What is Solana?

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By Bitpanda

Solana is a decentralised blockchain built to enable scalable, user-friendly apps for the world. The network supports thousands of projects spanning decentralised finance (DeFi), NFTs, and Web3.

  • Launched in 2020, Solana uses a unique hybrid system featuring a Proof-of-Stake (PoS) consensus mechanism to secure the network and a Proof-of-History (PoH) consensus mechanism to verify blockchain transactions.

  • Solana claims to be the fastest blockchain in the world with high transactions per second (TPS) and is a competitor to the popular Ethereum network.

  • The Solana network aims to be environmentally friendly, boasting a substantially lower energy impact compared to other blockchains.

  • SOL, the native token of the network, is used for staking and paying transaction fees on the Solana platform.

  • The Solana price reached its all-time high on November 6, 2021, at €256.46


What is Solana?

Launched in 2020, Solana is a decentralised blockchain built to enable scalable, user-friendly apps for the world. The network features thousands of projects across decentralised finance (DeFi), Web3, NFTs, and blockchain games.

As you may know, it is possible to run apps on some blockchains - these are called decentralised apps (DApps). How? Let’s imagine a blockchain was the operating system for your computer or smartphone (Windows, MacOS, Android, iOS, etc.), and DApps are running on it, just like ordinary apps on your devices. 

The Solana blockchain is one of those blockchains that supports apps, but with next-level speed and scalability. Solana achieves this advantage over its competitors with its innovative Proof-of-Stake (PoS) and Proof-of-History (PoH) hybrid protocol. Solana uses PoS to secure the network and a PoH consensus mechanism to verify blockchain transactions.

What are the differences between Solana and Ethereum?

To be the best, you have to beat the best. Solana is often dubbed the ‘Ethereum-Killer’, but how does it match up to its rival? Let’s take a look at their differences in more detail: 

  • Blockchain processes: Solana uses an impressive PoS/PoH hybrid system to maintain the network and support projects and users with lightning speed. Ethereum on the other hand currently relies on a PoW consensus mechanism, which offers increased security but is significantly slower.

  • Transaction speed: Solana’s speed claims are backed by numbers with significantly higher transactions per second (TPS). It’s worth bearing in mind that the upcoming Ethereum Merge could well change the tides in favour of the world’s second biggest crypto.

  • Environmental impact and sustainability: Solana prioritises sustainability and its PoH mechanism is touted as being so efficient that it has an energy impact that’s a fraction of other blockchains. Solana has also shared an energy comparison feature to highlight the network’s efficiency and sustainability efforts.  

 

How does Solana work?

Throughput is usually measured in TPS: the higher this number, the faster the blockchain. Solana’s outstanding speed allows apps used on the blockchain to run faster than other apps on different blockchains. 

In some blockchains, if more and more people were to start using these apps, they would likely become slow and overpopulated, because the blockchain would not be able to keep up. It’s like when your phone’s memory is close to full and the apps start slowing down. But Solana’s memory actually grows every time it’s about to get full, which avoids causing a slowdown. Solana’s great scalability - the ability to handle a growing amount of transactions by adding resources to the system - sets it apart from many competitors. 

In addition, Solana claims that its system not only offers decentralisation and speed but also security. The PoH protocol has a validation procedure that relies on the unique timestamping of blocks based on the order of blockchain transactions and the passage of time between them. This timestamping is centralised and works in tandem with PoS, allowing for efficient verification to occur much faster compared to rivals like Ethereum. 

How to buy Solana?

You can buy Solana through cryptocurrency exchanges like Bitpanda using fiat currencies, e.g. euros or U.S. dollars. It’s a good idea first to get familiar with the Solana price history and the current exchange rate. Once purchased, your Solana investment can be viewed and accessed in a digital wallet similar to a banking app. You then have the option to hold on to your SOL or sell it again via the exchange.


What is the Solana price history?

Like other cryptocurrencies, Solana is considered a highly volatile asset and its price has fluctuated through many highs and lows throughout its existence. It’s important to do your own research before investing in crypto. 

Since launching in 2017, there have been notable price developments for SOL. Solana reached its all-time high on November 6, 2021, at €256.46 and its all-time low on May 11, 2020, at €0.5008. Its current market capitalisation is €12.4B

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