Polkadot and Ethereum that delegate operations to other attached chains (layer 2).
Solana can process 50-65,000 transactions per second. And in theory, it can process up to 70,000 transactions per second (TPS). In comparison to its competitors, Ethereum’s 15 TPS and Bitcoin’s 7 TPS.
The reason why Solana can process such high transactions per second with utmost efficiency is that it runs on the Proof of Stake (Pos) consensus mechanism that authorizes timestamped transactions along with a low barrier entry.
Solana has already announced plans to getting further improvements to this system for optimal efficiency.
Solana Token (SOL)
History of Solana
Solana is a project that was first introduced in a whitepaper by Anatoly Yakovenko, founder of Solana back in 2017 before launching globally in 2020.
Users use public key cryptography to sign transactions. This is a theme that is common across blockchain technologies.
Here’s a quick overview of the technical concepts covered in this article.
These are what enable blockchains like Bitcoin to function:
- Cryptographic hash functions, like SHA256. Used for generating blockchain account addresses, and for public/private key pairs used for digitally signing transactions.
- Transactions containing data which update the state of the blockchain.
For example, Alice sends Bob 10 bitcoin. Such transactions use digital signatures (via private key) to show that Alice really did send Bob 10 bitcoin. Otherwise, Bob could just fake the transaction.
- Blocks, which group transactions.
Indepth solana bitcoin ethereum
SOL token went from $1.5 on January 1, to a then peak of $16.9 on the 23rd of February 2021 with an all-time high of $127 back in Dec 2021.
SOL is currently trading at the $54.60 range with a market capitalization of $18,420,770,175 and is regarded as the 8th largest cryptocurrency as per Coinmarketcap.
It was announced by the Solana Foundation announced that there will be a total of 489 million SOL tokens. However, as of May 2022, the circulating supply stands at $18,405,765,503 and the total supply stands at 337,461,279.57 SOL
Where can you use SOL Tokens?
SOL tokens hold significance within the network for a couple of reasons:
Staking: A Solana Network user is eligible to stake SOL tokens directly on the network while also having the option to delegate SOL to an active validator in a bid to improve network security.
However, the launch did not have a substantial bullish effect on the price as the token drifted down to around 60 cents USD. SOL remained within the 60 cents-$1 range until early July 2020.
In July, Solana launched on the popular cryptocurrency derivatives exchange FTX, Serum.
The announcement helped the price of Solana shoot up to $5 over the course of the following month. The price settled around $3 for most of the year.
As the crypto market started the major bullish run at the end of 2020, Solana skyrocketed, moving from $1.5 on January 1, to a peak of $16.9 on the 24th of February 2021.
SOL currently trades at around $13.77 and has a market capitalization of $3,681,261,287 which makes it the 28th largest cryptocurrency.
The Solana Foundation announced that there will be a total of 489 million SOL tokens.
It’s worth noting that having a blockchain ledger containing transactions is nothing special.
The difficult part is getting a network to agree on the state of the ledger when it’s updated. This has been a topic of interest in distributed systems research for decades.
You’ll often hear the term Byzantine Fault Tolerant (BFT) thrown around. BFT refers to a class of consensus mechanisms that work when participants in the network can’t trust each other to behave well.
Imagine that Alice broadcasts a transaction into the network saying that she pays Bob 10 bitcoin.
In May this year, the cost of a single transaction on the Ethereum network touched US$71.72.
The high costs of transactions and issues related to scalability might be viewed as headwinds for Ethereum. But the leading altcoin network will soon transition to a proof-of-stake protocol, which will reduce transaction fees significantly while enhancing scalability features in the process.
Solana has returned 10,600% in the last year
One of the top-performing cryptocurrencies in the past year, Solana has gained 10,600% since November 2020.
When adding a block to the blockchain, there is a special challenge that must be solved; we need to guess a value for the nonce such that the SHA256 hash of the nonce and the serialized data fields produces a hash with a certain number of leading zeros. This “leading number of zeros” is referred to as the block’s difficulty level, the observation being that the larger the required number of leading zeros, the longer it takes to guess a nonce that produces a hash with that many leading zeros. Why is this?
Think of it like this; a SHA256 hash is 256 bits, which is 64 hexadecimal characters (each hex character requires 4 bits to encode. 4 * 64 = 256). Each hex character can be one of 16 possible values, and we have 64 of them, so there are 16^64 possible SHA256 hashes. Let’s say we want to find a hash with 20 leading zeros.
As of March 2021, about 267.2 million of these have entered the market.
Uses for SOL Tokens
There are two major uses for SOL within the network.
- Staking: users of the Solana Network, use SOL tokens for staking. They can either stake their SOL directly on the network or delegate them to an active validator to help secure the network.
Users who stake their rewards get inflation rewards in return.
- Transaction Fees: like most other tokens, users can use the SOL to pay for fees for sending transactions or running smart contracts.
Key Integrations for Solana
Solana proposes an innovative hybrid consensus model. Because of this, Solana has enjoyed interest from small-time traders and institutional traders alike.
For example, your bank is the only entity which can update your account balance in their database, and you trust them to do so. If you received news that your bank had decided to make their database publicly available for anyone to download and update, you would probably panic.
And yet, that’s what Bitcoin does.
Bitcoin is decentralized and trustless, meaning there is no trusted authority which controls updates. Bitcoin forms a distributed, peer-to-peer network of computers called “nodes” which run Bitcoin’s software.
This software contains a copy of Bitcoin’s blockchain, along with the ability to write updates to it, and communicate with other nodes on the network. Any person can download a copy of the software freely, and become a node.
If Bitcoin were using a traditional database, this would be chaos.
The number one smart contract chain uses a proof-of-work consensus algorithm to operate with a globally distributed network of nodes validating transactions. The transactional infrastructure of Ethereum differs from Bitcoin because it focuses on facilitating a decentralised development landscape rather than a peer-to-peer payments network. Bitcoin, for example, employs a UTXO (unspent transaction output) model, whereas Ethereum employs an accounting model. As a result, Ethereum can now process transactions twice as fast as Bitcoin, at around 15 transactions per second (TPS).
As Ethereum’s popularity, adoption, and development grew, so did network congestion and high gas fees. However, since the initial launch of Ethereum in 2015, co-founder Vitalik Buterin has been working on scaling solutions, with Ethereum 2.0 promising to resolve these issues.
Greg Fitzgerald, a former Qualcomm colleague, operationalized Yakovenko’s whitepaper a few months later, releasing the project on GitHub under the name “Silk.” Fitzgerald’s implementation also worked well, verifying 10,000 transactions in less than 0.5 seconds. Then, not long after, another Qualcomm colleague, Stephen Akridge, suggested that offloading signature verification to graphics processors could increase throughput.
Yakovenko enlisted the help of Fitzgerald and Akridge, and the three of them co-founded the Solana Foundation in March 2018. The project was originally known as “Loom.” However, a layer-2 Ethereum project called “Loom Network” launched around the same time, causing confusion in the crypto community.