Solana could become the 'Visa of crypto' according to Bank of America
The Bank of America planning expressed that Solana is set to take a slice of Ethereum's market share. due to its advantages of low transaction fees, scalability, and ease of use.
Bank of America digital asset strategist Alkesh shah has predicted that Ethereum competitor Solana could become the "Visa of the digital asset ecosystem" in a Jan 11 research note.
The Solana network Launched in 2020 and has since grown into the fifth-largest cryptocurrency with a market cap of $47 billion. An order of magnitude faster than Ethereum, it has been used to settle over 50 billion transactions and mint over 5.7 million non-fungible tokens(NFTs)
Critics however argue its speed comes at the expense of decentralization and reliability but Shash thinks the benefits offset the disadvantages:
"Its ability to provide high throughput, low cost and ease of use create a blockchain optimized for consumer use cases like micropayments, Defi, NFTs, decentralized networks (Web3) and gaming."
He proceeded to recommend that Solana is taking a slice of Ethereum's market share due to its low fees, and scalability while Ethereum might be consigned to "high-value transaction and identity, storage and supply chain use cases." composed Shah, as quoted by a Business insider.
“Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent.”
Visa processes an average of 1,700 transactions per second, but the network can theoretically handle at least 24,999 transactions per second, Ethereum currently handles around 12 Transactions per second on the mainnet, while Solana boasts a theoretical limit of 65,000 transactions per second.
Shah concedes that "Solana focuses on scalability, but a relatively less decentralized and secure blockchain has tradeoffs, outlined by a few network performance issues since inception" Solana has experienced too much its fair share of network performance issues over the past months, like withdrawal issues most recently confirmed by Binance on Jan 12, reports of despite performance across social media on Jan 7, and what seemed to be a DDoS attack on Jan 5, even though Solana denied this was the situation.
This came under a month after a past attack on Dec 10, with reports of network congestion caused by mass botting related to an initial Dec offering (IDO) on Solana-based decentralized exchange platform, Raydium.
On Dec, 22, Austin Federa, head of communications at Solana Labs, said that developers are currently working to address the network's issues, specifically about improving transaction metering.
“Solana’s runtime is a new design. It doesn’t use EVM [Ethereum Virtual Machine] and a ton of innovation was done to ensure that users have the cheapest fees possible, but there’s still work to be done on the runtime.”
Read: Solana faces network degradation for the second time this week