Solana to Zero: Some Reasons Why You Might Want To Avoid Investing.
Are Solana’s best market days behind it?
Executive Summary: The use case and market strength of Solana has been exceptional up to this point. The coin has skyrocketed to 11th place in marketcap. However, concerns regarding its centralization and response to developing technology leaves questions regarding its overall strength in the long-term.
Solana, is more than a blockchain project, it aims to provide decentralized apps with speedy, scalable, and inexpensive transactions (dApps). The ambitious project was started by an ex-Qualcomm engineer named Anatoly Yakovenko, and because of its fast transaction throughput and low transaction fees, has garnered a lot of interest in the cryptocurrency community especially after it announced the arrival of its Solana Saga phone.
But let’s be real for a moment. Nothing is as perfect as it seems. Even the most perfect of paintings has its flaws. Solana is no different in this regard. Despite all of the Solana blockchain project's fascinating features, there remain serious concerns that must be acknowledged and addressed regarding its long-term viability and capacity to compete with other blockchain systems like Ethereum and Binance Smart Chain. There are many glaring flaws that have been called into question which in the interest of transparency we will tackle here.
One potential negative aspect that many of us are growing concerned about is the relative high degree centralization present in Solana. The project uses a proof-of-stake consensus method, so users that stake their SOL tokens and participate in transaction validation can gain rewards. This has some benefit in providing incentivized stability with the promise of passive income generation but it certainly comes with some considerable drawbacks.
Many critics contend that not only do only a few validators truly govern the Solana network, but that additionally the top 20 validators now hold more than 50% of the staked tokens! The realistic concern many share is that such concentration may hamper cooperation toward swiftly growing Solana to meet challenges as a result of the classic innovator’s dilemma. Growing centralized and highly concentrated power, puts the decentralization of the network at risk, resulting in a currency that is highly vulnerable to governmental forces and market dynamics.
Another issue is Solana's subpar absorption. Despite providing speedy and affordable transactions, the platform hasn't yet attracted a significant number of dApps and users compared to other blockchain platforms. Other blockchain systems' widespread use, including Ethereum and Binance Smart Chain, are partly a result of Solana having a dearth of development tools, and a relative lack of community support. Without a significant ecosystem of dApps and users, it may be difficult for Solana to compete over the long term and provide a justified rationale for its current market price.
Some technological difficulties have also arisen within and in regards to the Solana blockchain. In November 2021, there was a lengthy, widespread malfunction of the network that precluded the completion of any transactions. Blockchain’s are known for providing solid transaction validation and tracking capability albeit slow in comparison to established centralized processes. Solana’s potential is in bridging the speed and volume gap. All of which makes the outage resulting from overloading very concerning. These performance woes show that the network may have a general inability to handle an increased volume of transactions. Even though the Solana team was able to repair the network and get everything back to normal, the incident raises serious questions about the platform's long-term scalability and ability to handle high amounts of transactions.
Solana has also had more than its fair share of additional technical issues, such as software bugs and security weaknesses, in addition to the aforementioned downtime. In December 2021, a critical bug in the Solana wallet software might have permitted an attacker to steal money from users' wallets was discovered. The error was quickly addressed, but it highlighted the alarming potential risks of using brand-new, untested blockchain networks.
Even if Solana offers a lot of advantages, some people have doubts about its long-term viability and ability to compete with other existing and potential blockchain systems. Like any new technology, Solana has risks and unknowns, so it's critical for customers to carefully consider the benefits and drawbacks before making any decisions.
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Conclusion: Solana has some considerable challenges that it must address that raise concerns regarding its long-term viability. Issues such as centralization and the potential for future outages must be addressed before it can be considered a safe bet.
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