Solana Could Become ‘Cryptocurrency Visa’: Bank of America

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 January 11 research note.

The Solana network launched in 2020, and has since grown to become the fifth largest cryptocurrency, with a market capitalization of $47 billion.. An order of magnitude faster than Ethereum, has been used to settle over 50 billion transactions and mint over 5.7 million non-fungible tokens (NFTs).

But nevertheless, critics argue that its speed comes at the cost of decentralization and reliability, but Shah believes the benefits outweigh the drawbacks:

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

He went on to suggest that Solana is taking a slice of Ethereum’s market share due to its low fees, ease of use and scalability, while Ethereum may be relegated to “high value transaction and identity, storage and supply chain use cases”Shah wrote, quoted by 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 sometimes greater than the value of the transaction being sent.”

Visa processes an average of 1,700 transactions per second (TPS), but the network can theoretically handle at least 24,000 TPS. Ethereum currently handles about 12 TPS on mainnet (more on layer two), while Solana boasts a theoretical limit of 65,000 TPS.

Shah admits that “Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, illustrated by several network performance issues since its inception”.

Solana has experienced more than its fair share of network performance issues in recent months, such as the most recently confirmed withdrawal issues by Binance. on January 12, reports of performance lag across social media on January 7, and what appeared to be a DDos attack on January 5, though Solana denied this was the case.

This came less than a month after a previous attack on December 10, with reports of network congestion caused by mass botting associated with a Dec initial offering (IDO) on Solana-based decentralized exchange platform Raydium..

In an interview with Cointelegraph on Dec. 22, Austin Federa, head of communications at Solana Labs, said developers are currently working to address network issues, specifically in relation to improving transaction metering..

“The Solana runtime is a new design. Does not use EVM [Ethereum Virtual Machine] and a ton of innovation has been done to ensure users have the cheapest rates possible, but there is still work to be done at runtime.”

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