Solana could become ‘the Visa of cryptocurrencies’, says Bank of America

Bank of America digital asset strategist Alkesh Shah predicted that Ethereum competitor Solana could become the “Visa of the digital asset ecosystem” in a research note on Tuesday.

The Solana network launched in 2020 and its native token, SOL, has since become the fifth largest cryptocurrency with a market capitalization of $47 billion. With a faster transaction than Ethereum, it has been used to settle over 50 billion transactions and mint over 5.7 million non-fungible tokens (NFT).

Critics, however, argue that its speed comes at the cost of decentralization and reliability, but Shah thinks the benefits outweigh the drawbacks:

“Its ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use such as micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming.”

He went on to suggest that Solana is taking a slice of Ethereum’s market share thanks to its low fees, ease of use, and scalability, while Ethereum may be relegated to “high-value transaction and identity, storage, and chain use cases.” supply,” he wrote. Shah, as quoted by Business Insider

“Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally greater than the value of the transaction being sent.”

Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 TPS. Ethereum currently handles around 12 TPS on its main network (more on layer two), while Solana has a theoretical limit of 65,000 TPS.

Shah admitted, saying, “Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has tradeoffs, illustrated by various network performance issues early on.”

Solana has experienced a number of network performance issues in recent months, such as confirmed withdrawal issues by Binance on Wednesday, late performance reports on social media on Friday, and what appeared to be a distributed denial-of-service attack on 5 January, although Solana denied that was the case.

This came less than a month after an earlier attack on December 10, with reports of network congestion caused by massive bots associated with an initial DEX offering on Solana-based decentralized exchange platform Raydium.

In an interview with Cointelegraph on December 22, Austin Federa, head of communications at Solana Labs, said that developers are currently working to address the network’s issues, specifically in regards to improving transaction measurement:

“The Solana runtime is a new design. It doesn’t use EVM [Ethereum Virtual Machine], and a ton of innovations have been made to ensure users get the cheapest rates possible, but there is still work to be done at runtime.”

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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