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by Emma Newbery | Published on Nov. 29, 2021
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$1,000 invested in Solana a year ago would now be worth almost enough to buy a house in West Virginia.
Solana (SOL) is one of the superstar cryptocurrency performers of 2021. Its price has gone up over 10,000% in the past year -- massively outperforming more established cryptos like Ethereum (ETH) and Bitcoin (BTC).
If you'd bought $1,000 of Solana on Nov. 21, 2020, it would be worth a whopping $110,133 today, according to CoinMarketCap data. You can do a lot with $100,000 -- including almost paying for a typical house in West Virginia.
To put that in context, here's how other cryptocurrencies stack up:
Solana is one of several smart contract cryptocurrencies that have been dubbed potential "Ethereum killers." Smart contracts are tiny pieces of code that live on the blockchain and power many popular decentralized applications (dApps).
Ethereum was the first crypto with smart contract capabilities, but its network is now very congested and users face high transaction costs. As a result, both investors and developers are looking for newer, faster, cheaper, more scalable cryptos -- and Solana is a popular choice.
Here are some of the reasons behind its stratospheric gains:
Solana can process around 50,000 transactions per second (TPS) which makes it one of the fastest cryptocurrencies available. In contrast, Ethereum can only process about 15-45 TPS, at least until it completes its upgrade to Eth2.
Fees fluctuate, but according to Solana's website, the average transaction fee is currently around $0.00025. Looking at the recent transactions on Solana, each one cost around 0.000005 SOL, which is about $0.0011 at time of writing. Since Ethereum fees can go over the $100 mark at times of heavy demand, this is a substantial difference.
There are a lot of programmable cryptocurrencies available right now. One good way to see which ones have legs is to look at the number of projects and applications that are running on their networks. Solana hosts over 500 projects, including NFT apps, decentralized finance, and other tools.
It's always good to be cautious about buying a cryptocurrency that's just hit another all-time high. But the more important question is what you believe that token will do in the long term. If you think Solana will continue to outperform its competitors, then its recent highs are not necessarily a reason to hold back -- especially if you can buy one of the dips.
That said, if you're buying in the hope of another 10,000% return in the next year, you will almost certainly be disappointed. Solana may continue to do well, but it's unlikely to produce the same gains.
All cryptocurrencies carry risk, so it's important to only invest money you can afford to lose. Here are a few Solana-specific issues to be aware of:
Solana is available from most top cryptocurrency apps and exchanges. As with any investment, do your own research and make sure you fully understand the risks and potential gains. Ultimately, only you know how it may fit into your overall portfolio.
There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. And to find the one that's right for you, you'll need to decide what features that matter most to you.
To help you get started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list here and get started on your crypto journey, today.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery owns Bitcoin, Ethereum, and Solana.
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