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Bank of America hopes Solana becomes a «Cryptocurrency Visa»

  • Looking at the speed of Solana’s transactions, BoA analysts are pretty sure it will dominate the payments market in the future.
  • The analyst remains confident that Solana will overcome its decentralization issues and take market share from Ethereum.

Cryptocurrency platforms have often received direct comparisons with traditional payment institutions. In a recent research note on January 11, Bank of America digital asset strategist Alkesh Shah predicted that the Solana blockchain could be a “Visa” of the encrypted world.

Solana has made headlines over the past year due to its impressive growth and rally on the SOL sign. Launched in 2020, the Solana blockchain is among the top five blockchain networks with a market capitalization of $ 47 billion. In addition, it has emerged as a solid tier 1 alternative to Ethereum that offers massive scalability with low cost transactions. As a result, Solana has recently attracted a number of decentralized financial projects (DeFi).

The Solana blockchain has settled more than 50 billion transactions and has settled more than 5.7 million non-interchangeable tokens (NFTs). Alkesh Shah commented on his growth for Business Insider:

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

Solana performance issues

However, critics have argued that Solana’s speed comes at the expense of decentralization and reliability. Although Solana has grown exponentially in a very short space of time, it has faced more frequent downtime problems. Well, the developers need to step up at this point to be able to play long term.

Shah also shares some statistics comparing Solana and Visa. The VISA network currently processes approximately 1,700 transactions per second. However, the network can theoretically handle at least 24,000 transactions. Solana, on the other hand, has a theoretical limit of a whopping 65,000 TPS. BoA analysts conclude by saying

Solana prioritizes scalability, but blockchain alternatives are relatively decentralized and secure, which has been demonstrated by a number of network performance issues since its inception.

Solana is taking a share of Ethereum

The BoA analyst said Solana is taking a slice of Ethereum market share because of low fees, ease of use, and scalability. Shah said:

Ethereum prioritises decentralization and security, but at the expense of scalability, resulting in periods of network congestion and transaction fees sometimes exceeding the value of the transaction being sent.

Currently, the Ethereum network is undergoing a major transition to the Ethereum 2.0 Proof-of-Stake (PoS) blockchain. Once scalable, network transactions exponentially increase above the current 12 TPS. On the other hand, Pantera Capital CIO Joey Krug recently said that it will be very difficult to take market dominance from Ethereum. During an interview with Bloomberg, the CIO said:

If we move the clock forward 10 to 20 years, a very significant percentage, perhaps even over 50%, of the world’s financial transactions will be in touch with Ethereum in some way.

Escher Booko

I am fascinated by the complex possibilities of blockchain technology and try to make the subject accessible to everyone. My goal is to make the world aware of cryptocurrencies in a simple and understandable way. I believe that cryptocurrencies and blockchain technology will have a great positive impact on people's lives.

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