Over the past few months, Solana has delivered an impressive performance, capturing the attention of many investors worldwide. Bitcoin is the world’s largest cryptocurrency when measured by market capitalization. However, in many ways, Solana has outperformed it in terms of growth rate.
Solana and Bitcoin target different types of investors and crypto users, making the change significant for broader market trends. In this article, we’ll try to explain why this has happened and what the broader implications of this trend are for crypto traders and the industry as a whole.
Facts and Figures
Bitcoin is trading at $111,111 USD, while Solana trades at a much smaller absolute value of roughly $203.76 USD, at the time of this writing. However, Solana has gained about 33% since early August, while Bitcoin remained stable or stagnant during the same period.
1 SOL is worth roughly 0.001832 BTC, representing a 15% gain in relative value over the last 30 days. The market cap for both currencies has grown in the same time period. For Bitcoin, it grew 14%, and for Solana, it grew 56%, outlining the trend we mentioned.
Different Approaches to Crypto
Bitcoin is the world’s first cryptocurrency, launched in 2009. Its main function is to store value. This is achieved by incorporating scarcity into the code itself. Experts from Webopedia have noted that there’s a cap of 21 million coins, which limits the supply. It uses Proof of Work (PoW), which is secure, but requires a lot of energy.
Solana was launched in 2020, designed to address the scalability issues that blockchain has been facing. It uses a unique blend of Proof of Stake (PoS) and Proof of History (PoH), providing low cost and high speeds of transactions.
Transactions Speed and Scalability
The biggest performance difference between the two currencies is in the transaction speed. Bitcoin can only process around seven transactions per second (TPS). By contrast, Solana can handle 65,000+ TPS, due to its PoH and PoS hybrid system.
The difference in scalability makes Solana a better option for dApps, NFT marketplaces, and gaming ecosystems, since these require thousands of transactions to happen at the same time. For instance, this is why NFT minting has become a huge trend among Solana users, but it hasn’t caught on with Bitcoin owners.
Real World Utility
There are many real-world applications for both currencies. Some of them have been in place for a while. For instance, the best crypto casinos have long been accepting both currencies; however, in recent years, other, more traditional businesses have also started accepting crypto. Bitcoin is rarely used for smart contracts, as it wasn’t built for them, and Solana has a wide range of uses.
For instance, Solana is already seen as a hub for DeFi protocols, NFT marketplaces, and gaming projects. It also partners with Visa in creating Solana Pay, a payment settlement platform, made to bridge the gap between crypto and fiat payments.
Transaction Cost
Transaction costs are one of the biggest concerns for users, as they bite into their profits every time they use crypto. As cryptocurrencies are becoming widely used for transactions, they are also serving as a replacement for fiat money, and this is where the cost per payment matters. It’s also one of the reasons Solana is on the rise more potent than that of Bitcoin.
The cost per use for Bitcoin varies based on the state of the market. When the network demand rises, so does the cost of transactions. This makes it impractical for daily use, which includes numerous smaller transactions. On the other hand, Solana’s fees are a fraction of the cost, often just a few cents per transaction.
Energy Efficiency
Now that cryptos are part of mainstream finance, the amount of energy they consume is more of an issue than ever before. Crypto users are mindful of this fact, and being energy efficient has become one of the features a coin needs to provide in order to attract users.
At this point, crypto users use as much energy as a small nation, and it’s one of its biggest downsides. Solana, on the other hand, consumes less energy during a transaction than Google does during a single search.
To Sum Up
Solana has been outperforming Bitcoin when the two are measured in terms of growth and expansion. Both currencies have been growing in value and in scope, but Solana expands much faster. It gained 33% in two months, while Bitcoin remained at the same level.
There are many reasons why this is the case, and most revolve around the fact that even though Bitcoin is the largest cryptocurrency, it isn’t the best suited for many of the most modern cryptocurrency applications. Solana, on the other hand, is due to its affordability and scalability.