Despite all of the volatility, Bitcoin (BTC 1.42%) has been an incredible investment for those who have bought and held long term. Over the last five years, Bitcoin is up 1,120% and in that time it's become known as a form of digital gold.
If you missed out on Bitcoin there are still cryptocurrencies that will play a big part of our future. But the future of blockchains may not be digital gold, but rather utility that could be disruptive to everything from payment networks to the metaverse. And Solana (SOL 4.19%) is a blockchain worth investing in today.
Image source: Getty Images.
Going for speed
The Solana blockchain is built to be a fast, low-cost blockchain that enables innovations that would be impossible to execute on a blockchain like Ethereum (ETH 0.34%) that are built with proof of work (soon to be proof of stake) mechanisms that trade speed for security and stability. Given Solana's relatively new status and explosive growth over the last nine months, there have been growing pains like outages and slow transactions, but there have been impressive growth metrics as well.
- Daily active wallets: grown from 354,000 a year ago to 1.1 million in early June 2022.
- Solana token transfers: averaging about 3.5 million per day since early April 2022.
- Daily active programs: increased from 67 a year ago to 1,068 on June 2, 2022.
You can see the explosion in daily active programs, or applications that have been deployed on the blockchain, below.
Image source: Solana Network Analytics.
How Solana is being used
What gets the most attention on Solana is its vast collection of non-fungible tokens, or NFTs. Developers have been able to build NFT projects rapidly and use them to fund everything from art to metaverse projects built on Solana. But there's a lot going on beyond NFTs.
There are major decentralized finance apps like Raydium that allow users and projects to provide market liquidity for buyers and sellers for hundreds of tokens, often associated with NFT projects. Solana Pay is a payments layer using the Solana blockchain and a token like Solana or even USDC, which is a stable coin pegged to the U.S. dollar, meaning it's intended to hold the value of a dollar over time.
There are multiple metaverse projects being built on Solana and this may be the place to look for the future of metaverse technology. Solana's fast, low-cost transactions will make small dollar amount transactions possible, opening up the ability to sell more digital goods or services in the metaverse than might be available on a blockchain like Ethereum where transaction costs can be a few dollars to hundreds of dollars just to buy an item.
Growing pains for Solana
The biggest knock on Solana right now is the outages and bot attacks that have hit the network. This has made actual performance far slower than the theoretical 50,000 transactions per second, and at times Solana has been unusable. The development team has been fixing multiple bugs in updates with validators for months.
While these are very serious concerns, they are not unexpected. Ethereum went through similar issues early in its existence, including a 3.6 million Ether hack in 2016 and forks when DoS attacks impacted the blockchain. Solana grew to thousands of transactions per second in record time, which has caused growing pains. I think these technical challenges will be worked out in time, but it's unlikely Solana will execute tens of thousands of transactions per second in the near future, as some had hoped.
The future of the blockchain
If you think blockchain technology will disrupt many industries and the most widely used blockchains will be fast and low cost, Solana is a likely winner. There are still many bugs to be fixed and performance issues to be worked out, but developers have chosen Solana at a rapid rate and investors are pouring money into the ecosystem, making this a cryptocurrency to bet on.
