My first crypto purchases: Solana

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I’m late in the crypto space. Maybe that’s why I love Solana (CRYPTO: SOL) so much. I have no investment in Bitcoin (CRYPTO: BTC) or Ethereum (CRYPTO: ETH). Once you invest in something, you start to have a bias in its favor. These early coins brought in a lot of money for investors. It is therefore natural for people who have won big with these coins to think that they will continue to win.

I think the crypto revolution is still in its early stages. And while Bitcoin and Ethereum have definite advantages, so does Solana. Its technology is super fast compared to these old blockchains. And it is this dramatic increase in speed that makes Solana so important. Here’s why.

Image source: Getty Images

The market recognizes what’s going on

Solana has already had a wild ride this year. Its value soared from nowhere to crypto # 5 (measured by market cap) in less than a year. Its price evolution since the start of the year is illustrated below.

Solana price data by YCharts

Solana is up 10,000% since the start of the year. I could compare it to Shopify or Square, but I wouldn’t want to embarrass my favorite stocks. Silvergate Capital is up 600% and it looks like an anthill next to Solana.

Solana is now the third crypto whose price data will be reported on Bloomberg terminals to traders every day, after Bitcoin and Ethereum. This institutional decision indicates that Solana is an important coin and that people need to hear about it on a daily basis. But why is this relatively small ($ 66 billion) coin being mentioned in the same breath as Bitcoin and Ethereum?

It’s super fast

Bitcoin is popular because it is highly secure and has never been hacked. But it’s as slow as molasses. Visa performs an average of 1,700 transactions per second on its network. In 2019, Bitcoin recorded an average of 4.6 transactions per second. He got up to 7 transactions per second.

Solana carries out an average of 50,000 transactions per second. It’s 7,000 times faster than Bitcoin. And it’s 29 times faster than the Visa network. This is why Solana was my very first purchase. Speed ​​is essential for scalability and widespread adoption. And Solana is winning this race. It’s not even close.

Coin market capitalization transactions per second Bitcoin $ 1.1 trillion 7 Ethereum $ 500 billion 13 Solana $ 67 billion 50,000

Solana is smaller, so he has a much bigger advantage. Even after its fantastic run, the coin could easily jump another 1000% or more.

It’s super cheap

“Gas fees” are the transaction fees that users pay to miners to have their transactions included on the blockchain. While the fees change all the time, Bitcoin’s fees are incredibly high, comparatively. In April, it would cost an average of $ 59 to get your transaction on its blockchain. Bitcoin is therefore very secure, very slow and very expensive.

Ethereum has become the # 2 blockchain (its market cap is over $ 500 billion) as many other coins are built from its blockchain. Ethereum gas charges are also incredibly expensive as more and more people try to connect to this network. The price was under $ 10 for most of its history, but earlier this year it hit $ 70 per trade. On average, it’s around $ 39.

Solana’s fees, on the other hand, are well below a penny. Its average cost per transaction is $ 0.000025. So if you are wondering why the coin has increased 10,000% this year, this is why.

Solana is obvious

I am a crypto newbie and I am learning as I go. I am sure I will make a lot of mistakes investing in this area. But it seems to me that Solana has a key advantage in terms of speed and cost right now. Its blockchain is both super fast and super cheap. While old blockchains built on Ethereum may have change costs, going forward it seems to me that the vast majority of new projects will be built on Solana. So I think this coin will be more and more valuable in the future. I believe it will supplant Ethereum. And it might even give Bitcoin a run for its money.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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