Janice R. Andrews
Since 2012, Bitcoin (CRYPTO: BTC) has experienced four “halvings,” in which the incentives for mining the cryptocurrency have been cut in half every four years. Because they limit the supply of Bitcoin, bulls view these occurrences as significant drivers for the currency. The price of bitcoin increased by 109% in the 12 months preceding its most recent halving on April 19. Other cryptocurrencies saw a rise during that surge, which was fueled by expectations of reduced interest rates and the approval of the first Bitcoin ETFs with spot prices in January.
Yet since that fateful day, the price of Bitcoin has dropped by around 2%. This decline indicates that a large number of investors purchased Bitcoin before its halving; nevertheless, the absence of fresh inducements may be keeping prospective investors from making their initial investment. Currently, investors might be better off concentrating more on other minor cryptocurrencies that have been making larger gains than obsessing over Bitcoin. Solana (CRYPTO: SOL) is one of those tokens, having surged 472% in the 12 months preceding Bitcoin’s halving and a further 8% in the months that followed. Is today a no-brainer purchase?
The Distinctions Between Solana and Bitcoin
While Ether (CRYPTO: ETH), Solana, and other more recent cryptocurrencies are mined using the quicker and more energy-efficient proof of stake (PoS) technique, Bitcoin is mined using the older and more energy-intensive proof of work (PoW) method. Smart contracts, which may be used to create games, non-fungible tokens (NFTs), decentralised applications (dApps), and other cryptocurrency assets, are supported by PoS blockchains. To gain rewards, PoS tokens can also be “staked,” or locked up, on the blockchain for a certain amount of time. The sole natural usage of PoW blockchains is for direct cryptocurrency mining.
In other words, PoS tokens are valued by the expansion of their ecosystems, but PoW tokens are valued by their scarcity. For this reason, PoS blockchains—which provide the fastest transaction speeds and the lowest fees—are typically preferred by cryptocurrency investors.
Why Do Investors Find Solana So Exciting?
PoS blockchain Solana is the quickest in the world. Although it uses the same proof of history (PoH) technology as Ethereum, it speeds up the process. With this update, Solana can now process transactions five times quicker than its nearest rival Polygon (CRYPTO: MATIC) and 46 times faster than Ethereum. But Solana has only hit around 1.6% of its theoretical maximum speed, which means it has a lot of room to grow in its advantage over other PoS blockchains like Polygon and Ethereum.
The biosphere of Solana is expanding at a rapid rate due to its speed. Popular meme currencies like BONK and WIF, as well as decentralised exchanges like Jupiter and Orca, have been developed using it. It facilitates the settlement of stablecoin transactions for Visa (NYSE: V), PayPal (NASDAQ: PYPL), and Circle. Additionally, it has incorporated its Solana Pay payment system into Shopify’s (NYSE: SHOP) e-commerce services. Even last year, Solana released the Saga Phone, an Android smartphone optimised for Web3 apps. Although it’s currently a niche product, the dApps Store on it serves as a substitute for Alphabet’s Google Play Store. Over the next years, this continued growth ought to stabilise and increase the value of Solana’s native cryptocurrency.
Will Solana Survive Its Imminent Difficulties?
Over the last two years, Solana encountered three significant challenges. First, as it processed a rising volume of spam transactions, it experienced a string of network bottlenecks and security lapses. Second, one of Solana’s largest investors, the defunct cryptocurrency exchange FTX, hurriedly sold its tokens at a loss in order to settle with its creditors. Finally, investors shifted away from Solana and other speculative cryptocurrencies due of rising interest rates.
Most of those headwinds should blow through in the future. The goal of Solana’s developers is to use fresh upgrades to address congestion and security concerns. In May, FTX successfully concluded the $2.6 billion sale of discounted Solana tokens. Over the following several quarters, the bitcoin market might warm back up if interest rates stabilise and drop.
Is Now the Correct Time to Purchase Solana?
Like many other cryptocurrencies, Solana appeared to lose its appeal following the halving and acceptance of Bitcoin’s spot price ETF earlier this year. But because of this complacency, there is now a fantastic chance to purchase promising tokens like Solana, which has distinct long-term benefits over other PoS tokens like Ether and Bitcoin.
Solana is a formidable competitor in the cryptocurrency market with to its quick transaction speeds, growing community, and continuous developments. Solana may experience rapid development when the market steadies and it resolves its previous issues. Solana seems like an obvious choice for those seeking a new cryptocurrency with solid foundations and room to expand following the Bitcoin halving.
