Few asset classes have created millionaires faster than crypto. Known for their explosive volatility, these digital assets have allowed retail investors to trounce benchmarks like the NASDAQ Composite and S&P 500. That said, not all cryptocurrencies are created equal. Let's explore the pros and cons of Solana (SOL 1.56%) to decide if it could boom in 2025 and beyond.
A leader in blockchain technology
Launched in 2020 by its developer Solana Labs, Solana is a blockchain designed to be the ideal platform for building decentralized applications (dApps), which are programs built on top of a blockchain network. These can include crypto exchanges, games, digital art galleries, and more. Solana builds upon the weaknesses of earlier programmable blockchains like Ethereum, with dramatically faster speed and transaction capacity.
CRYPTO: SOL
Key Data Points
The Solana blockchain can handle 2,600 transactions per second compared to Ethereum's 15. It does this through an innovative consensus mechanism called proof-of-history designed to be faster and more efficient than older systems like proof-of-work or proof-of-stake.
Solana's technical prowess has boosted user demand. According to Coinledger, as of Sep. 17, 2024, the blockchain enjoyed 3.25 million active users and 35.99 million daily transactions, significantly more than its main rival, Ethereum, which only reports 1.13 million transactions. This growth could be because of Solana's increasing popularity as a platform for hosting meme coins, which are speculative (and often risky) crypto assets usually tied to online jokes or celebrity figures.
High-profile Solana-based meme coins include the largest one, Official Trump, launched by the U.S. president. The asset is worth an impressive $3.5 billion and helps boost Solana's network activity.
On the cusp of mainstream acceptance?
The Solana blockchain isn't without its challenges. For starters, meme coins are rarely a good bet for those who buy them. For example, the Trump Official coin has shed a jaw-dropping 77% of its value since its all-time high on Jan. 19. And Solana has hosted a slew of alleged cryptocurrency exit scams, such as the infamous Hawk Tuah coin, which has been sued over claims that some of its backers mislead buyers.
That said, Solana is also gaining increasing mainstream acceptance among major corporations and institutional investors.
Fintech giant PayPal has launched its stablecoin PayPal USD accessible through its popular PayPal and Venmo Wallets. Visa is also exploring a pilot program with the Solana network to help with rapid cross-border payments, similar to the role currently filled by the Society for Worldwide Interbank Financial Telecommunications (SWIFT). These high-profile partnerships could raise the market's trust in Solana, which could be good for its price stability and long-term performance.
Image source: Getty Images.
But perhaps Solana's biggest break could be just around the corner. This month, the Securities and Exchange Commission (SEC) acknowledged a bid by asset management firm Grayscale, which aims to create an exchange-traded fund (ETF) for Solana. If approved, this would make Solana the third cryptocurrency to get an ETF after Bitcoin and Ethereum, potentially unlocking the floodgates of institutional buyers who may be more willing to bet on the asset in a securitized form.
Is Solana a millionaire-maker cryptocurrency?
Solana has a lot going for it. With a market cap of $97 billion, it is already the fifth-largest cryptocurrency in the world despite only existing for five years. And it could slowly chip away at Ethereum (market cap of $317 billion) whose dominance can be attributed to its technical superiority for dApp development and growing acceptance among mainstream institutions.
That said, like many major cryptocurrencies, investors shouldn't expect Solana to post the explosive volatility common with meme coins or non-fungible tokens (NFTs). While Solana still has millionaire-maker potential in the long run, this will likely play out over years or decades, not weeks or months.
