Over the past decade, cryptocurrencies have rapidly emerged as one of the most popular wealth builders. One of the newest and most exciting cryptos to gain attention and adoption is Solana (SOL). During the bull run in 2021, Solana emerged as one of the top coins reaching an all-time high of $260. Developers, investors, and users alike love Solana due to its significant usability and outstanding functionality. In fact, people have often compared it to Bitcoin (BTC). Solana, however, has many distinctive features that differentiate it from other cryptocurrencies like Bitcoin.
In this blog, we take an unbiased comparison of SOL and BTC, so that you can conclude whether buying this exceptional cryptocurrency is worth your investment or not.
Features of Bitcoin
Launched in 2009 by an anonymous person called ‘Satoshi Nakamoto’, Bitcoin is the most well-known cryptocurrency in the world. Symbolized as (BTC), it has a market cap of 364B and operates on a proof-of-work consensus. Bitcoin has a lot of emerging financial competitors who have tried to replace it as a payment system. However, it stands strong as the largest cryptocurrency in the world by market capitalization.
Because of its accessibility and liquidity, it is extremely easy to use. Thus, Bitcoin is the most accepted cryptocurrency in the world.
Bitcoin is also the most secure blockchain network and the most trusted source of digital currency among users. Popularly called ‘digital gold’ this cryptocurrency is a potential store of value for its investors.
However, as you may suspect, Bitcoin is not without its flaws.
Because of its wide popularity, Bitcoin transaction fees are quite expensive. The average fee for a bitcoin transaction is $23.
However, the brighter side is that the high fees help in promoting a healthier and more secure network.
Another major flaw of Bitcoin is that it operates on a transaction speed of only 7 transactions per second. This is significantly lower than its emerging competitor Solana.
Additionally, Bitcoin mining involves an energy-intensive process to produce new coins and ensure the payment network is secure and verified. In fact, a single bitcoin transaction uses the same amount of power that the average American household consumes in a month, making it extremely destructive for the planet indeed.
Special Features of Solana
Launched in 2019 by Anatoly Takovenko, Solana is a public blockchain system that is decentralized in nature and operates in an open-source manner. Symbolized as SOL, it supports smart contracts, including NFTs and a variety of decentralized applications (dApps).
Before Solana was launched, blockchain transaction speeds were limited to 15 per second. The founders’ ambitious aim to create a brand new blockchain that could scale to global adoption led to the birth of Solana. With a peak capacity of 65,000 transactions per second, it puts more focus on being developer friendly and is immensely popular amongst investors. Solana’s most distinctive feature is its proof-of-history consensus mechanism. It is a unique way of building a trustless system for keeping track of the order of transactions conducted on-chain.
The transaction costs of the Solana network are quick as well as extremely minuscule ie. just $0.00025 per transaction. This is because Solana is able to process transactions faster with a higher block time and block size. This results in costs per transaction being consistently low. This makes Solana one of the blockchains with the cheapest transaction fees.
Another distinctive feature of SOLANA’s protocol is its focus on reducing the transaction time of the network. It decreases the validation time of both smart contracts execution and transactions. SOL claims to process 50,000 transactions per second with an average confirmation time of around 5 minutes.
Solana boasts of a high-performance protocol for scalability and user-friendly application, making it one of the best choices for developers who are looking for an alternative to Ethereum.
However, in the decentralized world, Solana is not considered to be ‘decentralized’ as Solana runs on significantly lesser nodes than Bitcoin.
The Solana Crash
Everything about Solana isn’t as rosy as it seems, and the popular blockchain has suffered a handful of outages and transaction stops last year, including a string of partial outages in January 2021. However, the biggest shock to rattle the crypto community came as Solana, once one of the best-performing coins of all time, crashed by 95% in November 2021.
Held to be the most unpredicted crypto crashes in history, the fiasco has dashed trust in the promise of Solana.
Mahin Gupta, Founder of Liminal, a digital wallet infrastructure platform said, “The FTX fiasco has surprisingly caught Solana, dragging it down further to its current state. Since earlier this year’s hack, SOL has been working hard to stabilize itself. FTX’s Solana-based decentralized exchange (DEX) Serum was also down by 53% recently. Some of the assets, like wrapped BTC on the Solana DeFi ecosystem, were backed by FTX, which now has almost zero value. The Solana assets and other assets in the ecosystem will be volatile in the near future. FTX and its founding team were big backers of the Solana ecosystem. $SOL is the second-largest holding of Alameda Research after FTT, which is why Solana is facing this crisis.”
Final Thoughts: Is Solana Still a Long-Term Buy?
After the FTX crash, everyone is asking the same question: What happens to Solana?
There is certainly scope for lots of discussion regarding the future of this incredible crypto.
Although SOL has faced a string of technical defaults which has resulted in its steep decline, it has a large developer community. So, as long as the developers keep building, SOL has the scope to rise again. Solana is definitely a technological advancement. It is a fast and minuscule transaction tool as compared to Bitcoin. Furthermore, it uses significantly less energy, and it is environmentally a better option for our planet as well.
If Solana continues to build with the end-user in mind, it can be expected to recover and grow with growing demands.
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