The race is on and has been for awhile: which chain can solve more of the problems with programmable money? Will Ethereum reign supreme, or will it be overtaken? And what is Solana?
All of these questions will be answered here.
Why Blockchain?
The “blockchain” concept has been around for quite some time (Bitcoin being one of the first widespread uses introduced around 2009), but it’s really taken off recently because it actually solves problems.
Developed around finance initially, most blockchains have come to be referred to as “DeFi”, or decentralized finance. Each chain functions on a similar premise, but with some technical differences.
Bitcoin functions mostly as a store of value now, while Ethereum is more like programmable money. Each chain has its own flavor of specialty, but each is built with some commonalities (as they’re all blockchains).
It is nearly impossible to alter the blockchain, due to the fact that it’s quite literally a chain.
That means that, without going too deep into the inner workings of the technology, the way it works makes it extremely difficult to defraud.
This intrinsic fraud prevention lends the blockchain to a myriad of other uses.
The idea of DeFi essentially cuts out most of the middle men in the traditional monetary system, leaving the end-user with a more streamlined, less fee-ridden system with which they can send money instantly all over the world. This international application is a game changer because before Bitcoin, transferring funds to people in other countries was expensive and time-consuming.
Now it’s easy.
Around 2015 Ethereum (ETH) was introduced as a form of programmable money. It utilizes a method of recording transactions known as “proof-of-work”, which makes validators (the decentralized cogs in the blockchain system) compete for rewards solving the same problem, with only the fastest receiving the reward.
This results in wasted energy by the losing validators, which will be important to remember once we get to Solana.
Another feature of Ethereum that makes it appealing is the fact that developers can create apps on top of it for a wide array of practical applications.
These apps built on decentralized web 3 chains like ETH are referred to as Dapps and help the blockchain expand beyond just DeFi. As more Dapps pop up, as well as newer blockchains, web 3 is becoming more and more helpful in everyday life for its users.
But it’s not without its flaws.
One of the largest criticisms of blockchain is the toll it tends to take on the environment. The computing power needed to solve the complex computer problems in order to forge new blocks is enormous.
Before Bitcoin gained mainstream popularity, many computer engineers wrote it off as not feasible due to the amount of energy it requires.
Ethereum is working hard to mitigate its environmental impact and remedy other problems such as gas fees, but so far it has been only moderately effective. Enter: Solana.
What Is Solana And What Makes It Different?
Solana is a layer one blockchain that solves some of the problems that Ethereum is struggling to mitigate and is quickly becoming a favorite among developers. Its open-source nature makes it a ready-made playground for people with web 3 ideas that they’d like to bring to fruition and many developers find it easy to build on.
Beyond that, what makes Solana extremely attractive is the way that it solves several of the most prevalent blockchain problems: speed, cost, and environmental impact.
One of the biggest flaws with Ethereum is what’s called a “gas fee”. Essentially, gas fees are transaction costs that fluctuate based on the traffic on the chain and can be quite expensive depending on how busy it is.
It helps to think of gas fees like the upcharge on Uber during peak hours: you can still get a ride, but you’re gonna pay extra for it.
What Is Solana In One Word? Efficient
On Solana there are still gas fees, but they’re essentially negligible ($0.00025 is an average: less than most credit card fees). That’s partially due to the fact that it operates on a proof of stake model rather than proof of work.
What that means is that instead of having validators compete on the same problem, it randomly selects validators from the pool to solve the problem, keeping energy usage to a minimum and SIGNIFICANTLY reducing the cost of gas fees.
Solana also has significantly faster transactions: a huge perk in a society where we want everything instantly. Ethereum processes 15-30ish transactions per second, while Solana can handle up to around 50,000 transactions/second.
It’s Ricky-Bobby fast! With quick transaction speeds, it’s more likely to be able to scale at the speed of tech and keep up with the innovations currently happening.
Solana is also one of the most energy efficient in terms of environmental impact out of the major chains out there. It’s carbon-neutral as of 2021, and as per its official blog:
“Solana, the world’s most performant blockchain, is already extremely energy efficient… a single Solana transaction uses only 1,939 Joules, which is less than the amount of energy required to complete two Google Searches. That is the equivalent of leaving an LED lightbulb on (36,000 J per hour) for a little more than 3 minutes, or running your refrigerator (810,000 J per hour) for about 11 seconds.”
“It is also notably much less energy than transactions on other common blockchains, such as an eth2 transaction (126,000 J), an ethereum transaction (777,600,000 J), or a bitcoin transaction (7,412,400,000 J).” – Solana Announcement
Reducing energy and transaction cost positions Solana to be a true competitor as web 3 moves beyond finance and into more practical applications.
Currency Merges With Art And We Call It The NFT Boom
As web 3 tech continues evolving outside of finance, blockchains are being viewed more and more as solutions to everyday problems rather than simply investment vehicles.
As this happens, the value of the currency will be less influenced by investors moving in and out like a Ponzi Scheme and more viewed as a means to accomplish a goal, be it in the Metaverse or the real world.
NFTs are more than just weird digital art: they’re the face of the web 3 technology on the backend.
Right now they’re wonky and sometimes rebellious and have a fraction of the utility that they will have in the near future.
As the NFT space develops, the art aspect will still matter, but the tokens themselves will have greater utility, such as memberships to exclusive clubs, admission tickets, subscriptions, and much much more.
NFTs represent communities, functionalities, and opportunities on the blockchain, but they’re still in their infantile stage. Solana is making it easier and cheaper to integrate NFTs into mainstream use and we have an opportunity to be a part of it at the beginning.
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The idea of the “blockchain” began a decade ago and has been rapidly developing in the past 5 years. Chains like Bitcoin and Ethereum serve their purposes, but have some inherent flaws that detract from their practicality such as high costs of transaction, slow transaction speeds, and large environmental impact.
Solana provides an amazing alternative to existing chains and a huge opportunity in the NFT space because it makes the cost of creation much less than other chains, encouraging Solana adoption. The lack of huge gas fees alone makes Solana NFTs much more practical to buy, sell, and transfer, which in turn allows more people access to NFTs without a large barrier to entry.
That accessibility will almost certainly encourage adoption. That being said, it’s still brand new and the crypto space itself still has a long way to go. How familiar are you with the Solana blockchain?
