Alkesh Shah, a digital asset strategist at Bank of America has revealed he believes Solana ($SOL) has the potential to “become the Visa” of the cryptocurrency space as it focuses on scalability, low transaction fees, and ease of use.
As reported by Business Insider, Shah has pointed out that Solana has settled over 50 billion transactions since it was first launched in 2020, while Visa processed 164.7 billion transactions in the year ended September 30. In a research note sent to clients, the Bank of America analyst noted the network has over $11 billion in total value locked on its decentralized finance (DeFi) ecosystem and has been used to mint over 5.7 million non-fungible tokens (NFTs).
The analyst added:
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 added Solana may soon take a share of Ethereum’s market share over its low transaction fees and focus on scalability, pointing out Ethereum “prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion.”
While Ethereum can handle around 12 transactions per second in its current state Solana has, according to data from its network, been consistently processing over 2,400 transactions per second. Solana’s theoretical limit is notable of 65,000 transactions per second. It’s worth noting Visa processes around 1,700 transactions per second on average with a theoretical limit of 24,000.
Critics have suggested Solana’s high transactions throughput comes with numerous trade-offs, including security and decentralization. Shah, in his note, wrote that Solana is “a relatively less decentralized and secure blockchain” whose trade-offs have been illustrated by network performance issues on several occasions.
Over the last few months, Solana has suffered a number of network congestions, some reportedly cause by denial-of-service attacks associated with heavy botting activity on the network. These congestions are to some, expected as Solana is a new blockchain with a number of innovations helping it scale to handle so many transactions per second.
Shah explained that Ethereum’s prioritization could “optimize it for high-value transactions and identity, storage and supply chain use cases” but noted this leaves room for Solana and other scalable networks to take some of its market cap.
As CryptoGlobe reported popular cryptocurrency exchange Kraken suggested that the price of SOL could rally as much as 260% this year as it has been in a “broadening ascending wedge” and “appears in the early innings of its fourth wave of price discovery.”
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