Solana is cementing it’s place as one of the most preferred blockchain network giving leading blockchain network platform Ethereum a good run. Solana which native cryptocurrency token is called SOL has skyrocketed in price this year to investors’ delight.
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Let’s take a look at this CNBC prediction report on Solana. “Solana is the leading Ethereum competitor,” Matt Hougan, chief investment officer at Bitwise Asset Management, tells CNBC Make It. “I wouldn’t put all my chips on it, but I’m a big fan.”
the overall market has shown support for Solana, too. This year, SOL is up nearly 17,000%, according to CoinGecko. Now the fifth-largest cryptocurrency by market value, SOL hit an all-time high of nearly $250 on Thursday, and currently, it has a market cap of over $70 billion.
There are a few reasons why Ethereum and Solana are often compared. For one, both have smart contract capabilities. Smart contracts, or collections of code that carry out a set of instructions on the blockchain, are crucial in running decentralized finance, or DeFi, applications and nonfungible tokens, or NFTs.
“A lot of the fastest-growing applications of crypto technology have been built on Ethereum and rely on the Ethereum blockchain to function,” Hougan says. “If you’re investing in Solana, you’re betting that its technical sophistication will help it leapfrog Ethereum.”
Though Solana has been especially buzzy lately, it’s important to research and understand the risks before investing. After all, financial experts generally deem all cryptocurrencies to be risky, volatile and speculative investments.
Although Ethereum is older and more prominent, “Solana is a viable competitor,” says Brett Harrison, president of cryptocurrency exchange FTX US.
One reason is because Ethereum “is fundamentally limited in its capacity for global-scale applications due to the small number of transactions per second it can support,” Harrison says. Solana can support tens of thousands of transactions per second, while Ethereum can support roughly 13 transactions per second.
Solana also has “significantly lower fees,” Trabucco says. One of the main complaints about Ethereum is its frequently high transaction fees.