It’s a cryptocurrency you have probably never heard of, but Solana (SOL) is now the 6th largest cryptocurrency in the world. Solana rose 12.6% last Friday, setting a record high. With a year to date rise of over 8,000%, Solana is looking like a legitimate competitor to Ethereum (ETH). Despite a massive rise over the past 6 – 12 months, many have never heard of Solana. It has seemingly appeared from nowhere.
What is Solana?
Now the top performing cryptocurrency of 2021, Solana is a blockchain network that claims to offer the fastest transaction speeds of any blockchain network and currently powers more than 400 Decentralized finance, Web3, and Non-Fungible Token projects. The aim of Solana is to maintain those fast speeds and create an ecosystem to power products and services in a way that feels similar to Ethereum.
With transaction speeds of over 50,000 transactions per second, Solana do back up their claims – that’s faster than Bitcoin and Ethereum combined. The cost is currently a fraction of that of Bitcoin and Ethereum and added multi-language programming flexibility has attracted many developers. Unlike Bitcoin and Ethereum, Solana is not designed for payments and the native cryptocurrency is currently only used to fund programs and transactions.
Why Should I Care?
For traders, this momentum is hard to ignore. Over the last month, Solana has gained around 276%. It’s market capitalization of $57 million has now pushed past Dogecoin and Ripple to the number 6 spot. Solana is the best performing cryptocurrency among the top largest tokens. By comparison, bitcoin and Ethereum have only moved 23% and 48% respectively and big mover Cardano has only climbed 126%.
So, what spurred this dramatic climb? It appears the increasing interest in decentralized finance and non-fungible tokens are the catalyst. There is renewed hype for NFTs of late and many of those NFTs are built on the Solana network. NFT sales are 30x larger than those of 2020, so it is little wonder why Solana has seen a rapid boost. On the decentralized finance front, the growth within the Solana ecosystem is pushing the tokens value. Growth of over 130% in just a few months has seen Solana’s smart contracts valued at almost $4 billion – that’s 200% in August alone.
What’s Next?
As is the case with many meteoric rises in cryptocurrencies, a significant pullback always looms overhead. Charting the future of such a token remains difficult owing to the rapid volatility of cryptocurrencies. However, crypto bulls point to the fundamental advantages of Solana over some of the largest cryptocurrencies in the world. Chiefly, rather than acting solely as a payments system, Solana is a project building platform. While Solana is a high-risk asset like most cryptocurrencies, another major feature rollout could be enough to see this asset soar even higher.
