Do you want to invest in a cutting-edge cryptocurrency? Look no further than Ethereum (CRYPTO:ETH) and Solana (CRYPTO:SOL). Both blockchains are building compelling cases as platforms for decentralized application (dApp) development, which could help attract investors to their native tokens and support long-term price appreciation.
Launched in 2015 to expand the potential of blockchain technology, Ethereum has since soared to become the world's second-largest cryptocurrency, boasting a market cap of $490 billion. With its responsive development team and first-mover advantage, Ethereum is well-positioned to maintain its lead over the long haul.
If Bitcoin were a calculator, Ethereum would be a smartphone: a general-purpose computing platform facilitating a wide array of tasks through smart contracts (self-executing programs stored on a blockchain). It is the first blockchain optimized specifically for dApp development and is now home to projects including non-fungible token (often in the form of digital art) markets, decentralized crypto exchanges, and decentralized finance platforms which allow users to borrow and lend digital assets.
Other programable blockchains like Cardano and Solana offer advantages in transaction speed and environmentalism because of their proof-of-stake (PoS) consensus mechanisms, whereby miners validate transactions based on the number of tokens they hold. This system is a departure from the energy-hungry proof of work (PoW) protocols used to mine new coins and validate transactions. But Ethereum's development team is working hard to keep the network relevant.
The Ethereum blockchain plans to transition to a PoS mechanism through an update called Ethereum 2.0, which aims to make it more environmentally sustainable and increase transaction capacity. It is unclear when the full transition will occur because this involves coordination from many different stakeholders.
Solana is a programmable blockchain with a market cap of $63 billion. It boasts some pretty major technical advantages that can help it attract its fair share of dApp development and potential real-world uses.
Launched in 2019, Solana doesn't enjoy the name recognition of its larger rivals. But as the sixth-largest cryptocurrency by market value, it is rapidly gaining ground. According to data from Solana's official website, Solana is the fastest blockchain in the world -- capable of handling 50,000 transactions per second compared to Ethereum's 15. It achieves this through its unique and innovative consensus mechanism.
The Solana blockchain combines PoS and proof-of-history, which is a complementary algorithm designed to speed up the consensus process by encoding time on the blockchain.
According to its website, Solana is home to the fastest-growing dApp ecosystem in crypto with more than 400 projects, including decentralized finance and non-fungible tokens. The blockchain is also enjoying burgeoning institutional interest; in June it completed a $314 million private token sale, with the biggest purchases made by venture capital firm Andreessen Horowitz and blockchain-focused investment firm Polychain Capital.
Which token is best for you?
On the surface, Ethereum and Solana look like direct rivals. But crypto isn't a zero-sum game and both blockchains occupy distinct niches. Solana's technical advantages make it ideal for investors who want to bet on real-world utility. Ethereum's strong brand and first-mover advantage will also give it a long-term edge as its developers work to upgrade the network's technical capabilities.