a
wallet for portable devices (as well as for computers) which allows to receive,
send and exchange a ton of different cryptocurrencies and which provides a
technical support team present 24/7 for its users.
Wallets for
your browser
If you'd
rather have your wallet right in your browser instead, here are some popular
options:
phantom
Phantom is a
very easy to use browser extension, which allows users to store Solana tokens.
With Phantom, you also have the option to send, receive and trade your tokens,
as well as connect and use any decentralized application (dApp) on Solana's
platform.
Phantom is
currently available for Firefox, Chrome, Brave and Edge.
SolFlare
SolFlare is
a slightly less popular alternative to Phantom which offers a “non-custodial”
wallet to its users. The functionality of the extension is very extensive,
including staking, swapping and many other options to grow your assets on the
Solana platform.
How to stake
Solana?
For staking
Solana, the first step is to transfer SOL tokens to a wallet that supports
staking.
Solana Staker Wallets
Here are
some wallet options you can use to stake your SOL tokens:
- phantom: The phantom wallet can easily be used to stake
your SOL tokens on the platform, learn more about theofficial
platform guide.
- SolFlare: As mentioned above, SolFlare is a web browser
extension that can allow you to easily stake your SOL tokens, learn more
aboutthe official platform guide.
- If you prefer to stake
directly from your cryptocurrency exchange,Binance and FTX allow you! However, you
will not have the option to choose your own validator.
- If you rather prefer to
do everything yourself, you can also connect quite a few other types of
wallet and stake your tokens thanks to the staking commands on theSolana Command Line Tool.
Conclusion
It is
impossible for us to tell you if Solana is a good investment for your
portfolio. Indeed, it depends rather on your risk tolerance, the current
diversification of your portfolio and how much you believe in the project.
If your goal
is to get rich by investing $60 and hoping that investment will bring you back
$50 million, Solana is probably not for you.
However, if
you believe in the future of Solana and think that the platform will be able to
compete with Ethereum, then Solana is an excellent addition to your portfolio.
But, again,
never invest what you are not prepared to lose and, above all, do your own
research before investing. Our article is an entertainment and informational
article, not financial advice.