Despite all the volatility, Bitcoin (BTC -1.69%) has been an incredible investment for those who bought and held for the long term. Over the past five years Bitcoin has grown by 1120% and in that time it has become a form of digital gold.
If you missed Bitcoin, there are still cryptocurrencies that will play a big role in our future. But the future of blockchains may not be digital gold, but rather a utility that could disrupt everything from payment networks to the metaverse. And Solana (FLOOR -4.90%) is a blockchain worth investing in today.
On the way to speed
The Solana blockchain is designed to be a fast and inexpensive blockchain that enables innovations that would be impossible to run on a blockchain like Ethereum (ETH -3.63%) which are built with proof-of-work (soon to be proof-of-stake) mechanisms that trade speed for security and stability. Given Solana’s relatively new status and explosive growth over the past nine months, there have been growing pains such as outages and slow transactions, but there have also been some impressive growth metrics.
- Daily active portfolios: increased from 354,000 a year ago to 1.1 million at the start of June 2022.
- Solana token transfers: averaged around 3.5 million per day since early April 2022.
- Daily active programs: increase from 67 a year ago to 1,068 on June 2, 2022.
You can see the explosion of daily active programs or applications that have been deployed on the blockchain below.
What draws most attention to Solana is its vast collection of non-fungible tokens, or NFTs. Developers were able to quickly create NFT projects and use them to fund everything from art to metaverse projects built on Solana. But there’s a lot going on beyond NFTs.
There are great decentralized finance apps like Raydium that allow users and projects to provide market liquidity to buyers and sellers for hundreds of tokens, often associated with NFT projects. Solana Pay is a payment layer using the Solana blockchain and a token like Solana or USDCwhich is a stable coin pegged to the US dollar, which means it is intended to maintain the value of a dollar over time.
There are several metaverse projects being built on Solana and this may be the place to look for the future of metaverse technology. Solana’s fast and low cost transactions will perform low amount transactions possible, opening up the possibility of selling more digital goods or services in the metaverse than might be available on a blockchain like Ethereum where transaction costs can be anywhere from a few dollars to hundreds of dollars just to purchase an item.
Growing pains for Solana
The biggest blow to Solana right now is the outages and bot attacks that have hit the network. This made actual performance much slower than the theoretical 50,000 transactions per second, and Solana was unusable at times. The development team has been fixing several bugs in updates with validators for months.
Although these are very serious concerns, they are not unexpected. Ethereum experienced similar issues early in its existence, including a hack of 3.6 million Ether in 2016 and forks when DoS attacks impacted the blockchain. Solana scaled to thousands of transactions per second in record time, which caused growing pains. I believe these technical challenges will be resolved in time, but Solana is unlikely to execute tens of thousands of transactions per second in the near future, as some had hoped.
The future of blockchain
If you think blockchain technology will disrupt many industries and the most widely used blockchains will be fast and inexpensive, Solana is probably the winner. There are still many bugs to fix and performance issues to fix, but developers have picked up Solana at a rapid pace and investors are pumping money into the ecosystem, making it a cryptocurrency to bet on. .
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