The decentralized finance ( DeFi ) are a hot topic in the industry criptomonedas. Most of DeFi’s infrastructure is built on Ethereum, the largest and most robust blockchain network that supports smart contracts.
Smart contracts are the code that powers DeFi , allowing exchanges, financial derivatives, and even insurance to be processed on the Ethereum blockchain .
With the affluent demand for the Ethereum network, transaction costs have skyrocketed. This makes it difficult for retail investors to use DeFi on Ethereum, as transactions can cost more than $ 50.
Like Ethereum, Solana uses smart contracts to host decentralized applications ( dApps ). However, Solana’s unique parameters allow for significantly lower transaction costs, while increasing the speed of the network.
Next, discover what Solana is, and how to buy the cryptocurrency in 3 easy steps.
What is Solana?
Solana is a smart contract-enabled cryptocurrency that uses proof-of-stake and proof-of-history consensus to secure its blockchain .
Instead, Ethereum uses a proof-of-work consensus , which increases transaction costs on its network.
To understand the differences between Ethereum and Solana, you should familiarize yourself with these different consensus models.
Proof-of-work consensuses use computational power to secure blockchain transactions. Bitcoin, for example, also uses proof-of-work consensus , although Ethereum is currently in the process of upgrading its blockchain from proof-of-work to proof-of-stake .
The proof-of-stake consensus uses validators with a financial stake in the cryptocurrency to verify transactions on the blockchain.
In many cases, anyone can become a validator as long as they have enough cryptocurrencies to use as collateral on the blockchain.
Cryptocurrency collaterals serve to keep validators in check: if guarantors attempt to introduce fraudulent transactions, their cryptocurrencies are confiscated .
The proof-of-history consensus works by adding what is essentially a timestamp to the blockchain.
In this way, transactions can be verified based on when they are sent using a verifiable delay function. Unlike the proof-of-work and proof-of-stake consensuses, the proof-of-history consensus records a transparent sequence of transactions, when they occur.
Brief history of Solana
Although the Solana (SOL) cryptocurrency token was just launched last year, the Solana Foundation has been busy with this task since 2017, when Anatoly Yakovenko and Greg Fitzgerald left Qualcomm , to start the Solana Foundation .
The token began trading in April 2020 at USD 0.75 and throughout the year, Solana roughly doubled in price.
In 2021 Solana gained the attention of the mainstream, rapidly ascending to the 10th largest cryptocurrency by market capitalization . Solana is currently trading at $ 67 per coin and has a market capitalization of more than $ 19 billion.
Solana’s rapid price recovery, from recent lows around $ 23, shows that investors are eager to bet on the future of blockchain.
How to buy Solana
1. Open an account online
Unfortunately, most of the popular cryptocurrency trading platforms have yet to add support for Solana. Being such a promising project, Solana is likely to be added to more cryptocurrency exchanges in the near future.
Right now, your best option is to use Crypto.com to invest in Solana.
To open an account at Crypto.com , you will need to enter an email address and create a password.
You will most likely also need to provide personally identifiable information to the website for tax purposes. Once your identity is verified, you are ready to start investing.
2. Buy a wallet (optional)
Before investing in any cryptocurrency, you should consider where you are going to store it.
It is not recommended that you store your cryptocurrencies in an online exchange, as exchanges are a great target for hackers.
Many exchanges have been hacked in the past. The only reason you should keep your cryptocurrencies on an exchange is if you are trading short-term. Instead, you should store your cryptocurrency in a hardware or software wallet.
Software wallets are free-to-use applications that allow you to store your cryptocurrencies safely on a PC or mobile device.
Hardware wallets are the safest way to store cryptocurrencies, since they store your assets offline, on a physical device.
3. Make your purchase
You can buy Solana on Binance using Bitcoin or USDT. Tether (USDT) is a stablecoin pegged at $ 1, so it simulates an investment in fiat currency.
Some cryptocurrency investors like to trade against Bitcoin, as this provides a metric to measure the performance of an investment.
You can place your buy order as a market order or a limit order.
Market orders are executed instantly at market price, while limit orders are executed if the cryptocurrency reaches a specific price that you can specify. However, if the cryptocurrency never reaches that price, your order will not be executed.
The best cryptocurrency exchange for Solana
Solana is available to clients in the US on some notable exchanges, including Binance, Coinbase, and Crypto.com.
If you are in the United States, then Coinbase is a great place to start investing in cryptocurrencies, as it is one of the oldest and most established cryptocurrency exchanges in the industry.
Additionally, Coinbase is a publicly traded company, so you can rest easy knowing that your funds are in good hands.
Binance is another great option for investors around the world.
The trading platform has a higher volume than the rest of the cryptocurrency exchanges. Even small market cap altcoins are on Binance. Additionally, Binance has a wide variety of altcoins to invest in. Given this, many operators go to this exchange in search of cryptocurrencies.
The best cryptocurrency wallets for Solana
Best Hardware Wallet: Ellipal Titan
In almost every way, Ellipal Titan is the best hardware wallet on the market. The wallet has 2 storage solutions: a hot wallet (mobile app) and a cold wallet (a physical device). Both are interoperable, allowing you to easily manage your cryptocurrency portfolio directly from the application.
Ellipal Titan has a sleek design with a large touch screen. In addition, the wallet does not use cables or bluetooth to connect to the application. Instead, the wallet uses QR codes, the safest way to transfer cryptocurrencies (since you need to physically scan the code to access your funds).
Although Ellipal is typically more expensive than its competitors, the company is currently offering a $ 30 discount as a special promotion. Applying the discount, the Ellipal Titan becomes a great deal, especially considering its premium features.
Best Software Wallet: Trust Wallet
Trust Wallet is a free-to-use mobile wallet that supports a wide variety of cryptocurrencies. If you ever plan to invest in tokens that use Binance’s smart chain, then you will need a software wallet like Trust Wallet to interact with Binance’s decentralized ecosystem.
Remember to save your initial phrase somewhere safe, as you will need it to recover your funds if you lose access to your account.
Trade, sell or convert your Solana
If you plan to actively trade with Solana, you will need to leave your funds on Binance to do so. If you are buying Solana to maintain it, in the long term, then you will need to transfer your tokens to and from your cryptocurrency wallet when you want to make transactions.
It is a good idea to average the purchase price as well as the selling price. Since cryptocurrency investments are so volatile, averaging your purchase helps reduce some of the risk associated with its volatility.
Current cryptocurrency prices
The cryptocurrency market has exploded this year, after large institutions such as Tesla and Paypal have expressed support for blockchain technology and Bitcoin.
While Bitcoin’s annual returns have been impressive, in terms of percentage gains, cryptocurrencies like Ethereum and Solana have done much better.
It is a good idea to keep an eye on the cryptocurrency markets to get an idea of how prices are moving.
Is Solana a good investment?
If Solana can truly compete with Ethereum, then the cryptocurrency can be a solid investment by 2021.
Ethereum still has the largest infrastructure on its blockchain , including decentralized exchanges (DEX), non-fungible tokens (NFT), and automated lending protocols.
If Solana is not able to build its infrastructure before Ethereum migrates to proof-of-stake , then it is unlikely that Solana will be able to compete with the Ethereum network, given the scope that network effects have on the industry. cryptocurrencies.