Solana (SOL) is the cryptocurrency that functions as the native token for the Solana blockchain, acting as a currency that allows different users to pay for the services that the blockchain offers.
One of Solana’s goals is to make decentralized finance (DeFi) more accessible for all organizations. It operates as an open-source project that facilitates the creation of decentralized applications or DApps. Solana’s blockchain can support smart contracts with lower congestion than its competitors, particularly Ethereum.
The Solana blockchain is charging forward on its mission to bring DeFi to the masses. SOL plays a significant role in that mission.
The Short Version:
- Solana (SOL) is the native token for the Solana blockchain, a platform that caters to the DeFi market.
- As a platform, it's popular for its fast transaction speeds and scalability.
- SOL is available on most major crypto exchanges. It can be purchased multiple ways, stored widely and easily staked.
- It's a quickly rising currency, though traders should be aware of how volatile crypto can be in general and use caution when buying.
Solana is currently one of the world’s top 10 most valuable cryptocurrencies by market cap, and many investors are interested to see how it will evolve in the near future. But is Solana the right investment for you?
What Is Solana Used For?
Solana is both a cryptocurrency and a platform for DeFi solutions like smart contracts, NFTs, and more. Since its release in March 2020, Solana has become popular for its improvements in the speed and scalability of blockchain transactions.
Solana’s innovative proof-of-history (PoH) consensus protocol keeps track of the time transactions are carried out, while its proof-of-stake (PoS) consensus protocol validates each sequence of blocks. These two systems working together negates the need for communication between computers to approve blocks. This leads to much faster transaction speeds. By making the network more scalable, Solana’s unique consensus model ensures that it can be useful for both large enterprises and smaller organizations.
Solana vs. Ethereum
One of Ethereum’s biggest rivals, Solana has been known for its significantly faster transaction speeds. Currently, Solana offers a throughput of 65,000 transactions per second (TPS) while Ethereum's TPS is just 15.
Because of its quick transaction processing, Solana hopes to become the “Visa of crypto.” Now Ethereum's developers have been promising that its throughput will catch up to Solana (and potentially even pass it) after the release of Ethereum 2.0. However, for now, SOL is a good alternative for those who've been frustrated by Ethereum’s transaction bottlenecks.
It’s not a perfect blockchain. Solana still has its issues, with much past criticism directed towards its frequent outages. But people looking for alternative options to Ethereum may be eager to purchase Solana to take advantage of the blockchain’s famously fast speeds.
How To Buy Solana (SOL)
The Solana currency is sold on many of the world’s top cryptocurrency exchanges, so there are many options to choose from. Major exchanges like Binance, Coinbase, Coinbase, FTX, and eToro sell SOL. You can also trade for Solana over decentralized exchanges — but you’ll need cryptocurrency to trade since these exchanges usually don’t accept fiat currency. The best option for purchasing Solana will vary depending upon your desired payment method.
Buy Solana With an ACH Transfer (Best)
If you are looking to purchase Solana using an ACH transfer, one of the most prominent exchanges for buying Solana is Coinbase. This exchange is one of the most popular around, and prides itself on being easy for new investors to use. With this exchange, you can purchase Solana using an ACH transfer, but the fees are relatively high.
Trade Solana (Good)
When it comes to trading, one of the best places to go is Binance. This exchange offers trading on over 600 different types of cryptocurrencies and DeFi tokens, giving you the most options for how to pay for the Solana you are looking for. Whatever coin you are looking to trade for Solana, Binance probably supports it and will charge you its famously low fees for trades.
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Buy Solana With a Debit or Credit Card (Worse)
For payments using either a credit or debit card, a good choice would be FTX. Even on the exchange’s more limited U.S. platform, investors can find multiple ways to purchase Solana. This platform makes purchasing Solana simple and charges fairly low transaction fees.
Paying with a card may be much easier for new investors who aren’t willing to connect their entire bank account to an exchange or don’t have other cryptocurrencies to trade.
Buy With PayPal or Apple Pay (Worst)
When using digital fiat options like PayPal or Apple Pay, things can get a little more complicated.
Although the payment platform (PayPal, Apple Pay, Google Pay, etc.) you’re using may depend on what you’re used to, not all exchanges are supported on every payment platform. eToro is a great crypto exchange for using PayPal and will allow you to purchase Solana after connecting your account. Apple Pay and Google Pay connect to Kraken, another popular crypto exchange. Just note that both of these platforms can charge relatively high trading fees.
How To Store Your Solana
Once you have purchased your Solana, you will want to keep it somewhere safe. Thankfully, when it comes to cryptocurrency storage, there are lots of options. Many exchanges offer an easy-to-access wallet for storing your coins directly within the exchange. However, some traders may prefer to keep a closer eye on their coins by having them transferred to a personal wallet.
In the end, both have advantages and drawbacks, so your choice will come down to personal preference.
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Use a Hot Wallet
When keeping your coins in a hot wallet owned by an exchange, you can access your coins much more easily and efficiently trade for other coins within the exchange. Exchanges take care of much of the upkeep of your wallet. They may also offer certain rewards for coin holders when they store large amounts of coins — another advantage.
One of the biggest drawbacks to this is that hot wallets are connected to the internet, making them more susceptible to hacks. A failed exchange might also shut down your wallet and prohibit access to your coins, since they control your private key.
Use a Cold Wallet
The alternative to holding coins on an exchange wallet is transferring your coins to a personal digital wallet. This option gives you the most control over your wallet and can maximize security through cold storage.
With cold storage, you can keep your coins offline so that no hacker even stands a chance of cracking into your wallet. By keeping your own wallet, you ensure that only you have access to your private key. That means no one can access your coins except you. Keeping a personal wallet also ensures you can stake your Solana.
As for drawbacks, if you lose your private key, you may find yourself locked out from your coins altogether. Moving coins in and out of a cold storage wallet also takes more time and effort. However, if you trust yourself and don’t mind the extra work, a personal wallet might be the right option for you.
Learn more about Hot vs. Cold>>Hot Wallet vs. Cold Wallet
How To Earn Solana for Free
Savvy investors can even use their Solana to acquire more at no additional cost. When you stake SOL, you commit to holding it for some time, making it unspendable. But in return, you earn more SOL. Think of it as staking earnings as if they were the interest from a savings account in a bank.
By staking your tokens on the Solana network, you assign your tokens to a validator. That person has increased power to approve transactions. Solana holders who help secure the network by staking their coins to one or more validators are rewarded with more Solana. Through staking, you can make the most of your SOL by letting it earn more money while you simply wait.
Bottom Line: Should I Buy Solana?
As one of the ten most valuable cryptocurrencies by market cap, Solana can certainly be worth considering for serious crypto investors.
Currently, the Solana blockchain holds an edge over Ethereum when it comes to throughput (TPS). And it's adoption rate is likely to increase over time as investors increasingly look for blockchains that offer speed and reliability. If Solana can continue to provide the solutions to these problems, the value of SOL will likely rise.
The cryptocurrency market is notoriously volatile, and the value of a single coin or token can rise or fall drastically in a moment. One day, what might seem like a sure thing could be the next day’s biggest flop. In the end, the choice of what investment to make must be made by each investor after extensive research. Solana is promising, but it is up to you whether or not you choose to commit to it.
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