Welcome to our Solana: Is SOL REALLY Worth It?! Video!
Solana is a cryptocurrency that was designed to work similarly to and improve upon Ethereum.
What Is Solana? Solana is a fast-growing blockchain with striking similarities to Ethereum—often referred to as an “Ethereum killer.”
Like Ethereum, the SOL token can be purchased on most major exchanges. The token’s real value is in conducting transactions on the Solana network, which has unique advantages.
The Solana blockchain uses a proof-of-history consensus mechanism. This algorithm uses timestamps to define the next block in Solana’s chain.
Most early cryptocurrencies, such as Bitcoin and Litecoin, use a proof-of-work algorithm to define the blocks in their chains. Proof of work uses a consensus mechanism that relies upon miners to determine what the next block will be.
However, this proof-of-work system is slow and resource-heavy, leading to the use of tremendous amounts of energy. This is one reason for Ethereum’s upcoming Merge, where the network will convert to a proof-of-stake system.
Unlike the earlier proof-of-work mechanism, proof of stake uses staking to define the next block. Staked tokens are held as collateral by the blockchain until validators reach a consensus about the chain’s next block.
According to Konstantin Anissimov, chief operating officer at crypto exchange CEX.IO, Solana uses “a mixture of time-tested cryptographic strategies and fresh innovations to address the shortcomings of crypto’s first-wave solutions.”
Powered by its unique combination of proof of history and what’s referred to as delegated proof-of-stake algorithms, the main problem Solana was attempting to solve was Ethereum’s scalability issues. Delegated proof-of-stake is a variation of the more traditional proof-of-stake algorithm.
For those who need a refresher, the proof-of-stake mechanism is a process of transactions for creating new blocks in a blockchain using a system of validators.
Solana brings users several advantages with its delegated proof-of-stake mechanism.
The history algorithm adds a layer of security to the network, says Christian Hazim, analyst at ETF provider Global X.
In essence, Solana addresses two out of three issues identified by Ethereum co-founder Vitalik Buterin in his blockchain trilemma of scalability, security and decentralization.
Although Buterin originally claimed Ethereum would address all three aspects of this trilemma, most experts believe the network only addresses two factors: security and decentralization.
Solana, however, is designed to address two parts of the trilemma: security and scalability. SOL’s proof of history algorithm provides unique security for the network. While the speed with which the Solana platform performs computations allows for increased scalability.
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses a considerable risk of loss. The speaker does not guarantee any particular outcome.
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