Only in a world where Shiba Inu (SHIB +0.33%) is recording 53 million percent gains in a year can the 12,000% gains by Solana (SOL 2.23%) get overlooked. That means with everyone looking at the ridiculous returns by the dog-faced coin, an opportunity still exists for the blockchain platform that was specifically designed to host decentralized applications.
OK, Solana isn't exactly a hidden gem, but it is nonetheless an alternative crown jewel of the cryptocurrency world. It was spawned with little fanfare nearly two years ago, but its fast operation at lower cost quickly caught the attention not only of cryptocurrency traders but also of developers, which should be a source of future growth for the platform.
Shiba Inu may be more popular or at least garner more headlines, but Solana has the greater potential. So the question is really not whether Solana can be the next Shiba Inu, but rather who's going to be able to stop Solana from being the top dog?
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Did I mention Solana is fast?
With a current market cap of $59.7 billion, Solana is the fifth-largest digital currency on the market. However, it still trails behind Bitcoin (BTC 1.24%) and Ethereum (ETH 1.79%), the two most valuable coins, by wide margins. What gives Solana some of the best growth opportunities of any cryptocurrency is that it is best at what it does.
Solana is fast and was designed for that purpose. It is currently one of the fastest programmable blockchains around, processing 50,000 transactions per second (TPS) with a maximum of 710,000 TPS possible as the network grows.
It's able to achieve such blazing speeds by using a combination of proof-of-stake (PoS) and proof-of-history (PoH) protocols. The latter is a revolutionary way of determining the time of transactions, without requiring every computer on the decentralized network to constantly communicate with each other in search of agreement. By doing so, the transaction verification process is slimmed down, thereby lowering costs.
Solana claims this innovation makes it a much more secure and better-performing blockchain than what its rivals can offer.
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Bargain basement pricing
Transaction fees are incredibly low on Solana, typically costing about 0.000005 SOL, Solana's coin. That charge works out to roughly $0.001 at the SOL coin's current price.
In comparison, the much larger Ethereum platform has seen its gas fees -- or the payments made for the computing energy required to process and validate transactions on Ethereum's blockchain -- run upwards of $100 for simple transactions and as much as $250 for purchasing non-fungible tokens (NFTs). Furthermore, Ethereum is plagued with congestion and slower transaction times.
The leading smart contract platform's costs have skyrocketed this year, making the average Ethereum transaction fee between $5 and $35 per transfer. Even Ethereum co-founder Vitalik Buterin has recognized that this is an issue and recently floated the idea of a five-fold reduction in fees.
While Ethereum will also soon transition to the more cost-effective and eco-friendly PoS model, narrowing the gap between it and Solana, there remains plenty to give an edge to the upstart.
Image source: Getty Images.
It's not over yet, because it hasn't even begun
Down from its all-time high price because of the broader cryptocurrency sell-off, it seems clear the blockchain platform is only just getting started, and not only because Solana is less than two years old.
Will Solana be able to post the same sort of nosebleed-inducing performance Shiba Inu has achieved this year? Highly doubtful, but it's unlikely that Shiba Inu will, either. Solana's faster blockchain network, low fees, and powerful ability to interact with numerous apps attracts a lot of attention from developers who want to build apps on this platform.
It's also attracting big-name cryptocurrency investors, including Alameda Research and Andreessen Horowitz. Sam Bankman-Fried, who founded, the FTX cryptocurrency exchange, lauded Solana last month as being light years ahead of the competition and doing many things that few others are attempting. Markets Insider quotes Bankman-Fried addressing a recent cryptocurrency conference:
"Solana is one of the few currently existing public blockchains that have a really plausible roadmap to scale millions of transactions per second at, you know, fractions of a penny per transaction, which is a scale that you need for this. That is not where a lot of other blockchains have been focusing, including Ethereum."
This recipe seems like a prescription for generating market-thumping returns in the future. It might not be the million-percent gains Shiba Inu saw, but reaching Ethereum-like pricing would still mean another 2,100% rise. I'm sure no one would turn their nose up at those returns, either.
