Is Solana a good investment in 2024?
Investing in the world’s fastest blockchain
Anatoly Yakovenko (founder of Solana (SOL)) finally figured it out…
He had the solution to blockchain’s BIG problem.
Remember, blockchain is the tech underpinning bitcoin, Ethereum, and every other crypto. It’s the fastest-growing technology in history.
But since bursting onto the scene in 2008, the tech has suffered from one killer problem.
Blockchain is slow.
Visa’s payment network can handle 65,000 transactions per second (TPS).
Bitcoin? Its blockchain can only handle 7 TPS. Ethereum can process roughly 30 TPS.
Remember, blockchain is a completely new way of record keeping. Instead of a middleman like a bank controlling the database, it’s run on a network of computers. This network of computers must talk to each other and agree on every new entry.
This process is incredibly secure… but it’s nowhere near fast enough to replace a stock exchange like the Nasdaq, which handles roughly 500,000 transactions per second.
Blockchain tech needed to speed up if it was to truly disrupt the core of the financial system.
Introducing blockchain… at Nasdaq speed
Anatoly downed two coffees and a beer at a San Francisco café. Then, he couldn’t sleep.
Awake until 4 a.m., he had a eureka moment: blockchains have the same “speed” bottlenecks as wireless networks. And they might have the same solutions.
It was a problem Anatoly was uniquely qualified to solve.
Anatoly is an electrical engineer by trade. For almost a decade, he worked at chip giant Qualcomm making distributed systems faster and more efficient.
He had been experimenting with blockchain technology for a while and knew there had to be some way to speed it up. After his eureka moment, Anatoly quit his job and founded Solana to build the world’s fastest blockchain. And boy did he come through…
Solana currently processes 65,000 transactions per second — just as fast as Visa. That’s 10,000X faster than bitcoin and 2,000X better than Ethereum.
Solana is also far cheaper to use than most other blockchains. It costs about three bucks to do a transaction on bitcoin. And between $8 and $40 on Ethereum. A transaction on Solana will set you back $0.00025 — a fraction of a penny.
How did Solana achieve these incredible breakthroughs?
Anatoly’s big idea is proof of history (PoH).
I could spend the next five pages talking about PoH.
It’s deeply technical and requires some complicated “moon math” to pull off. Here’s a brief overview…
On most blockchains, users have to “talk” to each other to figure out how to order transactions in each block. This causes delays and limits how many transactions a blockchain can process.
PoH solves this time challenge. Solana created a clock that essentially timestamps each transaction. It also automatically decides the order in which transactions get recorded onto the blockchain.
This dramatically boosts its speed.
Solana was built to execute transactions as fast as possible. The title of Solana’s first investor presentation read: “Blockchain at Nasdaq Speed.”
Solana is a “trustless” computer that can process transactions at the speed of light. That’s a recipe for disruption.
How does Solana make money
Like Ethereum and bitcoin, Solana is a “Layer 1” blockchain.
Think of Layer 1s as operating systems.
For example, your iPhone runs on Apple’s iOS. Samsung and Google smartphones are powered by Android’s operating system. Developers then build apps like Uber or Instagram on top of these platforms.
Layer 1s are the base of every blockchain. Then, apps like Uniswap (UNI) and Aave (AAVE) are built on top of these platforms.
Solana launched its blockchain in March 2020. Its hyper-fast speeds are attracting a ton of users.
Solana processes 91 million transactions per day (that’s more than Ethereum), up from just a couple million at the start of 2021.
Solana charges a small fee on every transaction, currently set at 0.000005 SOL.
It raked in $21.5 billion of revenues in the last month alone, and $260 billion in the last year:
Source: Token Terminal
And as you can see, transaction fees have been the primary driver behind Solana’s price surge in 2024.
Does Solana have a future?
“What if you could request a ride from your phone?”
That’s what Uber founders Travis Kalanick and Garrett Camp asked themselves on a cold winter night in 2008.
Uber was a genius invention. With two taps on your smartphone, a driver will come and pick you up. But Uber couldn’t have worked without another all-time great invention, the iPhone.
Imagine trying to use Uber on a laptop? You would be limited to ordering taxis from home or work. Drivers would have to carry laptops around in their cars to accept rides.
Apple’s iPhone made Uber possible. The iPhone’s built-in GPS could track your location, allowing riders and drivers to connect.
The iPhone unlocked Uber and dozens of other incredible new businesses. Solana will do the same for crypto. The world’s fastest blockchain enables a whole new class of decentralized apps that were previously impossible.
Until Solana, there wasn’t a blockchain that could handle the volumes required by traditional stock exchanges. Solana’s ultra-fast speeds and low cost make it the perfect place to build “high-frequency” apps like streaming, gaming, and messaging.
The point is: there isn’t one blockchain to rule them all.
Each chain has its own strengths. For example, apps that want unmatched security will still be built on Ethereum. And nothing will rival bitcoin as “digital gold.”
Crypto isn’t a winner-take-all market. It’s a multi-blockchain world where certain chains will carve out niches. The opportunity for this tech is so large that several chains will be worth trillions of dollars each. And we can make a lot of money investing in the best ones.
In short, Solana makes crypto faster, cheaper, and smoother than ever before. This is drawing in thousands of new developers… who are building game-changing apps… which will attract hundreds of millions of new users.
This is great for Solana’s token, SOL. Owning SOL is like owning stock in Solana, with a twist. It represents a share of Solana’s network and also acts like a currency.
New users need to buy SOL to participate in Solana’s ecosystem and use its apps. In other words, there will be a huge demand for SOL from projects and users who need it to transact.
Solana is now the fifth-largest crypto by market cap, valued at roughly $80 billion.
My research suggests it’s only getting warmed up. Solana today is like the internet in the early 1990s.
Lots of experimentation, a couple of early adopters… but its best days lie ahead.
Bottom line: Solana (SOL) is a good investment in 2024.
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