Solana Could Flip Ethereum To Become “Visa Of Crypto,” New Study By Bank Of America Shows

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New research from Bank of America reveals that Solana could become a “Digital Asset System Visa.”

With its focus on scalability, ease of use, and low transaction costs, the bank mentioned that the Solana blockchain could very well become a very good visa for the world of cryptocurrencies and NFTs in a research report for its clients after hosting Solana Foundation member Lily Liu.

Solana high productivity is merit

In a research note on Tuesday, Bank of America digital asset strategist Alksh Shah said that Ethereum competitor Solana could become a “digital asset ecosystem visa.”

Launched in 2020, Solana Network, with its native token SOL, has since grown to become the fifth largest cryptocurrency by market capitalization, with a market capitalization of $47 billion. It has been used to settle more than 50 billion transactions and generate more than 5.7 million non-fungible tokens, which is an order of magnitude faster than Ethereum (NFT).

Critics claim that speed comes at the expense of decentralization and reliability. Shah believes that the advantages outweigh the disadvantages:

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

Bitcoin, the world’s most popular cryptocurrency, is up 3.3% this week. The price of Ethereum, its closest competitor by market capitalization, is up 5.3%. Other big cryptocurrencies are also seeing solid gains. BNB stock is up 9.5%, Cardano is up 16.2% and Solana is up 10.6%.

Furthermore, Solana has some of the fastest transaction times in the industry. In the note, Shah explained:

“These innovations allow approximately 65,000 industry-leading transactions to be processed per second with an average transaction fee of $0.00025 while remaining decentralized and relatively secure.”

Visa now processes 1,700 transactions per second (TPS), yet the network has a theoretical capacity of at least 24,000 TPS. On its mainnet, Ethereum currently processes about 12 TPS (more on the second tier), while Solana has a theoretical capacity of 65,000 TPS.

Related article | Solana: A quick review and an outlook

decentralized trade-offs

In March 2020, Solana was launched as a decentralized blockchain capable of hosting highly scalable applications. According to Alkesh Shah, it is now the 5th largest cryptocurrency, having settled more than $50 billion in transactions and generated more than 5.7 million NFTs.

Since both cryptocurrencies allow smart contracts, which are the basic building block for decentralized systems such as blockchain-based banks and NFTs, Solana is often compared to Ethereum (non-fungible tokens).

“Solana prioritizes scalability, but the less decentralized and relatively secure blockchain has trade-offs, evidenced by many of the network’s performance issues from the start,” Shah admitted.

The cryptocurrency has been gaining a lot of interest from investors in the past year, and its price has increased by a whopping 4000%. However, it is dwarfed by its closest competitor, Ethereum. Solana has a market capitalization of $47 billion, or just over a tenth of the size of Ethereum.

SOL/USD is trading at $146. Source: Tradingview

Solana has had its fair share of network performance issues in recent months, including withdrawal issues that Binance confirmed on Wednesday, reports of performance lags across social media on Friday, and what appeared to be a distributed denial of service attack on January 5. , despite Solana’s denials.

Since its inception, Solana has settled more than 50 billion transactions, totaling more than $11 billion in closed-end value. It has also been used to produce over 5.7 million NFTs, demonstrating its focus on consumer applications such as financial transactions and even games.

Related article | Solana’s trading up 15.7%, but network issues raise concerns

Featured image by Investment U, charts by TradingView.com

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