Is Solana (SOL) a Good Investment?

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While much of the emphasis on crypto in recent years has been on price fluctuations and investment gains, one of the major points that crypto is trying to address is decentralized finance (DeFi). DeFi is where the true value in crypto lies. Many projects looking to build out their DeFi capabilities. One of these projects is Solana. 

What Is Solana (SOL)?

Created in 2017, Solana is an open-source blockchain platform that allows users to use decentralized applications (dApps) smart contracts to create, transact and interact across the blockchain. The chain has a variety of use cases ranging from NFTs to music streaming. 

The blockchain is secured using a unique system that combines proof-of-history (PoH) and proof-of-stake (PoS) consensus models. The PoH model is unique. It allows validators to verify transactions and create a “clock event,” which creates a timestamp for the transaction, which allows validators to be more efficient as they process less information in each block and to increase transaction speeds.

In terms of token supply, the founders of Solana stated that the supply would be capped at 489 million tokens. Around 430 million tokens are in circulation. 

Solana (SOL) Price History

Solana is currently the 6th-ranked cryptocurrency by market capitalization, closely trailing Ripple (XRP) and Binance Coin (BNB).

As of December 2023, it is trading for around $73, far above the price at the beginning of the year. In January 2023, the token traded below $10. It saw a small spike in February 2023 before remaining fairly steady in the $20 to $30 range. In November and December 2023, the price rose to 52-week highs of nearly $80.

Solana (SOL) Competition

Solana's largest competitor is Ethereum. Both chains use smart contracts and dApps to allow users to interact on the chain. However, Ethereum is much larger than Solana, probably because of Ethereum’s age. ETH began trading in 2015, while SOL began trading in 2020. Ethereum was the first mover in the space, so it was able to gain significant market share. Ethereum has over 54% of the total value locked (TVL) across all blockchains, while Solana only has around 2% TVL. While Ethereum has lost TVL over the past year, Solana is still a ways away from its largest competitor.

One major difference between the chains is transaction cost and speed. Previously, Ethereum used a PoW consensus mechanism. This process was costly, and transaction fees were high. However, Ethereum shifted to a PoS system, which is much more efficient and has significantly lower transaction costs. While they are still somewhat high, they are less than previously.

Solana boasts some of the lowest transaction costs and high speeds in the space because of its unique consensus mechanism. This feature is a major selling point for the chain. However, this point has been somewhat muted due to the Ethereum upgrades. 

Other competitors include Cardano (ADA), Avalanche (AVAX) and the Binance Smart Chain.

How to Buy Solana (SOL)

Solana is one of the most popular cryptocurrencies, so is available on the top crypto trading platforms. Benzinga recommends Coinbase, Kraken and eToro. These sites are known for their low fees, security and ease of use. To get started, navigate to the site and sign up using your email.

Best Hardware Wallet For Solana (SOL)

If you have decided that you want to invest in Solana, a hardware wallet is a good option to make sure that your crypto is secure.

Best Hardware Wallet: Ledger 

Ledger is a hardware wallet that allows users to securely store crypto. It stores private keys on a physical device so crypto can only be accessed if the device is present. Ledger wallets support the sending and receiving of SOL.

Ledger offers three hardware wallets: the Ledger Nano S Plus, Nano X and the Stax. The Nano S Plus is cheaper and more beginner-friendly. The Nano X is more expensive and offers more advanced features, such as more storage and Bluetooth connectivity.

Bonus section: Keep an eye out for new projects on the Solana chain. These projects can attract attention to Solana and increase the price of SOL.

Cryptocurrency Market Outlook

With 2023 coming to an end, many are looking towards 2024 to see what crypto has in store. With events such as spot Bitcoin ETFs, a Bitcoin halving and Ethereum upgrades, there is hype around crypto going into the new year.

However, some believe that these events are already priced in and may not result in significant price appreciation in 2024. 

Is Solana (SOL) a Good Investment?

Solana has lofty goals in terms of becoming one of the more prominent blockchains in crypto. Some believe that the chain has the necessary tools and user base to become more and more popular. However, others believe that the competition, particularly with Ethereum and Avalanche, is too fierce to overcome Think about where you land on this debate, as well as your personal financial situation and risk tolerance before making an investment decision.