During the COVID-19 lockdown, the cryptocurrency market experienced a massive turn that made it more popular than it already was. Bitcoin experienced a bullish run, as did Ethereum. Developers started exploring other projects and introducing them into the crypto community.
Solana (SOL) is one of the projects that rose to fame. It is a web-scale blockchain that was developed to process more than 50,000 crypto transactions per second – one of its kind. That’s why many crypto experts see it as a technology for the mass adoption of cryptocurrency. Applications hosted on Solana enjoy good computational bandwidth comparable to conventional internet.
It is a project with a promising future. When other cryptocurrencies were taking a dip earlier in the year, the crypto exchange’s native token, SOL, reached its all-time high of $200. This distinct outturn brought SOL to the attention of people in and outside the cryptocurrency.
As one of the leading cryptos in the world, it is not a surprise that many people want to learn about Solana exchange and the SOL token and why it pumped when other cryptocurrencies were losing their value.
Below are the basics of Solana and other important information.
What Is Solana?
In January 2020, Solana was launched without its source code away from the public eye until its release in March 2021 under the unspecified license. That’s because it was found in a period where many people already understood the importance of cryptocurrency and had high expectations for it.
Solana was built as a decentralized cryptocurrency platform based on a public base-layer blockchain protocol capable of high transaction speeds and scalability. It permits developers to create decentralized applications popularly addressed as dApps without designing around performance bottlenecks.
Solana has been making the headlines recently with its massive surge, the “Solana summer,” which attracted many investors, leading to a significant network instability.
The Solana native token, SOL, is used to make payments, trade and stake, etc. It gives users the power to make governance decisions regarding the Solana platform.
History of Solana
Anatoly Yakovenko, a former team member of Qualcomm, Mesosphere, and Dropbox, is the lead creator of Solana. According to Anatoly, curiosity drew his attention to the inefficiency of existing blockchains in performing more than 15 transactions per second. It was there that he started thinking about how a blockchain can handle multiple TPS in one go.
This curiosity conceived the idea of Solana. Anatoly worked with Greg Fitzgerald and Stephen Akridge, his co-workers from Qualcomm, in the development of Solana Lab.
In Q2 2018, Solana Labs started raising funds to build its new crypto network. Between April 2018 and July 2019, the team presented a little over $20 million through various private token sales.
Although Anatoly Yakovenko created Solana, Alameda Research and FTX Exchange also support it. The crypto billionaire, Sam Bankman-Fried, manages Almeda.
Furthermore, in March 2020, Solana launched on Mainnet Beta. It was after raising $1.76 million through a hosted public token auction. The project is currently on a beta network.
Currently, there are plans to upgrade from its current beta. This new stage ensures a more production-ready version that will be ready soon.
In August 2021, Solana’s price experienced a massive rise of 100%. It made it the tenth-biggest crypto by market capitalization since the history of cryptocurrency.
On CoinMarketCap, a market research platform, Solana hit an all-time high of $218.15 in October this year with a total value locked of $12,172,763,422.85 on smart contracts. Presently, the coin is ranked #6 with a live market cap of over $64 billion in coinmarketcap. There are over 300 million SOL in circulation.
How To Purchase Solana Coin
Buy a wallet (optional)
The first step of investing in cryptocurrency is having a storage facility. Store your assets in a certified wallet instead of an exchange platform. Exchanges are very vulnerable because they are prominent targets for cryptocurrency hackers.
If interested in trading crypto for only a short period, opt for a hardware or software crypto wallet to store your cryptocurrency.
Open an Online Account
Although Solana is not listed in most crypto exchanges, it is available in popular ones such as Binance, Coinbase, FTX and Huobi Global.
Crypto.com or Binance are the best options for exploring trading Solana.
To open an account with Binance, these are the steps you need to follow:
- You’ll need to enter an email address and create a password. Ensure you safeguard the password
- Some platforms use Know your customers (KYC), where you’ll also need to provide personal identification information for security.
- Once the verification is successful, you can purchase your coin.
Purchasing Solana Coin
We are going to use the Binance cryptocurrency exchange as an example. To purchase SOL, you can either make use of USDT or BTC.
Tether (USDT) is a stable coin with its value pegged at $1, just like fiat currency.
With BTC, you will get the equivalent of SOL coin when you trade your BTC/SOL.
To purchase SOL,
- Go to the Binance exchange platform, CREATE account, and log in.
- At the top of the page, click on “Buy Crypto”.
- Choose an option that is comfortable for you. There are options for Card deposit, credit/debit card, P2P trading.
The credit/debit card allows you to purchase cryptocurrencies using your cards while the P2P trading is for purchasing coins in the exchange through verified online crypto traders.
If you opt for P2P trading, you will have to open the page and select the seller you wish to transact with.
After choosing the seller, you go ahead and make payment. Then you notify the seller and your coin will be released to you.
One of the things to consider before transacting with a seller is the rating. Always go for traders with higher ratings.
Once you have purchased your stable coin (USDT or BUSD). The next step is to trade your BTC for an SOL coin.
To do that, go to “Trade” at the top of the page and click on “Convert” or “Classic” to trade your BTC or USDT for SOL cryptocurrency
If you opt for the Conversion feature, you will see a similar page below where you can convert your stablecoin or BTC to SOL coin.
If you wish to trade your USDT/SOL, you will need to click on “Classic”. You will be redirected to the trading page like the one below.
NOTE: To be able to trade your BTC or USDT for SOL, you will need to search for “SOL” using the search bar at the top right side of the page and select SOL/BTC or SOL/USDT trading pair.
However, if you opt to buy the SOL cryptocurrency with your debit card, you might not go through these processes.
But in a situation where you cannot purchase the Solana coin directly, you can purchase BTC or stablecoin (USDT) and use the conversion feature to convert your BTC or USDT to SOL.
Solana Fees and Charges
Solana fees are as low as $0.00025 per transaction, which fluctuates with time. The competition for block-space, which increases when the traffic on the blockchain increases, is set up by the price.
Compared to other cryptocurrencies, Solana’s transaction fees are 60 thousand times cheaper, which has contributed to its high scalability. As Solana continues to scale, the fees continue to decrease.
What Makes Solana Unique
One unique innovation that has placed Solana ahead of other cryptocurrency exchanges in transactions is proof of history (PoH).
Anatoly Yakovenko developed this transaction consensus. PoH allows for scalability and speed, the critical characteristics of a decentralized network.
Proof of History is a component in Solana’s Proof of Stake consensus. PoH shows the history of transactions by timestamping transactions immediately after they are added to a Solana block.
Solana has distinct features that go with its PoH. It generates a new block every 400 milliseconds, different from Ethereum’s 15 seconds and Bitcoin’s 10 minutes.
Solana is capable of carrying out up to 50,000 transactions per second. Such a vast number has suppressed the processing orders of the likes of the giant that is Ethereum, which is only capable of 30 transactions per second.
Also, it uses a decentralized clock as its timestamps reference. This timestamp is called the SHA256 hash function.
The primary purpose of proof of history is to create a fixed timestamp for every transaction on a decentralized platform which will serve as the standard time.
Solana Pros and Cons
The advantages of opting for Solana during trade include:
Solana’s capability to process 50,000 transactions per second while keeping meager transaction fees. Some of which includes:
- With the leverage on the Proof of History, Solana has achieved impressive scalability.
- Solana has several users who have increased the transaction value.
- Solana has achieved the economics of sales.
- Solana has composability between projects which saves the users the stress of dealing with a layer-2 system.
Since there are advantages of using Solana exchange, disadvantages also exist.
- There are still a lot of implementations surrounding their launch on the Mainnet Beta version.
- The hardware setup for Solana is more expensive.
- Solana has faced several backlashes for not being decentralized.
Solana has offered so many solutions to various traditional issues. These issues have been affecting earlier blockchain technology like bitcoin, Ethereum, etc., in their trading experiences.
The adaptation of Proof of History has created a more accessible means for verifying transactions and a more efficient consensus algorithm. Bitcoin and Ethereum have a strong contender, Solana, who will turn tides in the cryptocurrency world. In less than 4 years, the growth of Solana has had a remarkable display of growth and development.
If you follow the current market trend, you will notice that Solana is one of the cryptocurrencies with so many promises. There are chances of the platform becoming the best crypto platform in the future based on the platform’s road map.