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What Is Solana (SOL)?
This is a blockchain network that focuses on high throughput and fast transactions. It makes use of a distinct method to order transactions in improving its speed. Users can pay any transaction fee then have interactions with smart contracts with SOL, which is the native cryptocurrency of the network.
For blockchain technology, one of the greatest challenges it faces is scalability. The growth of these networks comes with limitations when it comes to confirmation times and transaction fees. The aim of Solana is to curb these limitations without the need to compromise decentralization or security.
Launched by Anatoly Yakovenko in 2017 from Solana Labs, this blockchain makes use of a new method to verify transactions. Ethereum, Bitcoin, and several other platforms have speed and scalability issues. Making use of a method called PoH (Proof of History), the blockchain of Solana can handle several thousands of transactions every second.
Solana: how does it work?
This is a 3rd-generation, Proof of Stake Blockchain. It makes use of a unique method to create a system to determine the transaction time, called Proof of History.
Tracking the transactions’ order is very important for cryptocurrencies. For Bitcoin, it does this by combining transactions into blocks using one timestamp. In consensus, every node needs to validate the blocks with other nodes. The method becomes an important waiting time for a block to be confirmed by nodes across the network. Instead, Solana makes use of another method. Let us look further.
What’s Proof of History?
The transactions and events of Solana are all hashed with the use of the hash function, SHA256. This function will take an input then produce a distinct output that’s can’t be easily predicted. Solana takes a transaction output and makes use of it as the next hash’s input. There’s now a built-in transaction order into the output of the hashed. The process of hashing develops an unbroken and long hashed transactions chain. This is a feature that develops a verifiable and clear transactions order that a validator includes in a block without needing any conventional timestamp. For hashing to complete, it also needs some time. This means that validators are able to verify the amount of time that has passed with ease.
Proof of History is a different process compared to what Bitcoin makes use of as one of its Proof of Work mechanisms for consensus. Bitcoin Blocks are massive groups of transactions without order. Every miner of BTC adds the date and time to their mined block based on the time in their location. There might be different times according to other nodes or maybe even false. Then, nodes need to find out if it is a valid timestamp.
If the transactions’ order is in a hashed chain, validators will process and transmit lower information in every block. With the use of a hashed variant of the most recent transactions stated, the time to confirm a new block becomes lower.
It is necessary to know that Proof of History isn’t a consensus mechanism. Instead, it’s a way to improve the time used to complete the transactions’ order. When attached to the proof of stake, choosing a block’s next validator is way easier. For nodes to validate the transactions’ order, they need less time, which means that the network selects a new validator faster.
What’s the SOL token?
SOL is the native cryptocurrency of Solana that functions as a utility token. Those who use it need to pay transaction fees with SOL when they interact with smart contracts or make transfers. As one of its models for deflation, the network burns SOL. Those who use SOL can also be the validators of the network. Similar to Ethereum, Solana gives developers a chance to create smart contracts and develop blockchain projects.
SOL makes use of the SPL protocol. When we say SPL, we mean the Solana blockchain’s token standard, just like Ethereum’s ERC20. There are two main uses of the SOL token:
- To pay transaction fees required whenever you use the smart contracts or network.
- Stake tokens as part of the consensus mechanisms of Proof of Stake.
Decentralized Apps building on Solana also creates new use cases of SOL. For instance, Chainvote is developing a DeFi voting application for corporate governance where you can vote with SPL tokens. In the first half of 2021, the price of Solana increased by almost 30 times, which makes it a famous pick with speculators and investors.
SOL: how to store it?
If you want to store SOL tokens, you can do that on the sollet.io cryptocurrency wallet created by Serum Academy. You can also store it in the mobile app, Trust wallet, and also some other wallets that support SPL. If you’d like to stake the SOL, you’ll be required to make use of a wallet that supports staking. You can make use of SolFlare wallet or even Solana command-line tools. You can sign up for a stake account with your wallet and delegate the SOL tokens in your wallet to a validator.
Since the project is relatively new, Solana has created the perks it promises in scalability and speed. The price of its toke is also performing well, attracting investors. However, adopting and using the network itself is still growing.
Till more people use Solana, we’ll not know if its speed is way better compared to the most used ones. It’s good to have a quick network, but the perks are most important when more people start using it and there are more use cases.