What is Solana and why did it go up and didn't seem to be affected when the whole crypto market collapsed? in this article I will explain it to you so you know if you should invest to it.
What is Solana?
But before that, did you know that if you invested in Solana last year you would have gains of around 11,871.1% according to CoinGecko, take note it was only 1 year and what if you bought Solana when it launched with less than $ 1 as of writing this article is already worth $ 243.3.
What exactly is this Solana, it is a cryptocurrency that is currently number four largest based on market cap, it is bigger compared to another big project like Polkadot and the famous meme coin Dogecoin. Solana was formed in 2017 from its founder Anatoly Yakovenko who is a great software engineer from the heavyweight companies Qualcomm, Dropbox and many others.
What's in Solana?
Like other crypto projects Solana is an open source and decentralized crypto that also uses proof of stake consensus like Cardano, Polkadot and other cryptocurrencies, unlike Bitcoin which is proof of work which is slow and not that eco friendly. But unlike other proof of stake crypto, Solana can be considered unique and one of the fastest crypto of all, if we compare Bitcoin is able to handle 4 transactions per second, Ethereum is 20 transactions per second , while Solana is able to handle not up to 50,000 transactions per second which if we compare to the Visa company, Solana is 2 times faster than Visa when it comes to handling transactions, Solana no longer needs to use of layer 2 solutions to make transactions faster here, unlike the long awaited promise of Lightning Network, Bitcoin and even Ethereum 2.0 or other layer 2 solutions in Ethereum such as Polygon or Matic.
Another advantage of Solana is its very cheap transaction cost of less than five cents, it is cheaper compared to Cardano and also very far compared to Ethereum which has a very expensive gas fee that sometimes reaches around $ 20 upwards depending on network congestion, Solana also solves the scalability issues that some of the large and popular crypto such as Bitcoin and Ethereum have. Solana did this because of what it called proof of history.
What is this Proof of History?
Basically, the proof of history is having a time record or timestamp within the blockchain, having this type of innovation becomes faster and you know the order of transactions and you don't have to go back and forth just to validate it. which causes slowing and time consuming to validate transactions as is happening with Bitcoin. So let's just imagine that you are a student and all the students in a classroom have their own watches that maybe Juan's watch is 5 minutes in advance, Pedro's watch is 5 minutes late and the other students in inside the classroom they have their own watch setting which for them is the right time, so if for example the first subject English is 7a.m. until 8a.m. then the teacher said that the whole section will be taking quiz at 7:40 a.m., so because the time on the watch varies from student, they still have to agree that it will be 7:40 a.m., so they have to take a quiz and because of this you can't do the quiz right away, ecause maybe they are still arguing or still having back and forth about who's right. So what if we just have a universal time for everyone, or let's say that we have a wall clock that is the right time, meaning there is no need to argue or validate for a long time, everyone in a section who is first or what is the right time. So that's what was done here in the group of history, we had a record of time so that everything would be better and the processes would be faster.
There is also what is called the Solana turbine which in simple explanation is a protocol where it can divide large formations into small ones as if it is divided so it becomes faster and easier to process information or transactions. Additionally like Ethereum it is also possible to make applications on Solana because it has Smart Contracts as so far there are 340+ apps running on the Solana network and many other things that Solana is innovating in blockchain technology.
Reasons why Solana keeps rising
1. NFT Marketplace
Like Ethereum, Solana also has an NFT marketplace and because of this, people can also mint NFTs using the Solana network, so one of Solana's popular NFT collection projects is the Degenerate Ape Academy or the 3D models of unique Apes and in just 8 minutes this 10,000 unique collection was sold out immediately, so in total during that time it reached 96,000 SOL or $ 23,344,320 in price as of today, so there's a lot of people who earn here in this NFT craze in Solana network.
2. Ignition
This is an event where it is possible for participants to win up to $ 5 million in prices and seed funding, it is important because it seems that this is Solana's way to collaborate or meet with other projects, in a way to makei it easier for crowd to introduce this crypto. Many projects were formed due to this event.
3. Big Investors
So of course for a crypto to hit, there must also be huge influencers or investors to invest in such projects, and in August 2021, Solana was able to race for $ 314 million plus money to scale Decentralized Finance even more in the Solana network, we know that the leader in DeFi right now is Ehereum. Well known investors who have funded it are Andreessen Horowitz who is known to have invested in Twitter, AirBNB and other startup tech companies. But even though Solana has been on the rise, it has collapsed in recent days.
Why did the value of Solana drop?
The price of Solana dropped by around 25% because there was a network called outage or in their term Resource Exhaustion, meaning the network went down due to the number of transactions it handled due to the sudden outbreak of Solana which allegedly reached 400,000 transactions per second, as a result of which applications running on the Solana network were forced to close for 18 hours first. Because of this, there are definitely a lot of people who have started selling, but now the Solana network is up and running again and the value is gradually increasing again.
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The information above does not constitute investment advice, financial advice, trading advice, or any sort of advice. I'm not a financial advisor nor an expert in such, so make sure you always do your own research first before investing. Happy Trading, Earning, Playing and Learning everyone!
Thank you for reading!
