It's been another crazy few weeks for Solana (SOL +2.15%) as another outage hit the blockchain. But this time there was relatively little impact on the token itself as investors brushed off reliability issues as one-time events.
The reaction is telling for a cryptocurrency that's been tied to Sam Bankman-Fried and FTX's collapse and seen high-profile NFT projects leave for other blockchains. But amid it all, the Solana ecosystem continues to improve steadily. And that may be the best case for buying this token below $25.
CRYPTO: SOL
Key Data Points
It's all about speed
If you're like me and you think the blockchain will increasingly be used as a payment layer or verification of digital assets, there needs to be quick scalability and speed for transactions at a very low cost. Solana is the obvious choice.
As I'm writing, the Solana network is completing 4,600 transactions per second and Ethereum (ETH 1.86%) is processing 10.4 transactions per second. When it comes to speed, they aren't even comparable.
On the cost side, the story is similar. A transaction on Solana costs a fraction of a penny, even when the network is slow, while Ethereum costs multiple dollars.
Scalability is key for a blockchain, and Solana is already performing at a level Ethereum developers hope to hit years from now.
Value is with Solana
Blockchains and their associated tokens aren't created equal. Some have large staking rewards (like Ethereum) and others are built on proof of work, but I think there's a good case to be made that Solana's token is a great value relative to others.
I already mentioned that Solana is executing far more transactions than Ethereum. Yet, its market capitalization is $7.8 billion, compared to $190 billion for Ethereum.
Like other blockchains, the number of active users on Solana has fallen recently, but not as quickly as the token has dropped. That's a buying opportunity for long-term investors.
CRYPTO: ETH
Key Data Points
Questions persist
As much as I like Solana, there are long-term questions about the blockchain and ecosystem. Some developers still prefer Ethereum Virtual Machine-, or EVM-, related blockchains, and that means both Ethereum and its layer-2 blockchains will remain a top choice.
There's also downtime to be worried about, which Solana suffers from time to time. For example, the blockchain goes down for a few hours every few months because of an unexpected problem. I think these are growing pains for a blockchain moving as quickly as Solana, but it's still a concern.
Investors diving in now need to consider Solana's strengths and weaknesses.
If crypto goes mainstream, Solana will win
If the crypto market and Web3 do go mainstream, it's likely the winning blockchain will look a lot like Solana. The blockchain needs to be fast and cheap, and right now there's no competing blockchain with the scale of Solana at this high speed and low cost.
That's why I think it's a no-brainer under $25, and I continue to be bullish on what's being built on Solana.
