Solana is up 17,000% this year—here’s what to know before investing in the Ethereum competitor – CNBC

Solana is up 17,000% this year—here’s what to know before investing in the Ethereum competitor – CNBC

As demand for Ethereum, the most used blockchain network, has surged this year, other projects have emerged in an attempt to compete. Among them is Solana, a blockchain with a native cryptocurrency called SOL.

“Solana is the leading Ethereum competitor,” Matt Hougan, chief investment officer at Bitwise Asset Management, tells CNBC Make It. “I wouldn’t put all my chips on it, but I’m a big fan.”

Hougan isn’t alone ⁠— the overall market has shown support for Solana, too. This year, SOL is up nearly 17,000%, according to CoinGecko. Now the fifth-largest cryptocurrency by market value, SOL hit an all-time high of nearly $250 on Thursday, and currently, it has a market cap of over $70 billion.

There are a few reasons why Ethereum and Solana are often compared. For one, both have smart contract capabilities. Smart contracts, or collections of code that carry out a set of instructions on the blockchain, are crucial in running decentralized finance, or DeFi, applications and nonfungible tokens, or NFTs.

“A lot of the fastest-growing applications of crypto technology have been built on Ethereum and rely on the Ethereum blockchain to function,” Hougan says. “If you’re investing in Solana, you’re betting that its technical sophistication will help it leapfrog Ethereum.”

Though Solana has been especially buzzy lately, it’s important to research and understand the risks before investing. After all, financial experts generally deem all cryptocurrencies to be risky, volatile and speculative
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