Solana is a decentralized blockchain network that serves as the competitor of Ethereum. Is it any good and worth checking out?

Blockchain is one of the most popular topics in the technology industry these days. It brings forth the adoption of decentralized systems in almost every part of our everyday lives. Apart from that, it also introduces the birth of many impactful innovations like NFT, Decentralized Finance, and more. Ethereum is arguably the most popular blockchain that supports all of these functions, including the building of Decentralized Applications (dApps). However, the system is still considered far from perfect due to several things such as performance and scalability issues.

In the meantime, the crypto industry keeps growing bigger and bigger. More blockchains with fresh ideas and new offers have emerged, including Solana. Despite being a newer player in the industry, Solana aims to become as big as the major leader Ethereum, or perhaps even more. Let's take a closer look into what Solana has to offer and see how good it is compared to the famous Ethereum blockchain.

Ethereum Vs Solana

 

Solana and Its Features

Founded in 2017 and launched in 2020, Solana is a high-performance decentralized blockchain that was created to allow users to develop scalable and user-friendly applications. It is considered one of the fastest and most efficient ecosystems in the world right at the moment and currently supports over 400 DeFi, NFT, and Web 3.0 solutions.

The biggest feature to look forward to in Solana is its excellent efficiency. Transactions on Solana are known to be processed very quickly and less costly. You can carry out almost 3,000 transactions every second (the speed is about 400 milliseconds per block) with an average transaction cost of $0.00025. In total, the blockchain is able to process around 30,000 to 65,000 transactions every second. That being said, Solana is undoubtedly a strong choice for developers if they are searching for a new blockchain platform other than Ethereum.

However, it is worth noting that in September 2021, the network was hacked and had gone down three times. The entire system collapsed for about 17 hours in total. Wormhole, a communication bridge that connects Solana and other DeFi networks on Ethereum, was also hacked in February 2022. The hack resulted in approximately $320 million of stolen funds, which is considered the biggest attack on Solana and the third-biggest DeFi attack ever. It came third only to the $600 million Poly Network crypto heist and the $552 million Ronin hack.

 

Ethereum and Its Features

Ethereum is a widely-known decentralized blockchain platform that has been around since 2013. It is the underlying technology that's built around its native cryptocurrency, Ether (ETH), and thousands of decentralized applications for users worldwide. It offers a number of interesting features, including the use of smart contracts, access to digital currency, and data-friendly services.

Ethereum is mostly known for its strong smart contract capabilities. There are many types of smart contracts on the platform that can be used for various purposes, program types, and people from different backgrounds. Hence, the use of Ethereum is very wide and continues to expand every single day. Solidity is the programming language supported by Ethereum and it is used for the coding of smart contracts.

The second great feature Ethereum has is the great ecosystem for NFTs. Although Ethereum wasn't the first blockchain that introduced the product, Ethereum-based NFTs are among the most widely used today.

Lastly, the tax efficiency in Ethereum is really good. You can use the Purpose Ether ETF (TSX: ETHH) which is available for Canadian people. ETHH is an ETF that holds nothing but ETH. Since the asset is traded on the TSX, you can just hold it in a TFSA. By doing this, you're no longer subject to all possible capital gains taxes. You'll need to pay the fund's managers a 1% fee for this feature, but keep in mind that the capital gain tax might go higher than that. Therefore, this method can save you from high tax rates.

 

Comparing Solana and Ethereum

If we compare Solana and Ethereum in more detail, we get to see the clear distinctions between the two based on several aspects, such as:

 

Consensus Mechanism

Consensus mechanism is a type of procedure used by blockchain networks to achieve the agreement on a specific data value or the current state of the network. Ethereum is still currently using the Proof of Work (PoW) mechanism, which means it uses the power of crypto miners worldwide to verify new transactions and add new blocks to the network. This system is considered highly secure and completely decentralized, but it suffers from a number of serious concerns.

For instance, the PoW system demands extremely high computing power, which as a result, restricts the scope of participation of users. This also has a rather negative impact on the environment because it requires a huge number of energy-intensive computers to operate daily. Hence, the system is certainly not efficient and results in enormous energy waste.

Meanwhile, Solana uses a completely different mechanism called Proof of History (PoH). It basically involves a historical record that proves a transaction happens at a specific moment in time. This is important because it can add security to the network and requires less energy compared to the standard PoW mechanism. In November 2021, an energy and climate advisor Robert Murphy reported that Solana only consumes around 1,837 on average transactions, which is less than the energy needed for two Google searches. Although the requirements for validators are still pretty high and require a specialized computer, Solana offers a massive improvement over the PoW system with its low energy consumption and great efficiency.

However, it's worth mentioning that Ethereum is currently in the process of upgrading itself to Ethereum 2.0. The upgrade will bring several changes to the network, including the shift from the PoW to the Proof of Stake (PoS) mechanism, which is more efficient and environmental-friendly. So, once the upgrade is fully launched, the consensus mechanism shouldn't be a problem for Ethereum anymore.

 

Transaction Speed

When it comes to transaction speed, Solana certainly gets the crown. The network uses the Tower Byzantine Fault Tolerance (tBFT), which is basically an improved version of Practical Byzantine Fault Tolerance (pBFT). This eliminates the need for any real-time communication between nodes, so it improves the overall efficiency of the network. Not only that, but Solana also leverages GulfStream to make it even better. As a result, Solana is capable of processing over 50,000 transactions per second.

In Ethereum, every user holds a copy of the digital ledger and Ethereum relies on these distributed ledger holders to manage the network. Therefore, the network can only process a very limited number of transactions every second. Not to mention that Ethereum is very crowded, so it might take a while for your transaction to be verified. This also means higher transaction costs.

 

Scalability

Apart from its fast transaction speed, Solana is also known for its enhanced scalability. It is scalable at its core level, so the network doesn't require two-layer solutions to increase its scalability. Moreover, the technology used in Solana basically breaks down the data into smaller pieces, which makes it easier to transfer across the entire network. Solana also uses a technology called Sealever to help process transactions across GPUs and SSDs.

Ethereum, on the other hand, can only process around 13 to 15 transactions per second. This number is relatively low compared to Solana, so the network's scalability is not very good. Still, it's important to know that Ethereum is currently developing layer-two scaling solutions with multichain network support so that the concerns of scalability can be resolved as soon as possible. In addition, the network's developers stated that once Ethereum 2.0 is launched, the transaction speed could increase to as much as 100,000 transactions per second with the same level of security.

 

So, Is Solana Better Than Ethereum?

We've learned that Solana and Ethereum are similar in nature, yet also different in a number of aspects. If we compare the two networks, we can see that Ethereum is more secure and widely used, while Solana offers a faster and more efficient system with affordable cost. Solana is certainly a strong competitor for Ethereum, but for now, Ethereum still wins the race for many reasons.

We can't deny that Ethereum has a number of concerning issues, but the network is currently getting a huge update with many improvements. Such upgrades should make the network way faster, cheaper, and more environmental-friendly. In the meantime, Solana is definitely not a bad option to explore. It currently has a faster transaction speed and lower cost than Ethereum, so it has the advantage of efficiency and affordability. There is no telling about what's going to happen in the long-term future, but Solana seems to show a very positive attitude towards growth and development.

At the end of the day, it's your call to pick the option that's best for you. Since the two have their own advantages and disadvantages, it's important to evaluate the above-mentioned factors and the one that suits you the most based on your personal goals and preference. For instance, if you put security above all, choose Ethereum. But if you care more about faster and low-cost transactions at the moment, Solana is the better choice. Just remember to do your research and don't forget to weigh all the risks before making any decision.

 

If you happen to choose Ethereum, there are a number of wallets ideal for how the system works. Find the options in 10 Best Ethereum Wallets to Store Your ETH.