Among the high-flying cryptocurrencies taking the crypto market by storm, Solana (CRYPTO:SOL) has landed on many investors' watchlists. On this episode of "The Crypto Show" from Backstage Pass, recorded on Oct. 20, Fool.com contributor Chris MacDonald and The Motley Fool's Eric Bleeker discuss why Solana is a top cryptocurrency they're watching right now.
Eric Bleeker: Now, we're going to go to a large project, but one significantly smaller than Bitcoin. Let's talk about Solana, which was actually the crypto that we decide to purchase on last week's show. What is it about Solana that you like?
Chris MacDonald: Well, with Solana, when I think about various cryptocurrencies or crypto networks, speed and cost are two critical aspects to each individual network.
In the case of Solana, in terms of speed, it's one of the fastest networks. That brings about a whole range of possibilities. The block time on Solana is around 400 milliseconds, which is lightning fast when we compare that to Bitcoin or Ethereum, and about 710,000 transactions per second is the stated capacity which is absolutely insane-they're something like 10-30 times what Visa can process.
Those key factors just allow for so many things to be done on the network.
In terms of cost too, I should touch on that. It's about a fraction of a penny per transaction, so it's very cheap.
In terms of the decentralized application space, there's a number of excellent projects on Solana. The Solana NFT marketplace is a great example of one that's just absolutely taken off. The consensus mechanism used, which is intriguing. It's a proof-of-stake mechanism, but it's actually called "proof of history." They use timestamps and the validation process to speed it up. That's the secret sauce. I'm waiting for more blockchains to copy this, I think it's really quite something.
The other thing that I do like about Solana is there's no minimum size requirements for staking. There's a staking rewards of around eight percent are quite attractive. There are some fees with that but it's definitely an intriguing investment from both the passive income and a growth perspective. You've seen that how fast this has grown this year. It's been incredible for a reason.