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Beginners Guide To Solana: Definition, Pros, And Cons

  • Vrinda Mathur
  • May 26, 2023
Beginners Guide To Solana: Definition, Pros, And Cons title banner

Solana is a crypto computing platform that aims for high transaction speeds while maintaining decentralization. It makes use of several novel approaches, such as the "proof of history" mechanism. SOL, Solana's native cryptocurrency, is used to pay transaction fees and to stake. It also allows holders to vote on future upgrades.


 

What is Solana?

 

Solana is a blockchain platform for hosting decentralized, scalable applications. It was founded in 2017 as an open-source project by the Solana Foundation in Geneva, with the blockchain built by Solana Labs in San Francisco.

 

Solana is much faster in terms of transaction processing capacity and has significantly lower transaction fees than rival blockchains such as Ethereum. The cryptocurrency that runs on the Solana blockchain, also known as Solana (SOLUSD) and trading under the ticker symbol SOL, increased nearly 12,000% in 2021 and reached a market capitalization of more than $66 billion at one point, making it the fifth-largest cryptocurrency by this metric at the time.

 

Solana, like Ethereum, is both a cryptocurrency and a versatile platform for running crypto apps, including Degenerate Apes and the Serum decentralized exchange (or DEX). Its main innovation is speed, which is achieved through a collection of new technologies, including a consensus mechanism known as proof of history. Solana can process approximately 50,000 transactions per second, whereas Ethereum can only process 15 or fewer (the ETH2 upgrade, which is currently underway, is designed to make Ethereum much faster than it is now).

 

As Solana is so fast, congestion and fees are kept to a minimum. The developers hope that high speeds and low fees will eventually allow Solana to compete with centralized payment processors such as Visa. SOL is the native cryptocurrency of Solana. It is used to pay transaction fees as well as staking. SOL can be purchased and sold on exchanges such as Coinbase.

 

Despite its popularity, SOL was not immune to the 2022 cryptocurrency bloodbath. SOL's market capitalization had dropped to around $11.71 billion by October 3, 2022. It also dropped to ninth place in terms of market capitalization.

 

Solana's blockchain employs both proof-of-history (PoH) and proof-of-stake (PoS) consensus mechanisms. PoS allows validators (those who validate transactions added to the blockchain ledger) to verify transactions based on the number of coins or tokens they own; PoH allows those transactions to be timestamped and verified in real-time.


 

Why use Solana?

 

On a standard gigabit network, a centralized database can process 710,000 transactions per second if the transactions are no larger than 176 bytes on average. Using the distributed system technique known as Optimistic Concurrency Control [H.T.Kung, J.T.Robinson (1981),] a centralized database can also replicate itself and maintain high availability without significantly compromising that transaction rate. 

 

At Solana, they provide the same theoretical limits that apply to blockchain on an adversarial network. What's the secret ingredient? Finding a way for nodes to share a time when they cannot rely on one another. When nodes can rely on time, 40 years of distributed systems research suddenly becomes applicable to the blockchain.

 

The most noticeable difference between their method and those based on timeout is that timeout produces a traditional distributed algorithm in which the processes operate asynchronously, whereas their method produces a globally synchronous one in which every process does the same thing at (approximately) the same time. 

 

The method appears to run counter to the entire purpose of distributed processing, which is to allow different processes to operate independently and perform different functions. If a distributed system truly is a single system, the processes must be synchronized in some way. The simplest way to synchronize processes is to have them all do the same thing at the same time.

 

When Bitcoin was invented more than a decade ago, it solved a difficult problem: how to allow strangers anywhere in the world to conduct financial transactions over the internet without the involvement of a payment processor such as Visa or PayPal.

 

A blockchain is a technology that enables decentralized transactions and gave rise to the entire universe of cryptocurrencies that we now know. However, when compared to centralized networks such as those used by credit card companies, blockchains typically have one major disadvantage: they are slow. As of August 2021, Ethereum's network typically processes fewer than 15 transactions per second, compared to Visa's network, which processes tens of thousands.

 

Solana is one of many new crypto solutions aimed at making crypto networks more scalable and faster. It employs several ingenious technologies, including a novel mechanism known as "proof of history."

 

The Solana documentation describes the Solana open-source project, which is a blockchain designed from the ground up to be scalable. They explain why Solana is useful, how to use it, how it works, and why it will continue to work long after the company Solana is no longer in business. 

 

The Solana architecture seeks to demonstrate the existence of a set of software algorithms that, when combined to implement a blockchain, eliminate software as a performance bottleneck, allowing transaction throughput to scale proportionally with network bandwidth. The architecture then goes on to meet all three desirable properties of a proper blockchain: scalability, security, and decentralization.

 

On a standard gigabit network, the architecture describes a theoretical upper bound of 710 thousand transactions per second (tps) and 28.4 million tps on a 40-gigabit network. Furthermore, the architecture allows for the safe, concurrent execution of programs written in general-purpose programming languages like C or Rust.

 

Solana's architecture aims to demonstrate a set of software algorithms that, when combined with a blockchain, eliminate software as a performance bottleneck. Because of this, transaction throughput scales proportionally to network bandwidth.

 

Solana's architecture satisfies all three desirable blockchain characteristics: it is scalable, secure, and decentralized. Its architecture specifies a theoretical maximum throughput of 710,000 TPS on a standard gigabit network and 28.4 million TPS on a 40-gigabit network.


 

Benefits of Solana:

 

As new blockchains are created, speed, security, and developer friendliness remain important considerations. Here are some of the most significant advantages of Solana:


Benefits of Solana 1. Fast transaction times 2. Low gas cost 3. No mempool issues 4. Smart contact capabilities 5. Simpler to program 6. Consumes less bandwidth 7. Better for environment 8. NFT’s and smart contracts

Benefits of Solana


 

  1. Transaction times are extremely fast.

 

Solana is one of the world's fastest blockchains. One of the many reasons Parcel Protocol chose Solana was the fast transaction speeds. As more people begin to use blockchains on a large scale, blockchains must be able to process transactions quickly. "Stuck" or pending transactions that take minutes or hours to confirm do not provide a positive user experience. As of this writing, Solana can handle up to 4,000 transactions per second (TPS). In the future, TPS could theoretically be much higher.


 

  1. Low gas costs.

 

Some believe that for blockchain technologies to become "mainstream," the costs of using them must be lower than they are now. Solana is in a good position for that future state. Today, a Solana transaction often costs fractions of a penny, which is encouraging for developers building applications that require low-cost transactions in comparison to other popular chains.


 

  1. Solana Has No Mempool Issues. 

 

Solana Has No Mempool Issues. A mempool is a waiting area where a completed transaction awaits acceptance by the blockchain. One of Solana's main advantages over Ethereum is that there is no waiting period between processing a transaction and adding it to the blockchain. Essentially, it lacks a mempool. Instead, transactions are accepted almost instantly.


 

  1. Smart contract capabilities.

 

One of the main reasons why Solana is so popular among developers is the platform's many unique and innovative smart contract features. Solana accelerates blockchain engineering from Sea Level to Tower BFT. Solana smart contracts are written in popular coding languages such as Rust, C, and C++, making the platform even more accessible. Furthermore, Solana does an excellent job of providing detailed documentation for developers who are just getting started.


 

  1. Solana is simpler to program.

 

Ethereum is powered by Solidity, a software designed specifically for Ethereum. Solana is powered by Rust, the most popular programming language among developers. Rust, which is easier to use and more familiar, can build a wide range of applications, including games and blockchains. This makes Solana a more accessible platform for deploying apps than Ethereum, resulting in the Solana ecosystem's exponential growth.


 

  1. Solana consumes less bandwidth and is more robust.

 

All blockchains face the same problem: how to share data within the network. Consider a blockchain with 10,000 linked computers. When a block is mined, the information must be independently shared 10,000 times with all computers. This causes bandwidth issues, slowing down the blockchain.


 

  1. Solana is better for the environment. 

 

The process of mining Ethereum blocks is known as Proof of Work (PoW), and it requires a lot of computing power and consumes a lot of electricity. Ethereum consumes more energy per year than Israel and Belgium combined, significantly contributing to global warming. Solana employs Proof of Stake (PoS) and Proof of History (PoH) algorithms, which consume 99.9% less energy than PoW. Solana is simply better for the environment, making it a far more appealing option to its users and environmental groups.


 

  1. NFTs and smart contracts.

 

Ethereum is credited with introducing smart contracts into the crypto ecosystem. DApps can run on blockchain networks thanks to smart contracts. The growing popularity of smart contracts has resulted in the congestion that the Ethereum platform is currently experiencing. Solana is also expanding its presence in the rapidly growing non-fungible token (NFT) market. Its NFT marketplace, Solanart, provides NFT buyers with faster transaction speeds at much lower fees.


 

Cons of Solana

 

There are a few drawbacks that deter users from investing in it. Some of the most notable ones to be cautious of are as follows:

 

  1. Stability Deficit.

 

Solana is supported by a small user base. It has a much shorter track record than Ethereum. The Solana Foundation recently announced 'intermittent instability' with the blockchain. Reliability is an important factor in cryptocurrency investing, and Solana appears to have a long way to go before gaining trust.


 

  1. Inflation. 

 

Investors are drawn to cryptocurrencies to combat the general inflation problem that plagues fiat currency. Many cryptocurrencies address this issue by limiting the total number of coins that can be created. Solana, on the other hand, does not have such a limit. Its inflation rate is expected to fall by 15% per year until it reaches a fixed level of 1.5%. Solana has approximately 350 projects on its network, whereas Ethereum has nearly 2,900. These are some examples: NFT projects for DeFi Gaming apps


 

  1. Solana is challenging.

 

The rise of soldev.app, Solana Cookbook, and Solana's StackExchange, combined with an active community, made it easier for developers to get started with Solana. It is no longer necessary to scrape knowledge about building on Solana from multiple fragmented sources of knowledge. It's much easier to learn and build with Solana now than it was previously, but the reputation of it being difficult persists.


 

  1. Stability.

 

Even though Solana has a smaller user base and a shorter track record than Ethereum, investors may be less confident in the network's stability. Solana's reputation suffered a setback in September when the Solana Foundation tweeted that the Solana blockchain was experiencing "intermittent instability." 

 

Anatoly Yakovenko, CEO of Solana Labs, stated that the network had experienced similar stability issues the previous week. The company blamed the problems on "resource exhaustion," and said its engineers were working to resolve them. Reliability is key for cryptocurrency investors, many of whom weren't happy with the relatively vague explanation.


 

Conclusion

 

In conclusion, Building on any blockchain is a time-consuming and potentially risky endeavor. To gain some stability, we frequently avoid those who cause us the most uncertainty. Indeed, Solana can be difficult to understand at first and raises many questions, but the activity and participation that is taking place in its ecosystem right now are undeniably visible.

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