- Solana was founded by Anatoly Yakovenko in 2017, a previous lead systems engineer at Qualcomm.
- Solana’s unique hybrid consensus model boasts transaction speeds that rival Visa and Mastercard, along with equally low fees.
- Solana is the first crypto project to introduce the concept of Proof of History (PoH) as a consensus mechanism.
- Although SOL is widely available on exchanges, there can be some hurdles to jump through to acquire it. Caleb & Brown has simplified the process by buying and trading SOL down to 4 easy steps.
What is Solana (SOL)?
If Visa can perform up to 24,000 transactions per second (TPS), why can’t a blockchain?
This is the question Anatoly Yakovenko probably mulled over in this mind as he laid the foundation for Solana. With Bitcoin averaging 10 minutes to mine a block, its transaction speed sits around a mere 3-7 TPS. Something needed to be done to make blockchains a truly effective, efficient borderless financial system. Not only did this system need to process a high volume of transactions, but it also needed to be scalable.
Yakovenko co-founded the third-generation, open-source blockchain, Solana, in 2017 with a goal to scale transaction speeds without compromising on security and privacy. Officially released to the public in 2020, it uses a unique hybrid consensus model of Proof of Stake (PoS) and Proof of History (PoH) mechanisms.
The PoH protocol works to solve the issue of time agreement among validatory nodes, effectively recording a digital timestamp of all incoming transactions. With this timestamp already pre-recorded, validators have one less factor to consider when confirming transactions, effectively speeding up the PoS process. This hybrid consensus mechanism also uses significantly less computational power than other methods, like Proof of Work (PoW) which is used by Bitcoin.
SOL is the native token on the Solana network, which also has smart contract functionality. SOL is used for making or sending transactions, interacting with smart contracts, or for staking.
In its early testing phases, Solana exceeded 50,000 TPS; a testament to its potential usability as the project grows.
Recommended Reading: What is a Layer 1 Blockchain?
What Solana (SOL) Brings to the Table
There are some key features that distinguish SOL as an asset. These include:
Proof of History: Solana’s unique PoH consensus mechanism is considered to be a reliable way to record transactions and/or events to its ledger. By solving the agreement on time first, the network can handle high transaction volume without incurring significant delays to transaction times that commonly plague crypto projects.
Eco-Friendly: Because Solana’s hybrid consensus model uses comparatively less computational power than other methods, Solana is often considered to be an eco-friendly crypto project. The network was made carbon neutral in 2021 and has committed to upholding this status into 2022.
Low Fees: Solana boasts near-zero transaction fees across its network. And with the introduction of a new fee structure, fees will now be localised and dependent on activity within a certain part of the network. For example, if there’s a big non-fungible token (NFT) drop tomorrow on Solana, only those interacting with or minting the NFTs will experience increased fees. This unique approach to managing fee volatility is similar to surge or seasonal price changes in traditional markets.
Smart Contracts: Smart contracts unlock the whole suite of utility that the Solana network offers. These programmable pieces of code are used to create agreements between parties without an intermediary, simplifying contractual agreements while reducing the overall cost to create and implement them. SOL is used to upload a contract to the network.
DeFi, DApps, & NFTs: The Solana network is home to countless DApps and NFTs. How does one use and pay for these services and assets? With SOL. This native token is the “gas” that fuels the entire network of DApps available on the Solana blockchain. From gaming to finance, there are thousands of DApps using SOL to execute smart contracts daily.
Ultimately, it’s up to the individual investor to determine if Cardano is the right investment for them.
Recommended Reading: The Big Four: Smart Contract Platforms
How to Buy Solana (SOL) in 4 Easy Steps
The easiest way to buy SOL is through a brokerage, like Caleb & Brown.
With 24/7 access to your personal broker, you can buy SOL with fiat currency or trade with your current assets with no pair limits. Since brokerages do not need to deal with network latency issues like exchanges, you’ll have access to a pool of interchangeable assets. This not only makes SOL acquisition easier, but it also makes other, difficult to access tokens easier to acquire. Here’s how you can buy SOL in 4 easy steps.
1. Open an Account
Register as a client for free in just 5 minutes. You can register as an individual, corporation, business, trust, self-managed super fund, self-directed IRA or 401(k).
2. Verify Your Account
Verify your account by submitting the required Know Your Customer (KYC) documentation. This usually includes a photo ID, proof of address, and other documentation depending on the type of entity you register as. For more information, see our Onboarding Your Account FAQs.
3. Deposit Cash or Crypto
Once your account is verified, deposit your funds into the account provided by Caleb & Brown. A test transaction will be done first and, if successful, you can then transfer the entire amount.
4. Buy SOL
Once the funds hit your account, you’re ready to place an order. Simply send your order form via email to your personal broker. Your broker will execute your trade as requested, avoiding slippage where possible. Additionally, all Caleb & Brown clients have 24/7 access to their brokers, on-call to answer any crypto questions you may have.
Alternative Ways to Buy Solana (SOL)
You can also buy SOL through a centralised exchange (CEX) or a decentralised exchange (DEX). Each option brings with it a unique set of hurdles to jump through.
If using fiat currency on a CEX there will often be additional KYC steps and fees applied to have your fiat converted to crypto. Check with the exchange you are using before proceeding.
You will also need to find a SOL trading pair; an asset that can be freely traded for SOL. For most exchanges that list SOL, this is usually a stablecoin or Bitcoin.
Alternatively, if you find a DEX that lists SOL, it’s not as simple as pressing “buy”. You’ll need to find a SOL trading pair here as well. If you don’t have one of these assets, you’ll need to swap your fiat or crypto for a coin that readily pairs with SOL. Keep in mind that you will be charged a transaction fee for each swap you complete.
Lastly, when using DEXs keep in mind that they come with their own set of risks. DEXs offer no custodial services, are prone to hacking, and are generally less secure than CEXs and brokerages.
How Much SOL Should I Buy?
How much SOL you buy depends largely on your investment goals. Investors should weigh a variety of factors before choosing a project to invest in. Ultimately, it’s up to you to determine how much you decide to invest, and what strategies you use to invest in crypto. Doing your own independent research will go a long way in helping you create and set investment goals.
How is Solana Different From Ethereum??
Solana is often compared to Ethereum since the project attempts to solve many of the pain points Ethereum experiences while trying to scale (e.g. high fees and slow transaction speeds). But the fundamental difference between both projects lies in their consensus mechanisms. Ethereum uses a PoW protocol (soon to be PoS), whereas Solana uses a hybrid of PoS and PoH. This difference in consensus protocols has allowed Solana to process transactions at a significantly faster rate, while using much less computational energy.
Where is the Safest Place to Buy SOL?
With digital asset scams on the rise, now is more important than ever to engage services that prioritise user security above all else. If you’re looking for a secure, custodial service to safeguard your assets, look no further than Caleb & Brown. We have a battle-tested security infrastructure, through the leading asset security platform Fireblocks.
Make Your First Solana (SOL) Investment
Working with a crypto broker is one of the easiest and most secure ways to get your hands on SOL. Caleb & Brown specialise in delivering a personalised experience for every investor, ensuring you can make an informed decision on every trade. Not to mention key features such as:
- Unlimited pairing with no limits on trading volume
- Custody on all stored assets
- No deposit or withdrawal fees
Trusted by over 20,000 clients in over 100 countries, Caleb & Brown has the experience needed to help you execute your first SOL investment.
Sign up for your free consultation today and start investing in SOL.
Recommended reading: How to Buy XRP in the USA
Disclaimer: This assessment does not consider your personal circumstances, and should not be construed as financial, legal or investment advice. These thoughts are ours only and should only be taken as educational by the reader. Under no circumstances do we make recommendation or assurance towards the views expressed in the blog-post. The Company disclaims all duties and liabilities, including liability for negligence, for any loss or damage which is suffered or incurred by any person acting on any information provided.