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3 facts to know about Solana, before buying the cryptocurrency
It’s safe to say that the cryptocurrency market is back in investors’ good graces. After cryptocurrency prices collapsed in 2022, they have seen monstrous growth over the past 15 months. There may be no better beneficiary of this positive momentum than Solana (CRYPTO: G).
This cryptocurrency it has skyrocketed 800% in the last 12 months alone. A $1,000 investment would be worth $9,000 today. Good luck finding a better performing asset.
Before you rush to buy Solana, make sure you take the time to understand these three facts about it.
1. Transaction mechanism
As EthereumSolana manages a betting test consensus mechanism. This means that the owners of the tokens are the ones who help approve transactions and validate the blockchain. Solana also has smart contract functionality.
But this innovative cryptocurrency has a unique feature known as proof of history. This system changes the way time is recorded on the blockchain, reducing the need to carry additional data and resulting in faster throughput. It helps explain why Solana can theoretically process 50,000 transactions per second (TPS). This is astronomically higher than Ethereum’s 14 TPS or Bitcointhat’s 5 TPS.
2. Build use cases
Solana’s differentiated infrastructure, with its focus on speed and low cost, helped introduce a valuable use case. Launched in February 2022, Solana Pay could be the killer app on this network. It allows consumers and merchants to connect directly via the blockchain, managing transactions in the native token, SOL, or a stablecoin. There is instant settlement and virtually no commissions.
For retailers, payment processing is a huge expense item that can erode their already slim margins. Solana Pay can help these merchants retain more of their revenue as profit.
Not only that, but because a blockchain is used, new features can be introduced. Merchants can attach a non-fungible token (NFT) to each purchase that acts as a receipt. This NFT could also offer future discounts or access to special events held by that merchant. The ability to interact with customers is what’s exciting here.
Solana also dabbles in the mobile space. It launched a web3-enabled smartphone, called Saga, in the summer of 2022. The hope is that this product can integrate more users into cryptocurrencies by making it easy to interact with various decentralized applications. A second, cheaper version of the smartphone was also introduced.
I think it’s encouraging to see a popular cryptocurrency like this attempt to bring greater utility, with the intention of transforming Solana from a tool used primarily for financial speculation to one that people can turn to in their daily lives. Time will tell whether these initiatives will actually succeed.
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3. Investor enthusiasm is high
Investors who are considering owning cryptocurrencies should be fully aware of the boom and bust nature of this industry. Narratives appear to drive price movements, especially in the short term. The result is that things will remain volatile for the foreseeable future.
With its current market capitalization of $77 billion, Solana has a valuation close to that of companies like Ferrari, MercadoLibreAND PayPal. I’m not sure if this is justified, but it probably raises a lot of optimism about Solana’s future. If there is one thing that is certain, however, it is that there are still many uncertainties in the long term.
Now you have more information about this booming cryptocurrency. But before you buy, you should ask yourself whether you believe in Solana’s prospects for the next decade and beyond. If you do, then it might make sense to initiate a small position in this digital asset right now.
Should You Invest $1,000 in Solana Right Now?
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Neil Patel and its clients have no position in any of the securities mentioned. The Motley Fool has positions and recommends Bitcoin, Ethereum, MercadoLibre, PayPal and Solana. The Motley Fool recommends the following options: Short June 2024 $67.50 PayPal Calls. The Motley Fool has a disclosure policy.
3 facts to know about Solana, before buying the cryptocurrency was originally published by The Motley Fool