Bank of America Says Solana Could Take Market Share From Ethereum, Become Crypto Ecosystem’s Visa

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Bank of America analyst claims Solana could take market share from Ethereum. Noting that Solana is optimized for micropayments, gaming, and non-fungible tokens (NFTs), the analyst expects “Solana could become the visa for the digital asset ecosystem.”

Bank of America on Crypto, Ethereum and Solana

Bank of America (BOFA) analyst Alkesh Shah released a cryptocurrency research note this week claiming that Solana may pull market share from Ethereum.

The Bank of America analyst described that Solana “produces blockchain optimized for consumer use cases by prioritizing scalability, low transaction fees, and ease of use,” quoting Lily Liu , member of the Solana Foundation.

Its ease of use and low cost make crypto optimized for micropayments, games, and non-fungible tokens (NFTs). With over 50 billion transactions settled since its launch in March 2020 and a total value of $10 billion locked in, Shah said:

Solana could become the Visa of the digital asset ecosystem.

Solana is the fifth largest cryptocurrency with a market capitalization of around $46 billion. Ethereum is the second largest crypto with a market capitalization of almost $400 billion at the time of writing, based on data from Bitcoin.com Markets.

Noting that differentiating Solana from Ethereum is “proving fruitful,” Shah noted that the valuation gap provides an opportunity for Solana. Its Proof of History blockchain helps improve the performance of its Proof of Stake consensus mechanism, the Bank of America analyst said, noting:

These innovations enable industry-leading processing of approximately 65,000 transactions per second with an average transaction fee of $0.00025, while remaining relatively decentralized and secure.

Meanwhile, the Ethereum blockchain prioritizes decentralization and security over scalability, Shah described, adding that Ethereum’s scalability issue has led to periods of network congestion and fees. ultra-high transaction rates.

Pointing out that other scalable blockchains could reduce Ethereum’s market share, Shah explained:

Ethereum’s tiering could optimize it for high-value transactions and identity, storage, and supply chain use cases.

Crypto exchange Coinbase recently predicted that “ETH scalability will improve”. However, “As we welcome the next hundred million users to crypto and Web3, the scalability challenges for ETH are likely to grow.”

Last week, a JPMorgan analyst explained that the introduction of Ethereum merge and Layer 2.0 will speed up transactions and could significantly reduce power consumption. However, another JPMorgan analyst noted that Ethereum could lose its decentralized finance (defi) dominance due to scaling issues.

Meanwhile, Solana is not without problems. Last week, Bitcoin.com News reported that the Solana network had experienced “degraded performance due to an increase in high compute transactions… This results in increased transaction load and processing times, and some transactions failed”.

Do you agree with Bank of America that Solano will take market share from Ethereum and become the Visa of crypto? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

Image credits: Shutterstock, Pixabay, Wiki Commons

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