DeFi
September 28, 2022
What is Token Burn and it's effects on price
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
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Ever since the crypto world has come into the limelight, a lot of people have tried their hands in this business. Many fail and a few succeed but there are always those who don’t reach the very top but are still close enough to it because they offer something that the big guns do not. Talking about the crypto world, Solana or SOL is one such cryptocurrency.
Solana is a computing platform in the crypto world that has set out to acquire much higher transaction speeds and they try to accomplish that without compromising with the decentralization of it all. This article will tell you all about SOL like its pros and cons. So let us begin!
To put it simply, SOL or Solana is just a high-functional open-source project that works mainly on the decentralization finance of a blockchain network. It works on the Proof-of-History consensus mechanism which also has the underlying Proof-of-Stake consensus of the blockchain.
It is because of the hybrid consensus mechanism of combining the Proof-of-History with Proof-of-Stake that Solana has attracted so many people. It has garnered the attention of a lot of traders, ranging from the small traders to the big guns. The main objective of SOL is to make DeFi available to the public on a much bigger scale.
Solana is the world's fastest blockchain which supports all web3 projects like Defi and NFT. It provides a strong, feature rich platform for developers to build apps and provides faster transaction speeds as compared to any other blockchain in the crypto space. Let’s take a look at the statistics of SOL as of 2022.
The Solana network is quite complex in its operation and it is what makes Solana unique from the rest of the blockchains. It uses Proof-of-Stake and Proof-of-History algorithms which performs specific functions of the Solana network.
Proof-of-Stake is a consensus mechanism which selects the next validator to add a new block to the blockchain. Now you already know that the Solana network offers transaction speeds upto 65,000 transactions per second.
To maintain this transaction speed, the Solana network utilizes Proof-of-History algorithm which ensures that the sequence of all the corresponding transactions is correct by sending the block data to multiple nodes at the same time.
As discussed, the Solana network is based on Proof-of-Stake consensus mechanism which is used to choose the validators for the blockchain. This PoS system makes use of Byzantine fault tolerance (BFT) algorithm which in fact helps the PoS system to select validators and makes the network furthermore secured.
The cryptography function incorporated by Solana is the SHA-256 hash algorithm. It encrypts the data and then gives output of 256-bits which is a highly secured format. The blockchain periodically samples the hashes which are used to trace the sequence of transactions by the validators.
The validators use a cryptographic clock to check the timestamp of the hash generated. This record helps to check the sequence of hashes individually without having to wait for the previous validator. Thus, the transaction speeds are improved and the network is made secure
Solana does have many advantages and it even stands out compared to Ehtereum, you can say it is the competitor of ethereum. We will list down some advantages of Solana vs Ethereum in bullets, later we will explain the Pros of Solana.
Advantages of SOL over Ethereum
Coming to the main part, Advantages of SOL are outlined below
Solana charges very low fees, it operates as many as billions of users and the users have supported and provided a good amount of belief in Solana. Because of that, SOL has achieved a sort of stable economics which helps provide low application fees to users.
With a huge audience, there are some expectations that SOL has to get over and prove that it's worth it. Saying that, SOL proves its point by processing a 50,000 transaction in a second. Along with the great speed, it takes a very low fee, fewer than $0.1.
There are very few disadvantages of SOL and they are:
Cryptocurrency is known for its expensive setup (not every cryptocurrency). SOL has this setup expense as a big disadvantage, because of the cost many users have second thoughts for SOL.
Just like other cryptocurrency, SOL is also decentralized. But, SOL is specially criticized because of not being properly decentralized.
SOL provides a number of advantages like low gas fee or improved operation and scalability but it has certain drawbacks as well, so it will do you good to make any decision a calculated one because that is what you must do when your money is concerned.
The crypto world can be a fickle thing and if you do not understand it completely, it may cost you your hard-earned money. So do your research and reap the benefits. Till then, keep reading our articles on cryptocurrencies.
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