Due to its focus on scalability, ease of use, and low transaction costs, the bank indicated in a study report to its clients that the Solana blockchain may very well become the equivalent of Visa for the world of cryptocurrencies and NFTs after hosting Solana Foundation member Lily Liu.
Is Solana’s High Throughput a Good Thing?
In a Tuesday research note, Alkesh Shah, a digital asset strategist at Bank of America, said that Ethereum competitor Solana may become the “Visa of the digital asset ecosystem.”
The Solana network launched in 2020, and its native token, SOL, has since risen to become the fifth-largest cryptocurrency by market capitalization, valued at $47 billion. In addition, it has settled over 50 billion transactions and created over 5.7 million nonfungible tokens in a fraction of the time it took Ethereum to do so (NFT).
According to detractors, speed comes at the expense of decentralization and reliability. However, Shah believes the advantages outweigh the disadvantages:
““Its high throughput, low cost, and ease of use make it suitable for consumer use cases including micropayments, DeFi, NFTs, decentralized networks (Web3), and gaming,” says the company.
Bitcoin, the most popular cryptocurrency globally, has gained 3.3 percent this week. Ethereum, its nearest competitor, increased by 5.3 percent. Other big cryptocurrencies have seen significant increases. BNB has increased by 9.5 percent, Cardano by 16.2 percent, and Solana by 10.6 percent.
Solana also has some of the fastest transaction times in the business. In the note, Shah explained:
The business claims that “these enhancements enable an industry-leading 65,000 transactions per second with average transaction costs of $0.00025 while remaining relatively decentralized and secure.”
Visa’s network can now process 1,700 transactions per second (TPS), with a theoretical capacity of at least 24,000 TPS. On its mainnet, Ethereum now processes about 12 TPS (more on tier twos later), whereas Solana has a maximum capacity of 65,000 TPS.
READ MORE ON:
- Will Solana Outperform Bitcoin and Ethereum in 2022?
- Advice for your crypto startup to stand out
- Why This Company Might Fail at Bitcoin Dividends and How It Will Pay Them
In March 2020, Solana, a decentralized blockchain that can handle enormously scalable programs, was published. Alkesh Shah is now the fifth-largest cryptocurrency, having settled $50 billion in transactions and generating more than 5.7 million NFTs.
Because both cryptocurrencies feature smart contracts, which are the essential building block of decentralized systems like blockchain-based banking and NFTs, Solana is frequently compared to Ethereum (nonfungible tokens).
““A somewhat less decentralized and secure blockchain has drawbacks, as proven by many network performance concerns since formation,” Shah added.
The cryptocurrency has gotten a lot of attention from investors in the last year, and its price has risen by more than 4,000 percent. It is, however, eclipsed by ethereum, its closest competitor. Solana is valued at $47 billion, or around one-eighth the value of ethereum.
In recent months, Solana has experienced several network performance issues, including Binance-confirmed withdrawal issues on Wednesday, social media complaints of slow performance on Friday, and what seemed to be a distributed denial-of-service attack on Jan. 5, despite Solana’s denial.
Since its start, Solana has settled more than 50 billion transactions, totaling more than $11 billion in value locked. It’s also been used to produce over 5.7 million NFTs, demonstrating its focus on consumer applications like money transfers and even gaming.