Investing in Solana (SOL coin) explained for those engineers who want to learn in crypto investing.
The Solana coin was started and launched to the market when the pandemic of COVID-19 was spreading around the world. At that time, this cryptocurrency (SOL coin) was worth even less than a dollar. However, over the years, the network has evolved and the Solana coin price has performed a big increase in Solana coin price rates.
The coin showed a rapid increase in a very short period – it took only two years for Solana to grow from $10 up to $249. Although SOL coin is down to $32 today, the investors don’t lose their confidence that the cryptocurrency will recover and bring good returns. Some analysts expect this to happen when the crypto market industry recovers because as you might have seen, the majority of assets are now almost 50% down from the year before.
What caused such an impressive increase in Solana coin price rates? Researchers and network participants say that the rising popularity became possible because of the concept of this project. The developers aimed to make DeFi accessible even to non-traders. They succeeded thanks to the innovative features of the network. Let’s see how it works.
The principles of the Solana concept explained for engineers
As you might already know, the majority of blockchain-based protocols apply proof-of-work or proof-of-stake models. The Solana protocol is different because it relies on the proof-of-history model. In a nutshell, these are records that apply computations in order to show when certain events inside the network took place. The proof-of-history is a new model implemented by Solana. Its key function is to make sure that the transactions are fast and the network is safe.
What makes Solana stand out from the crowd is that it applies a hybrid consensus mechanism by combining proof-of-stake and proof-of-history. Such a unique design allows the platform to solve the problems of transaction speed and scalability.
Solana has one leader node selected in accordance with the proof-of-work model requirements. Thanks to this, the platform doesn’t need to decrease the number of verified transactions because of the higher throughput. Currently, the ecosystem is capable of processing 50,000 transactions per second.
To conclude this abstract, the uniqueness of Solana lies in the proof-of-history concept. With it, the network can give better scalability, which, consequently, makes the protocol more user-friendly.
Key Events Impacting Solana (SOL) Price
- 2021 was the most successful year for Solana investors. In just a year, its native Solana coin SOL coin gained more than 13,000% outperforming all the other cryptocurrencies that year. At the beginning of 2021, the SOL coin token’s price was around $3, while in December 2021 it was closing at around $200. The most successful period was the summer of 2021 when the SOL coin price increased from $34 to $174 in just two months.
Such a success was caused by the increasing visibility of the platform. The developers of the network proved that the ecosystem had enough capacity to become the fastest blockchain in the industry. The white paper of the project provided theoretical grounds why it has enough capacity to process more than 700,000 transactions per second in the future. This claim contributed to the extreme growth of demand for the SOL coin.
- At the beginning of 2022, the entire crypto market experienced a big crash. Solana was one of the coins that dropped significantly. 6 months after the Solana coin reached its all-time high in November 2021, it fell down to $81, which was a 68% decrease.
- Recently, at the beginning of June, the Solana blockchain suffered an outage, because of which the validators weren’t able to process transactions. As a result, the Solana coin dropped 12% in just 24 hours. Today, the SOL coin price is $32.54.
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Pros of Investing in Solana (SOL)
- Solana is the blockchain that is able to perform the highest transaction speed. Such a feature is very valuable in the modern crypto industry. The more people will be willing to benefit from it, the higher the Solana coin price will grow.
- The verification mechanisms of Solana allow it to charge fewer fees than Ethereum. Even despite that, the number of processed transactions is much higher.
- Solanart, the NFT marketplace operated by the Solana blockchain, is rising in popularity.
- Due to the congestion on the Ethereum network, users who want to work with smart contracts are looking for efficient alternatives. Solana is one of the most popular ones.
- The verification mechanisms of Solana require smaller energy consumption, making the network more eco-friendly. It makes a great contribution to the positive image of this project.
Cons of Investing in Solana (SOL)
- Solana doesn’t have a fixed number of supplied SOL coin tokens, which leads to growing inflation.
- Solana is a too young project to show a stable performance. As a result, it has already experienced serious instability issues, such as the above-mentioned blockchain outage. Investors and traders won’t rely on the crypto Solana coin until its blockchain provides stability.
Conclusion
Despite the current declining price, many engineers and investors consider Solana to be a good investment from a long-term perspective. The entry point is quite low today. You can invest in the Solana coin and expect that the predictions of analysts will come true. By the end of this year, the coin price is expected to grow to $49.99. If this is true, your today’s ten-thousand-dollar investment might bring around $5,000 of profits by the end of 2022.
