Solana (CRYPTO: SOL) It is one of the latest cryptocurrencies that has experienced massive growth, with its price increasing by nearly 10,000% over the past year. Some have also called it the “Ethereum Killer” because it shares many similarities with its larger competitor, but is also much faster than Ethereum.
However, two difficult weeks passed for Solana, as its price fell. It’s currently down nearly 40% since its November peak, and has faced multiple challenges lately that could cause its price to drop even lower.
For long-term investors, downturns can be a great buying opportunity. By buying when the prices are lower, you can get a big investment to get a discount. Does this mean it is time to invest in Solana? Here’s what you need to know.
Why did Solana crash?
Part of Solana’s price drop may not have anything to do with the cryptocurrency itself. The cryptocurrency market in general has received a lot of success over the past two weeks, and many major cryptocurrencies, including Bitcoin And EthereumI watched their prices go down.
However, Solana has also experienced several major setbacks that may have affected its price. Recently, it was reported that the blockchain suffered a distributed denial of service (DDoS) attack that slowed its performance.
This is not the first time Solana has been injured, as he was also offline for 17 hours in September after an attack. Institutional investment firm Grayscale cited Solana’s security risks in a recent report, explaining that it uses under-utilized blockchain technology and could make it more vulnerable to attacks.
Is Solana a good investment?
While these recent security breaches are alarming, they can simply be attributed to the growing pains where the cryptocurrency finds its foundation. However, it is important to consider how much risk you are willing to take before you invest.
Solana has bright spots, and it could be a worthy competitor to Ethereum. It uses a date validation protocol, which is similar to Proof of Stake but more efficient. This results in incredible speed, and its network is much faster than most other cryptocurrencies.
If Solana is able to solve its security issues and prevent future attacks, it could be a solid long-term investment. No one knows for sure what the future holds for Solana, so whether it’s a good investment right now will depend on how optimistic you are about its potential and how much risk you are willing to take.
If you can take on higher levels of risk, you can choose to invest in Solana now with the hope of seeing long-term growth. But if you’re a risk-averse investor, there may be better options out there.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.