Solana is one of the most innovative blockchain projects currently ranked among the ten most valuable networks by market capitalization.
In this guide, you will learn what makes Solana unique, how it works as a blockchain and compares against other notable decentralized networks such as Bitcoin and Ethereum.
Additionally, you will learn about some decentralized apps already running on the network.
Is Solana A Blockchain?
Solana is a fully-fledged blockchain, but before we consider what makes it so, first, let’s define a blockchain and look at some features that constitute it.
A blockchain is a digital database record with information collected and stored using a logbook approach. Underlying the database is a cryptographic technology that can secure it to ensure its immutability.
Blockchains can be public or private where, in the former, the database is distributed amongst a wide network of public nodes while in the latter, the database is held by controlled nodes within a private network.
Solana is a publicly distributed ledger network with all the features that define a blockchain, including:
- It relies on cryptography for security and network integrity;
- The Solana software and database are public, open-source, and widely distributed;
- It relies on a consensus mechanism to keep all nodes in sync and to secure the sanctity of the database;
Read Types of Blockchain.
Solana creators opted to use Proof of Stake (PoS) as the mechanism used to achieve consensus.
However, PoS alone could not help the network achieve its scalability goals. Therefore, the developers adopted a novel technology dubbed Proof of History (PoH) to complement PoS.
PoH is not a consensus mechanism but rather a technique used to timestamp incoming transactions before the validator nodes can verify them. The timestamp is a cryptographic hash used to order transactions.
Once the transactions have been timestamped, they can be placed in batches called ‘entries’ which are then assigned to various validators.
This process is time-efficient and helps Solana achieve the theoretical 50,000 transactions per second (TPS).
In reality, however, the network processes about 2,000 TPS, which is still impressive.
Learn more: Does Solana Have A Wallet App?
What Blockchain Does Solana Use?
Solana has an independent layer-1 blockchain network that depends on its native validator nodes to verify transactions.
Additionally, Solana is a fully-fledged distributed network that can be used to host other decentralized applications (dApps) similar to Ethereum, which is considered the leading smart contract platform.
How Does Solana Blockchain Work?
Solana is a smart contract platform which means that it can host decentralized applications (dApps), including Defi apps, online blockchain games, and non-fungible tokens (NFTs). Essentially, anything you can do on Ethereum can also be done on Solana.
The distributed network achieves consensus through Proof of Stake (PoS) complemented with a consensus technology dubbed Proof of History (PoH).
PoS is more common among most of the newer blockchain networks enabling faster transaction confirmation times, cheaper transactions, and more energy-efficient operations.
PoH was adopted on Solana to increase its network throughput. PoS networks are often much faster than their Proof of Work (PoW) counterparts.
However, with the addition of PoH, Solana is now able to process as many as 50,000 transactions a second (TPS).
Why Is Solana So Popular?
There are several reasons for the popularity of Solana. These include:
- Multipurpose – being a smart contract platform, Solana can host dApps such as Defi apps, NFTs, or even blockchain-based games. Additionally, Solana has a native cryptocurrency called SOL which can also be used for value transfer or speculation. Over the last couple of months, SOL has skyrocketed in value, which has contributed to its popularity and that of the Solana network;
- Innovative blockchain – Solana uses staking as a consensus mechanism and complements it with PoH technology to increase its network speed. As a result, Solana is currently among the fastest blockchains;
- Cost – it only takes a few cents to conduct a transaction on the Solana blockchain;
- Eco-friendly – because it employs PoS staking, Solana is not only energy-efficient but also friendly to the environment.
Learn more: Is Solana A Layer 1 Or 2?
What Are The Applications Of Solana?
As a smart contract platform, there are several use cases associated with Solana, but the main ones so far are:
- NFTs – developers can create non-fungible tokens and their marketplaces on the network; Check NFT Tokens in Australia.
- Defi apps – decentralized finance includes apps through which users can lend, borrow and save on a blockchain network;
- Gaming – decentralized gaming apps or Web3 games are becoming more popular on blockchain networks such as Ethereum and Solana;
- Digital payments – there are an increasing number of apps through which users can make payments using SOL tokens or even other cryptocurrencies;
- DAO (decentralized autonomous organizations) – Solana can host these new kinds of organizations that run on governance structures based on decentralized principles.
Is Solana The Fastest Blockchain?
Not quite; several obscure blockchains have faster network speeds, theoretically compared to Solana.
However, among the larger networks, Solana is definitely the leader, with the capability of handling more than 50,000 TPS.
Is Solana The Next Bitcoin?
Solana and Bitcoin are completely different blockchain networks. Bitcoin was created as a digital alternative to fiat currencies without the need for trust-based implementation, while Solana was created as a smart contract platform.
Both may be decentralized and distributed networks, but their use cases differ.
Also read Is Terra Luna A Smart Contract Platform?
Is Solana Built On Ethereum?
No, Solana is not built on Ethereum. Instead, Solana is a fully-fledged independent blockchain network that aims to compete toe to toe against Ethereum.
Like Ethereum, Solana is a smart contract platform that can host decentralized applications.
Is Solana Better Than Ethereum?
Solana has several advantages over its counterpart Ethereum including:
- Network speed – Solana is much faster;
- Transaction fees – Solana is again far cheaper to use than Ethereum;
- Eco-friendliness – Solana uses staking while Ethereum (currently) uses mining to achieve consensus. Staking is more friendly to the environment.
- Passive income – SOL stakeholders can earn passive income by participating in staking within the network.
Can Solana Replace Ethereum?
Given all the advantages Solana has over its rival Ethereum, there is a possibility that it can grow large enough to displace it. However, Ethereum is still the smart contract king at the moment and enjoys the first-mover advantage.
It has a more vibrant community that will be hard to convert and is working on an upgrade that will see it transition from mining to staking.
Once it does, it will expectedly become faster, cheaper, and more eco-friendlier than it currently is, making it more competitive with its rivals.
Can Solana And Ethereum Coexist?
Yes, they can. Both have a lot to offer, and they bring a lot to the blockchain ecosystem. Even though they are direct competitors, it is crucial for both to exist as a way to encourage decentralization and provide options to users and developers.
Is Solana Proof Of Stake?
Solana is a Proof of Stake (PoS) blockchain that also uses a novel technology dubbed Proof of History (PoH) to achieve higher throughput figures than most other blockchain networks.
Solana is among the largest blockchain networks by market capitalization, and it’s easy to see why. As discussed in this guide, Solana has several advantages over its counterparts, such as Ethereum.
Its use of staking and PoH makes it one of the fastest, cheapest, and most eco-friendliest. Given that it can do everything that Ethereum can, and arguably better, it stands to see whether it will be able to displace it as the king of smart contracts.