Founded in 2017 by former Dropbox & Qualcomm engineer Anatoly Yakovenko, Solana is a programmable blockchain that runs various decentralized applications (D’Apps). Joined by Eric Williams and Greg Fitzgerald, the team at Solana have created a new process of dealing with traditional throughput issues that exist in the Bitcoin and Ethereum blockchains.
Thanks to experience designing distributed systems, Yakovenko was able to recognise that a reliable clock is key to simplifying network synchronization. When synchronization is simplified the network can reach unprecedented speeds. This timekeeping technique is referred to as “Proof of History”.
As an open-source, programmable blockchain, Solana supports developers and institutions globally to build D’Apps and marketplaces. It’s fully decentralized, secure, and highly scalable infrastructure uses ground-breaking computing technology to support thousands of nodes.
Currently the fastest blockchain in the world, Solana claims to support 50,000 transactions per second (TPS). Through its innovative protocol, it will be able to scale accordingly with the network bandwidth.
According to Yakovenko this transaction speed of 50,000 TPS could increase to as much as 700,000 TPS as the network grows. For reference, the most commonly used network, Ethereum currently processes trasactions at around 15 to 45 TPS.
As a programmable blockchain, Solana has the ability to transfer smart contracts. Smart Contracts are vital as they can be programmed to carry out functions when the details of the contract are met.
Solana’s native token SOL, can be used to pay for transaction fees across its network. The fees for transacting is incredibly low in comparison to other networks.
SOL is currently circulating at 26 million. With the maximum supply to be capped at 489 million tokens.
Unlike the Proof of Work (PoW) algorithm is used by networks like Bitcoin to synchronize transactions into groups called “blocks”. Where blocks can require ~10 minutes to be verified. Networks using the Proof of Stake (PoS) consensus are not held to these same parameters, however without reliable timestamps, validators are unable to determine the order of blocks. A common loophole has been to tag each block with a Unix timestamp. However, these timestamps are only accurate to within an hour or two.
Built upon the PoS protocol, Solana has changed the game with its innovative Proof of History (PoH) timing mechanism. According to Solana’s whitepaper, “Proof of History is a sequence of computation that can provide a way to cryptographically verify the passage of time between two events. It uses a cryptographically secure function written so that output cannot be predicted from the input, and must be completely executed to generate the output.”
It is essentially a cryptographic clock that enables nodes to agree on the time order of the events on the chain, without having to communicate directly with each other. This means that blocks can reach validators in any order and accurately verified due to its cryptographic timestamp. This allows for a greater level of efficiency and throughput within Solana’s network.
Solana’s exceptional transaction speed will be necessary if cryptocurrencies are to compete with traditional payment methods. Currently Visa states that it has the ability to process up to 24,000 TPS (average of 1,700 TPS), Paypal at an average of 193 per second. While crypto giants BTC & ETH at a relatively low 3-5 & 15-45 TPS respectively.
While the native SOL token can be used to cover transaction fees, holders can also stake the token to earn additional rewards. Staking is a good initiative for users to earn profit if they are looking to hold their tokens.