As the world watches and waits for Bitcoin to reach $60,000, you may have become aware of another altcoin which is quickly climbing the charts by the name of Solana. And just how did it get to be so high on coinmarketcap.com? Well, Solana is a unique altcoin project which aims to change the world.
What Is Solana?
Solana is a blockchain similar to Ethereum which was built to host a number of dapps or decentralized applications. Unlike Ethereum, Solana was built for speed and was started with the goal of becoming the fastest blockchain available. Thanks to some borrowed Bitcoin technology, Solana can process up to 50,000 transactions per second while also being decentralized and secure.
What Is SOL?
SOL is the cryptocurrency which is used on the Solana blockchain to pay fees and stake transactions. Someday, the creators of Solana want to hold votes of how users feel about changes to the blockchain, and they plan to count SOL as the number of votes someone has. For example, if you hold 5 SOL, you would receive 5 votes in the upcoming ballot for service changes to the Solana blockchain.
Who Invented Solana?
Solana was invented by Anatoly Yakovenko in San Diego, California. Yakovenko spent most of his life working in the telecommunications industry, and is well known in his field for creating smartphone technology. He developed the technology while he was an employee at Qualcomm. Somewhere along his journey, Yakovenko became a Bitcoin miner, which helped him to become familiar with the SHA256 hash function. And one night, Yakovenko came up with the idea to use the function to create a blockchain which would timestamp transactions. The whitepaper for his idea, the Solana blockchain was published in 2017. The project was called Solana after a popular beach in California.
How Does Solana Work?
Solana is similar to Ethereum 2.0 in that it runs on a sort of proof of stake consensus protocol. But it goes beyond just proof of stake in that it also has a proof of history model which is what keeps the system running so smoothly. Think of Solana as a factory, but one in which every factory worker can do the same job as any other. Imagine the factory workers are divided into groups and led by a leader. When you submit your transaction to the Solana blockchain, it is processed, time-stamped, given a clock, then added to a Solona block of transactions. Solana can add one block to its blockchain every 400ms.
So how is it so fast? Well back to those factory workers, because each of them can perform the job of all the others, all the groups of factory workers led by a leader can operate at the exact same time to process transactions. This means a number of clusters can be staking transactions at the exact same time. The worker nodes work to verify the transaction, once it is verified, this is when it is returned back to the leader to be timestamped. If the transaction is approved it is then added to the ledger.
This process alone isn’t enough to propel Solana to the heights of 50,000 transactions per second. But thanks to a couple additional protocols, this becomes possible. The first additional protocol is Gulfstream, and this protocol is important because it lets nodes know when it will be their turn to process a transaction. This way there is no lag time waiting for a node or group of nodes to come online, because the nodes which will be processing the next transaction have already been assigned. This protocol also dictates which node will be the leader node for the next transaction—as this is changed each time to help maintain decentralization. The second additional protocol is the Sealevel protocol, and this is what allows the small clusters of nodes to double check each other, as they run concurrently. This way no one cluster of nodes can be used to influence the system. And since the make-up of the clusters of nodes change with every transaction, this keeps the system decentralized.
How Do I Stake Solana?
Solana is unique, because unlike most of its competitors, there is no minimum amount of Solana you need to hold in order to stake transactions. Rather priority is given to those who hold more SOL, but if you have any amount of SOL you can stake a node. If you want to process more transactions, you’ll need to hold more SOL. If the node or nodes you are running are found to be misbehaving, they will be removed from the blockchain and your SOL will be taken away.
Is Solana Better Than Ethereum?
Solana and Ethereum are direct competitors as they both can be used for the exact same functions. Of course, Solana is the faster of the two, but this speed isn’t necessarily good. Because transactions process so quickly on Solana, SOL tokens are also created very quickly, which can lead to wild price swings and the coin supply goes up and down. Ethereum on the hand, while slower, is much more stable in terms of price swings. And Ethereum had the potential to be faster with layer two solutions, which although it’s nice that Solana has the speed built in, layer two solutions usually do well to speed up a blockchain enough to make users happy.
If you believe in the technology that Solana is providing, and think that it will become even more prominent as time goes on, then it might be a good idea to invest in a project like Solana. However, as mentioned above, Solana experiences wild price swings, so it may not be the safest investment. As of the writing of this article, Solana is still in the test stages, which means that its technology has yet to be proven. This can also make it an extremely risky blockchain to invest in.
Overall, whether you invest in Solana or not, is up to you. Just make sure you are informed of the risks and talk over any major financial decisions with someone you trust before placing a large investment.