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In this issue
Explaining Solana, the third major blockchain platform
Why do you need to pay attention to the third major blockchain platform
Here is the history of my relationships with cryptocurrency:
In December 2017 bought 0.0116 BTC for about $200.
Got tired up and sold these to a friend a year later for almost the same price.
Right now, this bitcoin amount is worth $650. Thankfully not that crazy. If it’d grown +1000% or something, I don’t know how I’d be able to live with myself.
Since October 2021, I started investing in Ethereum without any hopes. I’m prepared to lose that money entirely, but I’d better lose them rather than blame myself a decade later for at least not trying.
Why Ethereum? I’m just way more optimistic about Ethereum in the long-term than Bitcoin. It has a much bigger community and way more projects. Most importantly, I’m super confident about Ethereum 2.0, which will be rolling out in 2022 and includes a transition to proof of stake (which will make gas fees smaller and transactions faster).
Aside from Ethereum, two weeks ago, I discovered Solana, which blew my mind, and I bought some of its coins (SOL) right away to expand my crypto portfolio.
Solana is already considered the third major blockchain platform. In 2021, Bloomberg described Solana as “a potential long-term rival for Ethereum.”
What hooked me was their Energy Use Report:
I bet you didn’t know Bitcoin or Ethereum transactions used that much energy.
This crazy energy use is probably the biggest downside to Bitcoin or Ethereum in my opinion. Especially in times when the world is fighting climate change. So this report has got me intrigued immediately.
What you need to know about Solana is that they are not trying to beat Ethereum as the media often likes to present. Solana is supposed to complement Ethereum. They differ in use cases.
Developers of Solana solved a lot of complicated engineering challenges in quite an innovative way.
I highly recommend you watch this video that explains all the engineering brilliance behind Solana:
Although the key difference from other blockchains is that they use Proof of History as their consensus algorithm (which Solana’s founders created).
This leads to Solana’s main advantages over Ethereum.
Significantly lower energy consumption
Lower cost of transactions
Faster transactions
But these same advantages lead to their disadvantages. When Solana focuses on scalability, Ethereum values security. Solana’s network offers cheap and fast transactions but less security.
And this leads us to use cases.
Ethereum is best for high-volume transactions. It’s costly; it takes time; it’s much more secure. And when you’re buying a $1M+ NFT I bet you’d rather choose security over speed.
Solana is best for micropayments. When you want to spend low amounts often (like you mostly do with regular fiat money), you’d prefer speed over too much of a security.
One great example of using Solana is Audius, a music streaming platform where it makes sense to focus primarily on micropayments.
Week over week, I’m getting more and more excited about web3, and you can see this being reflected in this newsletter. Discovering Solana made me way more curious and engaged since I never use Ethereum because of its high gas fees. I’m absolutely going to keep an eye on Solana and explore its potential.
Thanks for reading. Until next week 👋🏻