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It looks like bitcoin and cryptocurrency prices have bottomed out—ending the worst weekly crypto rout since last December, during which major cryptocurrencies shed hundreds of billions of dollars in combined value.
This week, the world’s #1 cryptocurrency bitcoin is up 3.3%. The price of its closest rival by market cap, ethereum, jumped 5.3%. Other major cryptocurrencies are also on a tear. BNB is up 9.5%, cardano 16.2%, and solana 10.6%.
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While the entire crypto market is having a blast, Bank of America
BAC
has singled out one cryptocurrency that could become the next big thing in town. In a recent note, its digital asset strategist Alkesh Shah said solana could become the “Visa of the digital asset ecosystem”.
“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,” Shah noted.
The analyst pointed out there are more than 400 successful decentralized projects on solana’s blockchain.
Besides, solana boasts some of the fastest transaction speeds. Shah explained in the note: “These innovations allow for the processing of an industry-leading ~65,000 transactions per second with average transaction fees of $0.00025 while remaining relatively decentralized and secure”
But the wide range of applications and industry-leading transaction speeds have their trade-offs.
“Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, illustrated by several network performance issues since inception… Ethereum prioritizes decentralization and security, but at the expense of scalability, which has led to periods of network congestion and transaction fees that are occasionally larger than the value of the transaction being sent,” wrote the analyst, as quoted by Coindesk.
Solana was launched in March 2020 as a decentralized blockchain that can host highly-scalable decentralized applications. Today it’s the first largest cryptorurency— having settled more than $50 billion in transactions and minted more than 5.7 million NFTs, according to Alkesh Shah.
Solana is often compared to ethereum because both cryptocurrencies support smart contracts, which are the key building block of decentralized applications, such as blockchain-based banks, and NFTs (non-fungible tokens).
Over the past year, the cryptocurrency has attracted a lot of attention from investors and soared a mind-blowing 4,000%. Still, its size pales in comparison to its closest rival, ethereum. Solana has a market capitalization of $47 billion, which is just a little over one-tenth of ethereum’s size.
The BofA analyst thinks this valuation gap bodes well for solana. It means its vast potential is not yet fully baked into the price. And it gives the cryptocurrency a lot of room to grow as it chips away at the market share from ethereum and other major cryptos.
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