Ever since the concept of cryptocurrencies came into limelight world was worried about the impact of “crypto mining”, cryptocurrencies like bitcoin and ethereum consume 91 terawatts of energy for mining, which is way more than the energy consumption of 5.5 million people. Alarming isn’t !!
(Related Reading: How to Mine Bitcoin? Bitcoin Mining)
And from here the concept of Solana gained recognition. Solana, is a blockchain network that can be used for building DeFi applications and SOL tokens. While solana is still in beta it has attracted many to its new energy efficient ecosystem.
Let’s understand the basic terminologies associated with solana step by step. But first, what is solana?
What is Solana?
Solana is a blockchain network for building cryptocurrencies just like ethereum and bitcoin. The only difference between solana and ethereum is the former's high speed of transactions. This new to the fame blockchain network can perform 50,000 transactions per second, and that’s what makes it unique.
Solana can quickly add multiple properties to its existing network, whether its building applications or mining SOL tokens, this network can perform it all within microseconds. This cryptocurrency is often hailed as “ethereum’s competitor”.
Solana’s protocol is fast, secure and censorship resistant. The “decentralized” blockchain network that solana offers, is a combination of proof stake and proof of history. It is built on RUST programming language which provides it a robust base in safeguarding transactions.
(Must Check: Blockchain Technology Explained- Components and Applications)
Solana is a distinct cryptocurrency, it is fast and cost efficient, and follows Proof of History for providing an efficient and scalable network. Let’s take a closer look at “distinct features” of solana.
(Related Blog: Polkadot Cryptocurrency: Structure and Working)
You can watch the following video for a concise explanation of Solana blockchian network.
Let’s take a closer look at “distinct features” of solana.
Features of Solana
Proof of History: Bitcoin and ethereum’s blockchain network follows a “proof of work” (proof of work means every node on the blockchain network will arrive at a consensus before any new entry ) approach for allowing and restricting entries on its database.
Proof of Work (PoW ) is quite complex and slows down the speed of transactions, keeping in consideration the disadvantages of the PoW system, PoH (Proof of History) was introduced. In simple terms proof of history means a new block can be added to the blockchain network without any mutual agreement.
In solana every node has its own clock and they take decisions, without consulting each other. Proof of History increases the speed of transactions, it also provides an efficient blockchain network and keeps a track record of all the transactions.
Tower Byzantine Fault Tolerance (BFT) algorithm: The BFT system is like a safety shield for the solana ecosystem; it ensures that a particular node failure doesn’t impact the working of the entire system. This algorithm enables the nodes to continue working even after numerous failures.
Gulfstream: Gulfstream is a system that puts an end to “memepool needs”. Memepool can be thought of as a waiting area, where all the unprocessed transactions wait for their turn. Solana's network can manage a memory pool size of 1,00,00 transactions.
Every blockchain ecosystem has validators (validators select transactions and add them to the blockchain network). Solana’s network forward the transactions to its validators even before a new transaction is added. Validators simultaneously clear the memepool area and hence no “unconfirmed transactions” are left in the solana ecosystem.
Sealevel: Solana enables multiple smart contracts to run at the same time. This saves time and makes Solana a cost efficient blockchain network. The technology which enables solana to run multiple smart contracts at the same time is known as “sealevel”.
Cloudbreak: Solana follows a horizontal scaling method, the horizontal scaling method enables Solana to increase its scalability. Cloudbreak organizes a database that can read and write transaction input. Cloudbreak is also responsible for establishing a connection between hardware and software.
Pipeline: Most of the tasks in Solana’s ecosystem are segregated to ensure fast processing of transactions. Solana assigns the input data to different hardwares that are involved in the network. Multiple hardware quickly validates the information blocks via a process known as pipelining.
Turbine: Solana divides different blockchain nodes in smaller packets, the main purpose of this process is to increase the speed of transactions. Smaller packets of information can be quickly validated, it also helps solana to address issues related to bandwidth.
Features of Solana
How Does Solana Work?
Solana follows a combination of Proof of History (PoH) and Proof of Stake (PoS) for quickly processing transactions, Proof of History provides an easy way to validate transactions without any communication with nodes. Proof of Stake is a process where individuals stake cryptocurrencies for validating transactions.
PoH works on a simple formula: it assigns a given node, “leader position”, any given node with the leader position, has to generate the entire “proof of history” statement. After receiving the responsibility the leader node of the blockchain network, arranges other nodes on the blockchain network to generate a proof of history statement.
The leader node also pushes the execution of the current transactions, it finally publishes the transactions in their final nodes with “verifiers”. Verifiers execute the same transactions again in order to “verify” them. Verifiers also create copies of the transactions, and publish the same.
Every Solana network has one leader. The verifier node is also smart in its performance and has the same capabilities like a leader node, later the verifier node can also be elected as a leader through “proof of stake” elections.
A combination of PoH and PoS works best for Solana, this allows it to conduct processing at a relatively low cost when compared to bitcoin and ethereum’s blockchain networks.
Check out the solana whitepaper for detailed information.
Solana’s working system image source
What is Solana (SOL) token?
Solana SOL is a token that is built on solana’s blockchain network, at present its circulating supply is “26 million”, the SOL token skyrocketed after the release of solana blockchain network. Solana SOL token is a cryptocurrency like bitcoin, ethereum, dogecoin. At present the price of 1 Solana (SOL) token is $150.94 (13 September, 2021, 4:11 a.m.).
Solana (SOL) token can also be used for making additional profits through “proof of stake”(the process of validating transactions on the block is known as proof of stake).
Solana V/s Other Cryptocurrencies
The major difference that makes solana stand out from the crowd is solana’s ability to process transactions quickly, this one reason has hugely contributed to the success of solana. When compared with other cryptocurrencies Solana stands tall with no competition in terms of its transaction speed and transaction confirmation time.
Bitcoin and Ethereum are the slowest blockchain networks and take 60 minutes (bitcoin) 6 minutes (ethereum) to add a new block to their existing networks. Their speed of making transactions is also quite slow. While bitcoin’s blockchain network can perform 4.6 transactions per second, ethereum’s blockchain network can perform 13 transactions in a second.
Cardano and Litecoin also have slow processing speeds and can perform 257 transactions (cardano) and 56 transactions (litecoin) in a single second. Solana, the fastest blockchain network, can perform 50,000 transactions in a single second, its average transaction confirmation time is instantly that means Solana can quickly validate transactions and add blocks to its network.
(Must Check: Litecoin - Meaning, How it Works, Litecoin vs Bitcoin)
Speed comparison of solana with other cryptocurrencies
Rise of Solana
(Please note CNBC TV18 is used as a reference for this article)
Solana, the new to the fame blockchain network dominated the crypto charts in August 2021. Everyone rushed to hold a part of it for investment. Solana prices tripled during the month of August and this altcoin provided people a stable way to invest in “cryptocurrencies”.
(Must Check: What is Cryptocurrency?)
Solana started its journey with the base price of $36 and reached $100 within a single month. It also became the seventh largest cryptocurrency within a few months of its release. The main reason behind Solana’s soaring cryptocurrency prices is the individual and investor interest in Solana’s blockchain network.
Most of the companies that are building DEFi applications are using Solana’s blockchain network. Solana’s DeFi projects have exceeded the $3 billion mark, and companies are also looking forward to investing in Solana for NFT projects. Solana has broken the monopoly of Ethereum. Some companies that are built on solana’s blockchain network have seen quadruple growth this quarter.
(Must Check: Introductory Guide to Decentralized Finance (DeFi))
“Our goal- and I think we’ve succeeded there- is to make Solana an open source project that people just have fun building on the weekend or in their free time- so also unkillable”- Anatoly Yakovenko (developer of solana blockchain network)
Solana is a blockchain network that can transform the way of investing. This energy efficient system can quickly process multiple transactions that too all in one go. The future of Solana looks bright, especially in an era of DeFi applications and NFTs.