BofA: Solana could become ‘Visa for cryptocurrencies’

By Dan Runkevicius

The decline of Bitcoin and other cryptocurrencies seems to have stopped – but first, in the 5 days ended January 7, they recorded their biggest weekly decline since December, with their market capitalization falling by hundreds of billions of dollars.

So far this week, Bitcoin is strengthening more than 3% while its biggest competitor, Ethereum is making a “jump” of 5.3%. The other cryptocurrencies perform even better: Binance Coin wins close to 10%, Cardano rallies around 16%, while Solana’s winnings exceed 10%.

And while the cryptocurrency market as a whole is on track again, Bank of America has singled out a cryptocurrency that could be the new big trend in the market. In a recent note, analyst Alkesh Shah estimated that Solana could become the “Visa of digital assets”.

“Its ability to deliver high performance, low charge, and at the same time usability forms an optimized blockchain for consumer use, such as: micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming,” Shah said.

The BofA analyst pointed out that Solana’s blockchain hosts more than 400 decentralized projects.

Besides, Solana can be proud of the speed of its network. As Shah pointed out, “Solana is capable of processing 65,000 trades per second, with an average commission of $ 0.00025, while the process remains relatively decentralized and secure.”

But the wide range of applications and the industry-leading trading speeds have their compensation.

“Solana emphasizes scalability, but a relatively less decentralized and secure blockchain has compromises, which are reflected in various network performance problems by default … Ethereum focuses on decentralization and security, but at the expense of scalability, which has “lead the network to periods of ‘congestion’, while at times the cost of the transaction was higher than the transaction itself,” the analyst added.

Solana was launched in March 2020 as a decentralized blockchain that can host highly scalable decentralized applications. Today it is one of the largest cryptocurrencies, having traded more than $ 50 billion, and has 5.7 million NFTs, according to Alkesh Shah.

Solana is often compared to Ethereum because they both support “smart contracts”, which are a key building block of decentralized applications such as blockchain-enabled banking institutions and NFTs.

In 2021, Solana attracted the interest of investors and its price skyrocketed, recording an impressive increase of 4,000%. However, its size is significantly lower compared to Ethereum. Solana’s market capitalization is valued at $ 47 billion, just over 1/10 of Ethereum’s market capitalization.

The BofA analyst believes that this valuation gap will benefit Solana in the future. Indicates that the enormous potential of cryptocurrency has not yet been fully integrated into its value. This gives Solana a lot of vital growth potential, as it can claim – and extract – market share from Ethereum and the other big cryptocurrencies.

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