Solana could become the ‘Visa of crypto’: Bank of America

Alkesh Shah, digital asset strategist at Bank of America, predicted Solana, an Ethereum competitor, would become the “Visa for the digital asset ecosystem” in a research note dated January 11.

Launched in 2020, Solana Network has since grown to become the 5th largest cryptocurrency with a market capitalization of $47 billion. An order of magnitude faster than Ethereum, it has been used to settle more than 50 billion transactions and over 5.7 million non-fungible tokens (NFTs).

However, critics argue that its speed comes at the expense of decentralization and reliability, but Shah believes that the benefits outweigh the disadvantages:

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

He went on to suggest that Solana takes a portion of the Ethereum market share due to its low fees, ease of use, and scalability while Ethereum may be migrated to “high-value transactions, identity, storage, and supply chain use,” Shah wrote, Business Insider reported.

“Ethereum prioritizes decentralization and security, but at the expense of scalability, which has resulted in network congestion periods 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 around 12 TPS on the mainnet (more on the dual layer), while Solana boasts a theoretical limit of 65,000 TPS.

Shah acknowledges that “Solana prioritizes scalability, but a less decentralized and relatively secure blockchain has its trade-offs, evidenced by many of the network’s performance issues from the start.”

Solana has faced more than its fair share of network performance issues over the past months, such as withdrawal issues recently confirmed by Binance on January 12, reports of delayed performance via social media on January 7 and what appeared to be a DDos attack on January 5, although Solana has been He denied that this was the case.

Related: A decentralized and scalable exchange leverages Solana to improve the trader experience

This came less than a month after the previous attack on December 10, with reports of network congestion caused by mass mobilization linked to a December initial offer (IDO) on Solana’s decentralized exchange platform, Raydium.

In an interview with Cointelegraph on December 22, Austin Federa, head of communications at Solana Labs, said developers are currently working on network issues, specifically in terms of improving transaction scaling.

Solana Runtime is a new design. It does not use EVM [Ethereum Virtual Machine] A lot of innovation has been done to ensure users get the cheapest fees possible, but there is still work to be done at runtime.”