What is Solana?
Solana is a new, high-performance blockchain built to empower the next generation of decentralized applications. It is entirely open-source, developer-friendly, and public by design.
Solana runs at 50k+ transactions per second with a 400ms finality time block on a single shard. The Solana community has worked hard to develop a platform that greatly reduces the trade-offs between scalability and decentralization compared to other blockchains.
How does Solana achieve such performance? It all starts with Proof of History (PoH), an innovative clock that enables us to achieve record-breaking speeds without sacrificing security or compromising on decentralization.
PoH forms the foundation for several components of our protocol including Proof of Replication (PoRep), our unique approach to sharding, as well as Turbine, our gossip protocol which provides fast transaction finality and low block propagation times.
This all sounds very good, but before you ask how to buy SOL, we need to go over why it would be a good investment, based on the technological innovation Solana promises. You see, Solana is trying to solve a problem that has afflicted the blockchain for over a decade, so read on to find out what the problem is and how Solana is trying to solve it.
What Problem is Solana Trying to Solve?
Blockchains are slow; they can only process a handful of transactions per second, whereas centralized networks like Visa and PayPal can handle thousands of transactions per second. When you want to buy something with a credit card, your transaction has to go through Visa (or whichever card network you’re using).
When you send cryptocurrency—like Solana—to someone else, this also needs to go through a network. But with Solana and other blockchains, this network is decentralized: instead of being managed by one company or organization, it’s maintained by thousands of computers spread all over the world.
This makes blockchains much more secure than traditional systems because if anyone’s computer goes down or is hacked, the blockchain will keep working because there are so many other computers backing it up.
But, this comes with a significant drawback. Due to the sheer number of nodes, that is computers, recording, and validating transactions, achieving consensus between nodes takes a long time. A consensus is required for the blockchain to record its final data and progress on to the next transaction, and this is where Solana comes in, this is the core of what SOL is.
Achieving Transaction Throughput at the Scale of Visa or Mastercard, While Also Supporting Smart Contracts, Has Been One of the Crypto Industry’s Biggest Challenges
As we’ve been discussing, Visa and Mastercard process thousands of transactions per second. For this reason, achieving transaction throughput at the scale of Visa or Mastercard, while also supporting smart contracts like those on Ethereum, has been one of the crypto industry’s biggest challenges.
The reason is that blockchain relies on consensus to achieve a trustless settlement. This means that all nodes must agree before a transaction can be processed or verified. Nodes are computers running node software.
As a result of this consensus-based approach, blockchain networks have traditionally struggled with scalability because they reach a point where each node’s processing power becomes a bottleneck for overall network speed—there just aren’t enough resources to process enough transactions simultaneously.
Blockchain’s limitation when it comes to transaction throughput is worse if it supports smart contracts because the amount of data in each block increases as more data is added by users setting up smart contracts and executing functions within their code also known as “gas” in Ethereum. These functions represent lines of code that perform specific tasks when executed by the virtual machine running them (the EVM).
For example, Bitcoin can only do 5 transactions per second, and Ethereum can only do 15 transactions per second because each block size is capped at 1 MB. This means there is only so much data that can be included in each block before it becomes full (Bitcoin does ~3 transactions/second; Ethereum does ~15 transactions/second).
What are Bottlenecks?
Now, once you arrive at the point where you assume no new blocks are being published and that blocks contain only transactions that were verified separately from the block they’re in, you notice something else. Why do all these separate transaction verifications need to happen? Can’t we just put more than one transaction into a block and verify them all at once?
This is an interesting question—and it turns out that the answer is yes, in fact, we can. This raises another question: what’s stopping us from doing this for every transaction whether it has been verified separately or not? The point of this article is to help provide some answers to these questions, with references to how Solana carries out these functions.
What is Proof-of-History and how does it work?
Proof-of-History (PoH) is a time-stamping technique. In other words, it links data to a specific point in time. This allows us to establish that one particular event happened before another, even if the two events were not directly observed by the same party.
PoH uses a hash function to link the data and time together. A hash function is a deterministic procedure that takes an input string and converts it into an output string of fixed length (known as a digest). Hashes also have several useful properties:
- They are easy to calculate for any given input but hard to reverse (i.e., it’s hard to find an input that makes a hash equal to some target value).
- It’s impossible to predict what the output will be before you see it; therefore, hashes are unpredictable and resistant to tampering.
- You can change your input slightly and get radically different outputs; this property is known as collision resistance or avalanche effect.
- Any change in your input produces noticeable changes in your output (i.e., hashes are sensitive).
How PoH works with Gravity Chain
Why does the Solana blockchain have such a high transaction throughput? Part of the answer lies in PoH. PoH helps Gravity Chain run efficiently. PoH is not only a highly efficient consensus algorithm, but it also provides a consistent time reference for Gravity Chain.
This allows each node on the network to process transactions in parallel, vastly increasing throughput and lowering latency. PoH is perhaps best understood as an algorithm that makes time more consistent across all nodes on a network.
How Gravity Chain works with Turbines
Turbines are the nodes that process transactions on the Solana network. To remain competitive, Turbines need to be able to process transactions at the speed of the network itself.
Every Turbine maintains a series of rotating virtual “ledgers” called Gravities, which are each capable of processing transactions in parallel. This design allows all Turbines to handle an arbitrary amount of transaction volume, up to and including both expected and unexpected surges in traffic.
The design for Gravity Chain was inspired in part by Cisco’s novel approach to IP packet forwarding. To determine how large a Gravity Chain should be, we determined approximately what size our theoretical maximum transaction throughput would be. We then factor this by 50% and round down with a lower bound of 2 to ensure that there will always be spare capacity available during peak loads, while also ensuring that there will not be too much overhead caused by superfluous Gravities if the load is low.
Solana Achieves High Throughput
The Solana team observed that, when only Proof-of-History was used, the network did not achieve the level required for usability. This was because Proof-of-History relies on having many validators who have recently seen each other’s messages to determine which block is trusted.
The higher the number of validators, the more likely it is that a given validator will be able to collect a majority of votes from honest validators who have recently seen each other’s signatures to sign off on the most recent block.
When Gravity Chain and Turbines were combined with Proof-of-History, however, Solana’s throughput achieved levels not previously seen in permissionless networks (i.e., where anyone can participate).
Solana Uses a Combination of Technologies to Achieve Ultra-High Transaction Throughput That Supports Smart Contracts
Solana is composed of a network of many full nodes that are constantly processing transactions. Each node independently processes transactions and keeps track of the current state of the network (the ledger). Nodes communicate with each other to keep their view of the ledger’s current state in sync.
To achieve consensus, Solana uses Proof-of-History, which is a scalability protocol for blockchains developed by Solana and based on Lamport timestamps. Proof-of-History works by having each node generate a cryptographic proof that it’s been online during certain time intervals.
This way, if two chains are created at once, the chain with more nodes producing a Proof-of-History will be accepted as the most “correct” chain by participating nodes. While PoH requires some amount of overhead from participating full nodes to generate proofs, it causes far less overhead than typical consensus protocols and allows for extremely high transaction throughput.
These measures have made Solana a leading player in the world of cryptocurrencies. If all goes according to the company’s plans, SOL could potentially overtake Bitcoin in terms of transaction volume, simply because it is equipped to.
This makes it a good investment and a good reason why you should buy SOL. As for how SOL is to be bought, any coin exchange can facilitate that transaction. And since you’ll be buying Solana, the transaction will go down fast.