Want an investment built to stand the test of time? Look for a strong brand and sustainable advantages. Cryptocurrency giants Ethereum (ETH -0.07%) and Solana (SOL 0.13%) fit the bill. Let's discuss why they could make excellent bets over the long haul.
1. Ethereum
More than just a way to store and transmit value, Ethereum is a global computing platform that can be programmed for user-created software and services called decentralized applications (dApps). Ethereum's industry leadership and extensive ecosystem of projects give it a lasting edge rivals will struggle to replicate.
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Worth $404 billion, Ethereum is the second-largest cryptocurrency by market cap. It hosts many of the leading dApp projects, including OpenSea, the most popular Non-Fungible Token (NFT) marketplace. NFTs allow people to trade digital proofs of ownership on the blockchain, usually in the form of art. The platform also hosts burgeoning metaverse platforms such as The Sandbox, which is worth $4.2 billion.
DApp projects are a big deal for Ethereum investors because they use the platform's native token Ether (the unit that determines its market cap) to transact and pay fees on the network. That said, Ethereum's popularity has resulted in some challenges with network capacity.
With a transaction speed of 15 per second, Ethereum has fallen behind newer blockchains like Solana, which can handle 50,000 per second. But its strong brand and respected development team are a big reason it is still the platform of choice for most users. Ethereum is also working to solve some scalability challenges through an update called the Consensus Layer, expected to speed up its transaction verification system.
2. Solana
Founded in 2017 by Qualcomm software engineer Anatoly Yakovenko, Solana pushes the limits of blockchain technology. The platform's unique design and blazing-fast speeds put it years ahead of the competition. Moreover, its strong development team could make sure it stays there.
As mentioned earlier, Solana can handle 50,000 transactions per second, making it possibly the fastest blockchain in the world. The platform achieves this through some key innovations. Unlike Ethereum, which uses a proof-of-work (PoW) system where miners solve puzzles to update the blockchain, Solana uses proof of stake (PoS). Its miners verify transactions by using coins they already own, speeding up the process.
Solana augments its PoW system with a complementary algorithm called proof-of-history (PoH), which records time stamps on the blockchain to help speed up the process of verifying transactions.
With the speed question addressed, Solana's developers are now focused on reliability. Solana has recently faced some major outages because of duplicate transactions and other challenges. And the team is working on a solution to these issues (although they haven't provided many specifics), which could help attract more dApp development and position Solana for lasting success.
Long-term investing is key
Cryptocurrency is a notoriously volatile asset class, but keeping a long-term perspective is key because it helps investors avoid selling at the wrong time. It's impossible to predict when the current crypto bear market will end. But Ethereum and Solana can help power a rebound because of their strong brands and impressive technical capabilities.
