Ethereum (CRYPTO: ETH) was one of the strongest investments of 2021, its price has risen by more than 437% since the beginning of the year. It is also one of the more expensive cryptocurrencies, however, priced at just under $ 4.000 per token.
As Ethereum continues to grow, it will only get more expensive. If you are looking for a more affordable investment that has similar growth potential, there is another cryptocurrency to consider: Solana (CRYPTO: SOL).
Solana is one of the breakout stars of the cryptocurrency world, and while it has its downsides, it could potentially be the Ethereum of 2022.
Why invest in Solana now?
Solana is currently the fifth most popular cryptocurrency, with a market cap of over $ 52 billion. (For reference, Ethereum currently has a market cap of over $ 452 billion.) This puts it in a good position, as it has gained enough traction to compete with the biggest players in the cryptocurrency market, but still has plenty of room for growth.
It also shares many similarities with Ethereum. Both networks are smart contract platforms that can host projects such as decentralized financial applications and non-fungible token markets (NFTs).
However, Solana has one big advantage over Ethereum: speed. Ethereum can currently process around 15 transactions per second, while Solana can handle up to 65.000 transactions per second. Due to this speed, many developers have flocked to Solana's network, making it the fastest growing blockchain ecosystem.
Risks to consider
While Solana may be one of the most promising cryptocurrencies of 2021, it is not without risk. Some critics argue that Solana put more emphasis on speed than security, and suffered multiple attacks that caused security issues.
More recently, the network has been hit by a distributed denial-of-service (DDoS) attack. While Solana remained online, the attack shook investor confidence. Its price fell more than 20% in the days following the crash, and is currently down nearly 30% from its November peak. This isn't the first time Solana has been hit by an attack, as the network went offline for around 17 hours in September.
Some experts also worry that security issues will remain a problem for Solana. According to a recent report from institutional investment firm Grayscale, Solana uses a consensus mechanism that is not widely used by other cryptocurrencies. It uses a proof of history protocol, which is more efficient than other systems, but may not be as secure. This means that Solana may be more vulnerable to attack than other networks.
Is Solana a good investment?
Despite its recent volatility, Solana is still one of the most popular cryptocurrencies, and its price has risen more than 11.600% since the beginning of the year.
Solana's lightning-fast speed gives it a serious edge over its competitors, and more developers are switching from Ethereum to Solana as a result. However, its security concerns are troubling. The network could become an even bigger target for attacks as it expands, so Solana will have to work hard to prevent further incidents.
Whether Solana will be successful in the long run is uncertain. So far, the cryptocurrency has managed to recover from the difficulties, which could make it a promising long-term investment. But security concerns could curb investor enthusiasm, so it's unclear whether it will continue to grow over time.
If you choose to invest, make sure you are willing to hold on to your investment for the long term. Like all cryptocurrencies, Solana will likely face even more volatility in 2022. If she can overcome her security concerns, however, she could be a strong competitor in the cryptocurrency market.