This year has been especially difficult for cryptocurrencies, as the market for digital assets has lost more than $1 trillion in value since the start of 2022. That's even worse than the S&P 500, which is down 21% this year.
Thanks to the Federal Reserve's policy of aggressively hiking interest rates with the intention of fighting inflation, investors just aren't as enthusiastic about owning high-flying cryptos as they were throughout 2021. A weakening economy spurs a move toward safer financial assets.
But a down market means that astute investors can find some good investment opportunities in digital assets, what with prices down so much in 2022. One such crypto, Solana (SOL +0.95%), looks particularly attractive right now. With its price down a whopping 86% this year and at about $14 per token, is now a good time to buy SOL?
CRYPTO: SOL
Key Data Points
An innovative crypto
Solana was launched in April 2020 by two ex-Qualcomm employees, Anatoly Yakovenko and Greg Fitzgerald, who wanted to optimize for speed and cost. Solana was created with a proof-of-stake consensus mechanism, giving token owners the ability to lock up their holdings in order to validate new transactions and secure the network. It's like Ethereum's current system after the completion of The Merge.
But what makes Solana special is something called proof of history. This innovation eliminates the need for time stamps in the block data of the blockchain, freeing up storage space and increasing throughput. The result is that Solana's network can handle an incredible 50,000 transactions per second (TPS). This is far greater than Bitcoin's three TPS and Ethereum's 13 TPS. Amazingly, Solana is almost at the level of the top card network, Visa, whose network can process 65,000 TPS.
Since its launch, Solana has produced a remarkable return of more than 14,500%, easily making it one of the best financial assets to own during this time. It is now the 15th most valuable cryptocurrency network in the world, with a market cap of $5 billion.
Key catalysts
Unsurprisingly, Solana's incredible speed, coupled with its low transaction fees, makes it a potential disruptor to the lucrative payments industry. In fact, in February, Solana Pay was introduced. Solana Pay allows consumers to use their phones and a QR code to check out with merchants, which receive instant settlement and access to their funds. And because Solana Pay uses blockchain technology, other cool features can be introduced, like loyalty programs that incorporate non-fungible tokens (NFTs).
At a recent conference called Breakpoint, Solana announced its product road map, which includes smartphones with built-in crypto wallets that connect directly to the Solana ecosystem. Customers can preorder these early next year. Additionally, a store for decentralized applications, one that does away with fees, is on the horizon.
Probably the most exciting announcement was Solana's partnership with tech behemoth Alphabet, parent of Google. Google Cloud will produce a validator that can help to process transactions for Solana's network. And Google will start to store data from Solana, making it easily accessible for developers.
Out of the over 21,000 different cryptocurrencies in the world right now, Solana is definitely one that has obvious investment merit. Not only does this digital asset solve a problem in the payments market with its speedy transaction times and low costs, but its partnership with Google provides some serious legitimacy to the project and its long-term prospects.
Over time, these positive developments could help support a higher price for Solana, should adoption take off. That means it's probably a good idea to consider adding this innovative, exciting crypto to your portfolio.
