Ethereum (ETH 1.21%) and Solana (SOL -2.24%) are both making headlines in the world of cryptocurrency. They're growing in leaps and bounds when it comes to hosting projects on their blockchains and attracting investors to their coins. But their stories are a bit different. Ethereum arrived early on the crypto scene -- back in 2015. While Solana launched in 2020. Now, the question is which is the best buy today -- the more established player or the new kid on the block?
An important catalyst is on the horizon
Adria Cimino (Ethereum): Attention: An important catalyst is on the horizon for crypto giant Ethereum. The world's second biggest crypto already is a major player in decentralized applications (dApps). It dominates the market, with nearly 3,000 dApps running on its platform. But it may find its growth soaring in the coming years. That's because Ethereum is about to do something that will make life a whole lot easier for users. The blockchain platform is readying a major upgrade. It's one that will solve Ethereum's big problem: transaction speed.
Ethereum 2.0 is set to launch at some point next year. It involves the switch from a proof-of-work protocol to proof-of-stake. The platform will drop the energy intensive and time intensive process of complex computations to validate transactions. Instead, it will award validation assignments to potential validators according to coins held. The upgrade also involves the introduction of shard chains. They'll relieve congestion on the main network. All of this means transactions per second will climb from about 30 to as many as 100,000. At the same time, energy use will drop -- making the platform more eco-friendly.
If all goes well, Ethereum will not only maintain its leadership, but it may gain even more market share. It already has first-mover advantage. This means others will have to prove they're better -- or differentiate themselves -- if they hope to bridge the gap. Today is a good time to buy Ethereum because gains haven't been excessive compared to the performance of smaller cryptos. It's climbed about 500% this year. That's compared to more than 12,500% for Solana. Considering Ethereum's price is at about $4,300, it may not quickly double or triple an investor's money. But over time, this platform may continue to show its strength and dominance -- and deliver major gains.
Top option for scalability and speed
Jennifer Saibil (Solana): We're heading into the next stage in cryptocurrency, and Solana is one of the top options in terms of scalability and speed. As a newer cryptocurrency, it has the advantages of cutting edge-technology, and it also offers gains for investors as it grows. Then again, the price of Sol, or Solana's native token, has already gained a fantastic 10,000% over the past year. If you'd invested $100 last year, you'd be sitting on more than $1 million. That said, it's still a relative infant compared to some of the more mature cryptocurrencies, like Bitcoin (BTC 0.91%), with a $60 billion market cap as compared with Bitcoin's nearly $1 trillion.
Solana was created as a blockchain offering users the opportunity to develop "scalable, user-friendly apps for the world." It supports dApps, or blockchain-based projects, such as non-fungible token marketplaces and decentralized finance programs, and it already has more than 400 projects. The way it works is that a developer can set up a program, or smart contract, and it will appear on anyone's computer who is part of the network, or attached to the blockchain. What's different about Solana is that you can use multiple development languages to program, making it simpler to use, and also making it easy to communicate with other cryptocurrency platforms.It also does away with sharding, or side chains, which is an important part of how other cryptocurrencies are scaling their networks. With Solana, all of the dApps can communicate with each other, providing composability, or the ability to build projects on top of other projects. It's also more secure.
In addition, Solana is low cost and energy-efficient since it uses a proof-of-stake validation network, which means that users need to stake their tokens to validate transactions.The transaction cost is as low as $0.01, and the system can run up to 65,000 transactions per second, leading the industry. Solana is ahead of the cryptocurrency curve, and crypto investors should expect more from this growing platform.
Ethereum and Solana both represent promising crypto investments today. They've demonstrated their ability to perform in the dApps space. Deciding which to buy may be more of a question of investment style than anything else. Investors who are a bit more cautious may opt for the more established Ethereum. And those who are more aggressive might opt for a newer player like Solana. In any case, Ethereum and Solana are cryptos to watch closely in the coming year and beyond.