SOL, the cryptocurrency connected to the Solana network, has climbed its way into the world’s top 10 largest cryptocurrencies by market cap in 2021 amid rumours its blockchain infrastructure could be a long-term competitor to Ethereum.
Here everything you need to know about the blockchain and price predictions for 2021, 2022, 2023, 2024 and 2025.
What is Solana?
Solana is an advanced open-source blockchain project. It was founded in 2017 by Solana’s current CEO Anatoly Yakovenko, a former engineer with chip maker Qualcomm Inc, two other ex-Qualcomm engineers and Raj Gokal, an entrepreneur who previously worked in the digital-health sector.
The project raised more than $25 million across various private and public sale rounds.
Solana looks to power the next generation of decentralized applications, or dapps, — which are basically just blockchain-based versions of regular apps, like the ones you get on your phone — by leveraging a number of breakthrough technologies.
Decentralised applications, or dapps, are widely regarded as one of the key use cases for blockchain technology.
In recent years, the number of dapps has rapidly increased with developers launching everything from games to decentralised finance (DeFi) platforms on blockchains.
But there’s a problem with this as the vast majority of them run on Ethereum, which has struggled to keep up with the increased demand – leading to congestion on the network and eyewatering transaction (or gas) fees.
But Solana is aiming to step into the gap and succeed where Ethereum is currently struggling.
Solana can currently handle over 50 000 transactions per second, more than Ethereum and Bitcoin combined.
This would make Solana the fastest blockchain currently operating.
To put this into perspective, this is nearly 1,000 times faster than Bitcoin (max throughput ~5-7 TPS) and over 3,000 times faster than Ethereum (max throughput ~15 TPS).
Developers can also write and launch customisable applications in multiple programming languages on the Solana blockchain.
How does Solana work?
Solana is a third-generation, Proof of Stake blockchain.
The blockchain has implemented a unique way of determining the time of a transaction called Proof of History.
Keeping track of the order of transactions is key for all cryptocurrencies.
Solana transactions – for example if a user is purchasing an NFT – are all hashed using the SHA256 hash function.
This takes an input and produces a unique output which is almost impossible to predict.
The output of a transaction is then used as the input for the next hash.
This hashing process creates a long, unbroken chain of hashed transactions.
This makes a clear transaction that a validator then adds to a block, without the need for a conventional timestamp.
Proof of History is different to the process used by Bitcoin as part of its Proof of Work consensus mechanism.
Bitcoin puts transactions into blocks with a single timestamp.
Each node has to validate these blocks in partnership with other nodes.
This causes waiting times for nodes to confirm a block across the network.
Proof of History is not a consensus mechanism, however.
It improves the time spent confirming the order of transactions.
When this is combined with Proof of Stake, selecting the next validator for a block is much easier as nodes need less time to validate the order of transactions, meaning a new validator is chosen quicker.
What has been built on Solana?
Solana has a well-developed and rapidly increasing number of dapps built on it, many of which fit into the DeFi niche.
Some of Solana’s most popular dapps are:
Arweave: A decentralised data storage protocol which aims to offer permanent file storage.
O3Swap: A cross-chain aggregation protocol well matched with Ethereum, Binance Smart Chain, NEO, and Huobi Eco liquidity sources.
Oxygen: A DeFi prime brokerage protocol that allows users to extract value from their idle assets.
SolStarter: An IDO launchpad for projects building on Solana.
Solana price prediction
Forecasting site WalletInvestor predicts Solana will finish 2021 between $153.77 and $184.15 despite speculation it could climb much higher.
By the end of 2022, they predict SOL will reach between $230.15 and $277.47, between $293.28 and $385.54 by the end of 2023, $339.10 and $480.50 by the end of 2024 and by December 31, 2025, WalletInvestor predicts Solana will climb to between $400.92 and $621.21.
Meanwhile, DigitalCoin predict Solana will reach $292.42 by the end of 2021, $362.58 by the end of 2022, $403.15 by the end of 2023, $488.68 by the end of 2024 and $593.35 by the end of 2025.
