What Is Solana (SOL) and How The Ultra-Fast Cryptocurrency Works?
In this article, we will talk about Solana (SOL) a blockchain platform, and we will understand how this ultra-fast cryptocurrency works
What is Solana (SOL), and how the ultra-fast cryptocurrency works? Solana, a blockchain platform developed in 2017 by former Qualcomm CEO Anatoly Yakovenko, aims to boost throughput above common blockchains while maintaining a competitive price.
Solana’s novel hybrid consensus model combines the proof-of-story (PoS) and proof-of-stake (PoS) versions of the lightning-fast synchronization engine. As a result, the Solana network theoretically can perform over 710,000 transactions per second (TPS) without scaling techniques.
What Is Solana (SOL) and How The Ultra-Fast Cryptocurrency Works?
Solana uses the third-generation blockchain architecture, developed to facilitate the creation of smart contracts and decentralized applications (DApps). The project supports several non-fungible token (NFT) markets and decentralized finance (DeFi) systems.
Launched the Solana blockchain during the initial coin offering (ICO) boom of 2017. The project’s internal testnet was launched in 2018, followed by several testnet phases that led to the official launch of the manner in 2020.
What makes Solana unique?
Solana’s ambitious project aims to uniquely solve the blockchain trilemma, a concept proposed by Ethereum creator Vitalik Buterin. Blockchain developers must overcome the three main difficulties of decentralization, security, and scalability.
As they can only offer two out of three advantages at once, blockchains often force developers to give up one of the features in favor of the other.
The Solana blockchain platform has introduced a hybrid consensus mechanism, which trades decentralization for speed. Moreover, Solana (SOL) is a pioneering project in the blockchain sector thanks to its novel PoS and PoH mix.
Blockchains are generally more scalable; the more and better they scale, the more transactions they can handle per second. However, decentralized blockchains are slower due to time inconsistencies and larger throughput, which requires more nodes to verify transactions.
Solana’s design addresses this issue by selecting a leader node based on the PoS mechanism that distributes messages among nodes. Thus, even without a centralized and precise time source. The Solana network gains from the workload reduction that leads to an increase in throughput.
Solana also builds a transaction chain by hashing one transaction’s output and using it as the input of the following one. This transaction history gives Solana’s primary consensus mechanism a name: PoH. This idea enables the protocol to scale more easily, which in turn, improves usability.
How does Solana (SOL) work?
Proof of history, a series of calculations producing a digital record confirming an event on the network at any given time, is the fundamental part of the Solana protocol. And can describe as a data structure that is a direct addition to a cryptographic clock that provides a timestamp for every transaction on the network.
PoH relies on PoS using the Tower’s Byzantine Fault Tolerance (BFT) algorithm. An optimized version of the Practical Byzantine Fault Tolerance (pBFT) protocol. Solana (SOL) uses it to reach a consensus, and Tower BFT keeps the network secure and also running and acts as an additional tool to validate transactions.
In addition, PoH can produce a single, reliable output as a high-frequency verifiable delay function (VDF) and a triple function (setup, evaluation, verification). So, the VDF maintains order in the network by proving that block producers have waited long enough for the network to move forward.
Solana uses a secure 256-bit hash algorithm (SHA-256), a set of proprietary cryptographic functions that generate a 256-bit value. The network periodically sampled the SHA-256 number and hashes, providing real-time data from the set of hashes used by the central processing units.
Solana validators can use this series of hashes to save particular information created before producing a particular hash index. Once it establishes this information and enters it, it establishes the transaction timestamps. Therefore, to achieve high TPS and block creation speeds, all nodes on the network must be equipped. And also with cryptographic clocks that keep track of events instead of relying on other validators to validate transactions.
The Solana Token (SOL)
Solana uses cryptocurrency SOL. Solana’s native and utility token offers a way to transfer money together with blockchain security through staking. SOL was introduced in March 2020 and has worked to rank among the top 10 new cryptocurrencies by market capitalization.
The SOL cryptocurrency token operation scheme is similar to that used on the Ethereum blockchain. However, even though they work similarly, Solana token holders stake the token to validate transactions through the PoS consensus mechanism. While SOL enables users to participate in governance, the Solana token is also used to obtain prizes and pay transaction costs.
The answer to the question “How many Solana coins are there?” will put more than 500 million tokens into circulation, with the current total supply of Solana topping 511 million tokens. However, the current circulating quantity of Solana is little over half of that. Furthermore, only 38% of SOL tokens are set aside for the community. Also the Solana Foundation and its founder control over 60% of them.
Suppose you want to know where to buy Solana and can purchase SOL tokens on most exchanges. The top cryptocurrency exchanges for trading on Solana are Binance, Coinbase, KuCoin, Huobi, FTX, and others.
Solana vs. Ethereum
Solana has garnered a lot of attention for its performance and speed. It has even been mentioned as a serious rival to Ethereum and other market leaders in the cryptocurrency space.
So how is Solana different from Ethereum, and can it be considered a potential Ethereum killer?
Solana can challenge the dominant smart contract platform in terms of processing speed as it is reportedly capable of reaching a speed of over 50,000 TPS. Additionally, Solana employs various consensus techniques to prevent transaction confirmation that is too delayed. As a result, Solana (SOL) is one of the quickest blockchains in the market thanks to this functionality. And also enables it to compete with markets beyond the cryptocurrency realm.
Compared to that huge number, the current low-scalability Ethereum proof-of-work model can only handle 15 TPS. So Solana is thousands of times faster than Ethereum. Moreover, Solana’s network is also extremely cost-effective because the project uses novel tokenomics and charges lesser fees.
Decentralized Internet of the Future
It’s also important to note that the Solana blockchain is more environmentally friendly and sustainable because it uses one of the PoS variants. On the other hand, Ethereum’s present PoW strategy necessitates utilizing much computer power.
However, the Ethereum upgrade to PoS is something the entire crypto world anticipates. A rigorously constructed new type of Ethereum will have an execution layer (formerly Ethereum 1.0) and a consensus layer (formerly Ethereum 2.0). It might significantly boost throughput, enhance scalability, lower transaction costs, and minimize unsustainable energy use.
Suppose you’re still wondering if Solana is a good investment. If you should buy it the answer is still up to you. Unfortunately, despite its obvious benefits, Solana, like any crypto project, has its drawbacks.
First, the Solana (SOL) blockchain can compete with high-end blockchain projects. However, it is still vulnerable to centralization due to the small number of blockchain validators. Moreover, anyone on the network can become a Solana validator. But this is still difficult because it requires a lot of computing resources.
Additionally, the protocol still claims to be a beta version of the main net and does not negate possible bugs and bugs.
Despite these issues, Solana remains one of the largest ecosystems in the cryptocurrency industry and appears to be on the right growth path.
Solana (SOL) itinerary
Solana has several exciting developments coming online or just announced.
Moreover, Solana Pay will allow merchants to accept USD coins and other tokens at Solana’s speed and low cost. The new product is the result of Solana’s partnership with Checkout.com, Citcon, and FTX, as well as the Phantom integration.
And one of the most famous music festivals, Coachella, which will take place in the second quarter of 2022, has also announced a series of NFTs produced by Solana. In addition, some NFTs have real-world value, including lifetime vacation passes, guest passes, VIP passes, and other special perks not yet announced.