Cryptocurrencies are booming, with an ever-increasing number of investment opportunities emerging in the space. Most people have heard of the most popular cryptocurrencies, Bitcoin and Ethereum, but there are thousands of coins and tokens out there to choose from.

Here's why Solana (SOL -1.62%), in particular, looks like a good investment heading into 2022.

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Solana has experienced dazzling growth

Solana is the fifth-largest cryptocurrency, with a market cap of almost $57 billion. It is similar to Ethereum in that it is a blockchain platform that hosts decentralized apps, such as smart contracts, non-fungible tokens (NFTs), decentralized finance (DeFi) apps, and digital apps, among others. It enables transactions on its blockchain without the use of banks or other intermediaries. While Solana is the blockchain, it is also the name of the token that is used to facilitate these transactions.

Solana has been around only since 2019, but it has grown rapidly in just two years. It is currently valued at about $185 per token -- that's up from about $1.50 at the start of the year. It is one of the fastest-growing cryptocurrencies and actually rose to over $230 per token in early December before dropping down to its current level in the past couple of weeks.

A few different factors have fueled Solana's sharp rise. One of them is the growth of NFTs on its platform. NFTs are certificates of ownership of digital products, like sports memorabilia, art, drawings, music, and videos, to name a few. NBA Top Shot is one of the most popular NFTs, featuring video highlights of NBA players. Solana has been rapidly gaining market share and has become one of the leading NFT blockchains, with more than $775 million in NFT sales since August through more than 555,000 transactions, according to Cryptoslam.

Overall, Solana has more than 400 projects on its blockchain, with most of them NFTs and decentralized finance apps. That's far short of Ethereum's nearly 3,000, but it has grown to be among the leaders in a short time.

Speed kills

A big reason for Solana's success is its speed and efficiency. It has the fastest blockchain and currently conducts nearly 3,000 transactions per second, with the capacity to handle 50,000 to 65,000 per second and the architecture to handle much more than that if necessary.

Ethereum, by comparison, can currently handle only 15 to 45 transactions per second, although the cryptocurrency is coming out with Ethereum 2.0 in early 2022, which will be much faster.

Solana is not only faster than Ethereum but also cheaper, with the average transaction cost a minuscule $0.00025. That's about half of Ethereum's average gas fee of $0.0004 per transaction.

The other advantage Solana has is its unique validation process, called proof of history. This method is different from other cryptocurrencies in that it creates a timestamp that leaves a historical record that proves the transaction occurred. While other cryptocurrencies require the network to validate the transaction, the proof-of-history method makes validation much quicker, which enables faster transactions.

Plus, Solana has a powerful backer in Alexis Ohanian. The Reddit co-founder is investing $100 million in Solana through his venture capital fund, Seven Seven Six, to develop decentralized social media on a blockchain-based internet. Ohanian calls it the "next wave" of social media.

Next year, will Solana see the type of skyrocketing rise it has had in 2021? That's impossible to know, particularly as its major competitor, Ethereum, is ramping up its technology and improving its processes. But it has grown into one of the largest blockchain networks and has key advantages that should allow it to continue to gain market share.

As with all cryptocurrencies, move forward with caution, as they're a relatively new investment type, and regulation and other factors could certainly affect the space. But Solana has distinct advantages that should keep it near the head of the pack.