Solana came into the market in 2017 as a Blockchain technology to eliminate the need for centralized finance. It is the biggest competitor of Ethereum with its extremely low transaction fees. Solana is also known to be a fast Crypto when it comes to the speed of processing transactions.
Its price has gone up a lot in the past few months, and it has become the fifth-largest Crypto when it comes to market capitalization. In fact, even its market cap went up to $66 billion in the past year. However, when investing in Solana, it is a good call to opt for the best Crypto wallet in Canada or any other part of the world.
Technology Of Solana
The Blockchain network of Solana works on both Proofs Of Stake and Proof Of History. At the same time, Proof Of Stake allows the different validators to go through transaction verification based on the number of SOL tokens that they hold, Proof Of History timestamps the transactions with their speedy verification.
Pros Of Solana
1. Fast Transactions At A Lower Fees
Solana can carry out up to 50,000 transactions in a second. The transaction fees in Solana are also very less compared to its biggest competitor Ethereum and many other Cryptos.
2. Smart Contracts And NFT
The market of NFT has been soaring heights in the past year. Solana took up this opportunity and entered the NFT market. Its NFT is known as Solanart, and it has gained a lot of popularity in the marketplace. The low fee and quick transactions have driven many NFT buyers towards Solanart.
3. Diversification Benefits
When people talk about Cryptos, Bitcoin is usually their first thought. However, Solana is another Crypto that offers great diversification benefits. Analysts believe that the price of Solana may fall further this year. Hence, it will be a good buy for the long-term.
Cons Of Solana
1. Less Decentralization
Compared to Ethereum and other Cryptos, Solana only has around 1,000 validators in its Blockchain network. Ethereum has around 20,000 validators. The higher the number of validators, the higher will be the security of the respective Blockchain network.
2. Inflation Exposure
Cryptos are one of the best hedging tools against inflation. This is one of the reasons why they saw a boost in 2020. Like most Cryptos have a cap on the total supply of coins, Solana does not. So, it is considered a weaker inflation hedge compared to its competitors.
3. Weaker Network
Solana is still new to the market with a very small community. The investors do not wish to choose Solana over Ethereum because of the aforementioned reasons. Therefore, Solana does not get much of a chance to expand its network.
The Bottom Line
No matter how new it is in the Crypto market, it has observed splendid and constant growth since then. Analysts consider the future of Solana to be bright and recommend adding it to your portfolio. In fact, its technology is only expected to get better with time.