The report also compares the asset to security-focused Ethereum (ETH) and deFi newcomer Avalanche.
Solana comparison with largest credit card network
Bank of America gave arguably the highest praise a major US bank can bestow on a cryptocurrency. It compared Solana to the world’s largest credit card network.
“Solana could become the Visa of the digital asset ecosystem.”
Bank of America global crypto and digital asset strategist Alkesh Shah wrote in a research note published Tuesday. He cited the more than 400 decentralized applications on Solana’s (SOL) network. They host everything from peer-to-peer exchanges to NFT marketplaces.
Ethereum, meanwhile, could become the blockchain for “high-value transactions and identity, storage and supply chain use cases,” he wrote.
Crypto veterans have long compared the transactions per second (TPS) possible on blockchains to the transactions performed on credit card networks. Visa says it can theoretically handle at least 24,000 TPS, but around 1,700 on average. The most talked about TPS for Ethereum is 15. That’s not much, given the demands of decentralized applications that are constantly “on-chain”. With limited spots, transaction fees on the network are usually measured in double digits – in dollars ($)
While there are many projects trying to solve Ethereum’s scalability issues – including through sidechains on Polygon and rollups on Arbitrum – the congestion is unlikely to be significantly reduced until the full rollout of Ethereum 2.0. Ethereum creator Vitalik Buterin argued in June 2020 that the upgraded network could go to 100,000 TPS.
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Opening for other networks
Solana is blowing Ethereum and Visa both out of the water according to its own estimates, with a theoretical limit of 65,000 TPS. But BofA’s comparison isn’t entirely flattering. Shah said the following in reference to a September network outage and several minor issues:
“Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has drawbacks, illustrated by several network performance issues since its inception.”
That gives other networks an opening. Shah mentioned not only an upgraded Ethereum network but also Avalanche, arguing that the “attempts of the latter to find a middle ground” between Ethereum-level security and Solana-level speed could make it the best blockchain for decentralized finance and enterprises.
Nevertheless, Shah was careful to note that there doesn’t have to be one blockchain (outside of Bitcoin) to outperform them all; each blockchain may work best for different use cases. As for Solana, he noted:
“The ability to provide high throughput, low cost and ease of use creates a blockchain optimized for consumer use, such as micropayments, DeFi, NFTs, decentralized networks (Web3) and gaming.”