Solana Could Become Crypto’s ‘Visa’

According to Alkesh Shah, a digital asset strategist at Bank of America, Solana ($SOL) has the potential to “become the Visa” of the cryptocurrency industry due to its focus on scalability, low transaction costs, and convenience.

According to Business Insider, Shah stated that Solana had settled over 50 billion transactions since its establishment in 2020, whereas Visa handled 164.7 billion transactions in the fiscal year ended September 30.

The platform has over $11 billion in total value locked on its decentralized finance (DeFi) ecosystem, according to a Bank of America analyst in a research note given to clients, and has been used to mint over 5.7 million non-fungible tokens (NFTs).

The analyst continued, saying:

“Its ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use cases like micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming.”

He said that the platform may soon grab a piece of Ethereum’s market share thanks to its cheap transaction costs and emphasis on scalability, noting that Ethereum “prioritizes decentralization and security, but at the expense of scalability, resulting in periods of network congestion.”

While Ethereum can now handle roughly 12 transactions per second, Solana has been continuously handling over 2,400 transactions per second, according to network statistics. Solana’s potential limit of 65,000 transactions per second is significant. It’s worth mentioning that Visa typically handles roughly 1,700 transactions per second, with a theoretical limit of 24,000.

According to critics, Solana’s high transfer throughput comes with a number of trade-offs, including confidentiality and decentralization. In his remark, Shah stated that Solana is “a relatively less decentralized and secure blockchain” whose trade-offs have been demonstrated on multiple times by network performance concerns.

Solana has had a number of network congestion problems in recent months, some of which were purportedly caused by denial-of-service attacks related with strong botting activity on the network.

These bottlenecks are understandable given that Solana is a new blockchain with a number of features that let it grow to accommodate so many transactions per second.

Shah added that Ethereum’s priority might “optimize it for high-value transactions and identity, storage, and supply chain use cases,” but that this allows opportunity for Solana and other scalable networks to acquire part of its market capitalization.

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Patrick

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