Solana could become the ‘Visa of crypto’: Bank of America
Solana, according to a Bank of America expert, is poised to capture a piece of Ethereum’s market share due to its low transaction fees, scalability, and ease of usage.
In a research report published on January 11, Bank of America digital asset strategist Alkesh Shah projected that Ethereum competitor Solana might become the “Visa of the digital asset ecosystem.”
Since its inception in 2020, the Solana network has evolved to become the sixth largest cryptocurrency, with a market valuation of $47 billion. It has been used to settle over 50 billion transactions and mint over 5.7 million non-fungible tokens, and it is an order of magnitude faster than Ethereum (NFTs).
However, some claim that its speed comes at the expense of decentralisation and reliability, while Shah believes the advantages outweigh the disadvantages:
“Its ability to provide high throughput, low cost, and ease of usage makes it ideal for consumer use cases such as micropayments, DeFi, NFTs, decentralised networks (Web3), and gaming.”
According to report, Solana is gaining market dominance due to its low fees, ease of usage, and scalability, while Ethereum may be restricted to “high-value transaction and identification, storage, and supply chain use cases.”
“Ethereum values decentralisation and security over scalability, resulting in periods of network congestion and transaction fees that are sometimes greater than the value of the transaction being sent.”
Visa now processes 1,700 transactions per second (TPS), however the network has a theoretical capacity of at least 24,000 TPS. On mainnet, Ethereum can manage roughly 12 TPS (more on tier twos), whereas Solana has a theoretical capacity of 65,000 TPS.
“While Solana promotes scalability, a blockchain that is less decentralised and safe has drawbacks, as evidenced by various network performance issues since its debut.”
Solana has had its fair share of network performance issues in recent months, including withdrawal troubles confirmed by Binance on January 12, allegations of delayed performance on social media on January 7, and what appeared to be a DDos attack on January 5, despite Solana’s denial.
“This came less than a month after a previous attack on December 10, with allegations of network congestion due by mass botting in connection with an initial December offering (IDO) on Raydium, a Solana-based decentralised exchange platform.”
Austin Federa, head of communications at Solana Labs, told Cointelegraph on Dec. 22 that developers are presently working to address the network’s shortcomings, particularly in relation to enhancing transaction metering.
“The Solana runtime is a brand-new concept. It doesn’t employ EVM [Ethereum Virtual Machine], and while a lot of innovation was done to ensure that users pay the least amount of money feasible, the runtime still needs improvement.”