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

Solana could become the ‘Visa of crypto’: Bank of America
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Alkesh Shah, digital asset strategist at Bank of America, predicted that Ethereum competitor Solana would become the “Visa for the digital asset ecosystem” in a research note on Tuesday.

Launched in 2020, Solana Network has since grown its native token SOL to become the fifth largest cryptocurrency with a market capitalization of $47 billion. An order of magnitude faster than Ethereum, it has been used to settle over 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 is taking a chunk of the Ethereum market share thanks 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, as Business Insider reports.

“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 its main network (more on Layer Two), while Solana boasts a theoretical limit of 65,000 TPS.

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

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 Wednesday, delayed performance reports via social media on Friday, and what appeared to be a distributor denial of service attack on January 5, despite That Solana denied that this is 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 the initial DEX offering on the Solana-based decentralized exchange platform Raydium.

In an interview with Cointelegraph on December 22, Austin Federa, Head of Communications at Solana Labs, said that developers are currently working on addressing network issues, specifically in terms of improving transaction scaling:

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

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