By now, most investors have seen the explosive potential of investing in cryptocurrency. Bitcoin, the original cryptocurrency, has grown to nearly $1 trillion in market cap and has gained more than 6,000% in value over the past five years. Some of the newer tokens have benefited from crypto fever and posted almost outrageous gains recently, such as Shiba Inu's unprecedented 64,000,000% gain over the past year. Relatively new cryptocurrency Solana (SOL -4.33%) has also been a big hit, gaining more than 11,000% since December 2020. It also offers one of the fastest and most scalable models in cryptocurrency, so its popularity is more than just hype. That's why Solana is my top cryptocurrency to buy before the new year.
What are cryptocurrency's goals?
There are several reasons cryptocurrency has captured investors' attention and money. One of them is the potential to effect a real change in global finance. Bitcoin has already made its mark and is now accepted as payment across many channels while holding assets in a digital store of value. That's a truly mind-boggling and disruptive concept for first-world citizens who are used to currencies having value because they are backed by a government. The opposite is true for cryptocurrency; cryptocurrency has value because users assign it value, and it's not regulated by a central authority, like a government or a bank.
Solana is a platform built on a decentralized blockchain that allows users to create dApps, or projects, cheaply and quickly. They operate based on the core concept of defi, or decentralized finance, so they might be decentralized money exchanges, for example. It costs less than $0.01 per transaction, and it can run 65,000 transactions per second (TPS). For comparison, Ethereum can only run 4,000 TPS, although it's getting an upgrade to change that. It's also built for composability, which means that developers can build apps on top of each other, and the various apps can "communicate" with each other. These features make for a highly scalable model, and it's no surprise that it's been growing quickly.
A meta-world of possibilities
Cryptocurrency has the ability to truly change the way we do business. Money can change hands instantly and without interference, and people all over the world can make peer-to-peer transactions without an intermediary.
There are more applications for blockchain technology as well, beyond finance. NFTs, or non-fungible tokens, have become popular on the platform as developers have created blockchain-based NFT marketplaces, and virtual gaming is another example of blockchain-powered programs.
One interesting use of the platform is animation. Render Network is a cryptocurrency focused on creating high computing power for artists to develop rich virtual worlds, an underpinning of the metaverse. It recently decided to migrate to the Solana platform, where it can access speed and security for more efficient transactions and a better overall user experience. More and more people are seeing how Solana can help them grow and scale, leading to widespread usage and potential for so many different uses.
Is Solana's value inflated?
Cryptocurrency is still new, and it's developing greater value as people see what it can do. Of course, the rise in price is due to speculation, which makes it difficult to see the real value. Not many investments can deliver yearly 11,000% gains, and Solana might not keep up that streak, either. However, the fact that it may be past the hype may give you more of a reason to buy now. That's because as a cryptocurrency with wide possible usage, it's likely to keep going instead of disintegrating, which other cryptos might be getting close to as their hype implodes. If we are nearing a crypto bubble explosion, you want to be left holding tokens with real-world applications. And that's why Solana gets my vote for the crypto to buy before the new year.