Solana VS Ethereum: where to invest?
30.11.2022 | auglovoi
Solana is a cryptocurrency created by analogy with Ethereum. Named after a small coastal town in Southern California, Solana is the brainchild of software developer Anatoly Yakovenko. We talked about the history and principles of work here, as well as in video on our YouTube channel.
From the latest news: On August 2, the Solana ecosystem was hacked. We tell you more about it in our cryptonews.
Blockchain researchers and crypto investors claim that there was a compromise of the private key, which allowed hackers to steal Solana tokens, known as SOL, from Slope, Phantom and TrustWallet. Users reported that their funds were withdrawn from these “internet-connected” wallets.
The company Solana Status, which is managed by the Solana Foundation, reported the incident on Twitter: “After an investigation conducted by developers, ecosystem teams and security auditors, it turned out that the affected addresses were created, imported or used in Slope mobile wallet applications at some point. This exploit has been isolated from a single wallet on Solana, and the hardware wallets used by Slope remain secure.” The details of exactly how this happened are still being investigated, but the information about the private key was inadvertently passed to the application monitoring service.”
Damage estimates vary, and the theft of digital assets worth more than $ 6 million is reported.
What is Solana?
Solana is a rapidly developing blockchain that bears a striking resemblance to Ethereum, it is often called the “killer of Ethereum”. Like Ethereum, the SOL token can be purchased on most major exchanges. The real value of the token lies in conducting transactions on the Solana network, which has unique advantages. The Solana blockchain uses Proof-of-Stake, where the algorithm uses timestamps to determine the next block in the Solana chain.
Most early cryptocurrencies, such as Bitcoin and Litecoin, use Proof-of-Work consensus to define blocks in their chains. Proof-of-Work uses a consensus mechanism that relies on miners to determine what the next block will be. However, the Proof-of-Work system is slow and resource-intensive, which leads to the consumption of a huge amount of energy.
Unlike the earlier Proof-of-Work mechanism, the Proof-of-Stake system uses a bid to determine the next block, and the transaction process for creating new blocks takes place using a validator system. The tokens pledged are stored in blockchain until the validators come to a consensus on the next block of the chain. In fact, Solana uses a mixture of time-tested cryptographic strategies and fresh innovations to eliminate the shortcomings of the solutions of the first wave of cryptocurrencies.
In fact, Solana solves two of the three problems identified by Ethereum co-founder Vitalik Butorin in his blockchain trilemma: scalability, security and decentralization. Although Buterin initially claimed that Ethereum would solve all three aspects of this trilemma, most experts believe that the network solves only two factors: security and decentralization.
Solana, however, is designed to solve two parts of the trilemma: security and scalability. The Proof of History SOL algorithm provides unique network security, and the speed with which the Solana platform performs calculations allows for increased scalability.
What makes Solana unique?
Thanks to the unique combination of Proof of History and Delegated Proof-of-Stake, Solana provides exponentially faster transaction speeds than its closest competitors, Ethereum and Cardano (ADA), at a lower network commission cost.
Unlike Proof-of-Work, which uses miners themselves to determine the next block in the chain, or Proof-of-Stake, which uses tokens to determine the next block, Proof of History uses timestamps to determine blocks in the Solana chain. This innovative system allows validators on the blockchain to vote on the timestamps of various blocks in the chain. Thus, the chain remains relatively decentralized and at the same time provides faster and safer computing.
Since the essence of blockchain technology is to create decentralized systems, Solana tries to process transactions at a speed similar to that of a large centralized company such as Visa, while maintaining the decentralization of Bitcoin. This speed allows you to increase scalability, since the environmental and monetary costs of Solana systems are lower.
The speed of adding blocks to the Solana blockchain requires additional levels of blockchain security. This is where the Proof of History algorithm comes into play. This algorithm timestamps each block in such a way as to maintain the security of the system. Solana’s SAML tokens are then put on the card and used as collateral for processing transactions on the network. These transactions include everything from the confirmation of smart contracts to the use of Solana as a market for non-playable tokens (NFT).
One of Solana’s big breakthroughs occurred in August 2021, more than a year after the launch of Solana, when the Degenerate Ape Academy became the first major NFT project on the Solana NFT market. During the first three weeks of this month, the price of Solana jumped from $30 to $75. Solana’s historical high was reached in November 2021, when its price reached almost $260 during the height of the crypto bullish growth.
Solana vs Ethereum
Solana and Ethereum have some common features, but they also have striking differences. Here is a brief description of where these two platforms intersect and where they diverge:
|Platform||Open source||Open source|
|Decentralized applications (dApps)||✔||✔|
|Quantity||More than 350||Almost 3 000|
In addition, Solana Labs, which is a Solana technology company, is working on several interesting products. Among them is Solana Pay, which allows for cheaper, safer and faster transactions. Solana Labs has also launched the Solana Mobile Stock mobile stack. This is a set of tools for Android that opens up opportunities for mobile expansion. Solana plans to launch its Solana Saga mobile phone in early 2023.
Cryptocurrencies are highly volatile and extremely risky investment instruments. Investors should be confident that they can afford to lose the money they invest in SOL or ETH, even if they believe in the potential of Solana and Ethereum.