What is Solana (SOL) used for?
Source: @crypto-guides
There is a section in the "What is Solana crypto (SOL)? - Solana Guide" titled "What is Solana (SOL) used for?"; with this post I hope to contribute an item or two we don't usually hear about from both legacy media and even cryptocurrency-oriented media. For @crypto-guides -- Feel free to adjust as needed for Guide purposes.
First there was Ethereum. Then there were Layer 2 solutions for Ethereum. Then there is Solana. What is Solana (SOL) used for? This section of the Guide will cover that topic.
Background
First There Was Ethereum...
With 2880 dApps written for it , Ethereum's dominance of the dApp space was at 81.7949%.
... Then There Were Layer 2 Solutions ...
One consequence of that dApp dominance is high traffic and the congestion and gas fees that come with it. To alleviate that congestion plus its costs, a number of blockchain solutions have come about to form a Layer 2 over Ethereum (among them, THORChain and Polygon).
... Then There Is Solana.
Just as ETH is used to pay for transactions on Ethereum, SOL is used to pay for transactions on Solana.
Like Ethereum, Solana is a blockchain meant to serve as the basis for a development platform for dApps. Solana was designed as a development platform which can fill in the gaps in Ethereum. Keeping in mind the Layer 2 solutions used to offload burdens from Layer 1 Ethereum, Solana provides significant innovations at its Layer 1. One of these innovations is its "Proof of History" consensus algorithm (PoH).
Despite the basic similarities between Solana and Ethereum-- development platforms which happen to have a cryptocurrency to fuel transactions-- Solana and Ethereum fill different niches. Rather than being an Ethereum-killer, Solana is actually more complimentary in that it fills the gaps present with Ethereum.
SOL can be used not only to pay gas fees but also for payments where SOL is accepted. In this way, SOL is similar to ETH and BTC (as well as HIVE and even DOGE).
| SIDEBAR: Proof of History? |
|---|
| Most people would expect raw timestamps to be used to as part of mining a block to be added to a blockchain. If a network controls all the clocks, they all need to be in synch. If the clocks are controlled by various groups (as in a delegated proof of stake network), enough clocks have to be in synch for the timestamp to be rcognized as official. Either way, it can be a resource-intensive operation just to confirm the timestamp to be used. It can take too much work, so to speak. Enter Proof of History, a variation of Proof of Stake. The purpose of PoH is to prove that a transaction took place before some event; in this case, the event is another block. Think of PoH as the blockchain equivalent of a "proof of life" photograph taken to show that someone was alive (or at least present) as of the date indicated by the front page of the newspaper shown in the photograph. It may take too much work to agree on the time a transaction took place, but it should be easier for nodes to find agreement that a transaction took place before another one. Just as PoS was a major time-saver over PoW, PoH is supposed to be a major time-saver over PoS and PoW. |
Uses of Solana
Creating dApps for Mobile Devices
Solana is a blockchain, and it has its own cryptocurrency (SOL). Additionally, Solana is a development platform developers can use to crate apps for mobile devices. At the moment Solana can be used by programmers using the well-established programming languages C and C++ ("C" plus plus) as well as the relatively new language Rust; over time, Solana will be available for use by other programming languages.
Decentralized dApp Development
As of publishing time, Solana.com notes that there are 302 dApps in its ecosystem. Most dApps revolve around cryptocurrency-oriented activities such as wallets, exchanges, explorers, DeFi. On the creeative side there are 22 NFT dApps including a marketplace. There are even dApps for dating and fantasy sports. These dApps (not to mention those in the works for future release) provide additional use cases for the SOL token.
Decentralizing dApp Purchasing
For someone who is not a fan of iPhones or Apple more broadly, one of the greatest disadvantages of iPhone is its reliance on the Apple App Store. For all practical purposes, there is no other place an iPhone user can visit to download an iPhone app.
(It's not much better for Andorid apps, although it's possible to obtain apps from non-Google Play sources. Either way, it's a centralized experience controlled by companies known for controlling people's data.)
Solana can be used to provide by mobile dApp developers to provide a decentralized app store experience.
Microtransactions
All transactions involving a credit card-- whether at a store, using a personal computer, or via mobile device-- involve processing fees. Sometimes the fees are tacked on to the transaction, sometimes there are built-in; but always they are present. Even a small percentage or a fixed fee can add up over the course of a year. We know that credit card companies need to profit from those fees in order to stay in operation, but sometimes it feels painful to pay that fee.
Transactions made using Solana cost less than USD 0.01-- less than a cent. Microtransaction fees can go directly to the developers of a dApp, or to service providers accepting payments in SOL. When transaction volume is large, that's a lot of SOL being collected.
Tokenized Stocks
While it is possible to purchase 1 share of a publicly-traded stock-- or even fractional shares of one-- the process for doing so is not as easy as it should be. Firms which have such programs don't publicize them because most of their money is made from the trade of larger bundles of stock to other institutions or to high net-worth individuals.
One way to make stock purchases more accessible to people with more-limited resources is by selling tokenized stocks. Tokenized stocks are digital assets that can be listed on cryptocurrency exchanges. It's like turning shares of stock into fungible tokens for sale.
Digital Assets AG, a token issuer based in Switzerland, has done exactly this by using Solana to launch its stock-tokenization infrastructure. Among the tokenized stock offerings are Facebook, Google, Tesla, Netflix, and Nvidia. Tokenized stocks are an excellent way for investors the world over to access the U.S. stock markets. Since tokensized stocks are crypto assets sold at a cryptocurrency exchange, they are available for purchase or sale 24/7/365.
Conclusions
Rather than being developed as a payments system like Bitcoin and Dogecoin, Solana was developed as a developer platform like Ethereum. Solana currently has 302 dApps operating on its blockchain, and that number is expected to grow. Solana is built to scale well, something Ethereum has trouble doing despite dominating the dApp space at over 80%.
Solana is used for devloping dApps for mobile devices. Thanks to its use of microtransactions, it removes the pain associated with payment via credit card. While not feeless, the fees of less than USD 0.01 make Solana a good choice for making dApps with in-app purchase capability.
Microtransactions also make it possible to provide an alternate source of mobile dApps. Solana can be used to make decentralized app stores which can rival the centralized stores offered by Apple for iPhone and Google for devices using Android.
Tokenized stocks allow investors from all over the world to have access to stocks listed on U.S. stock exchanges by offering them as digital assets on a cryptocurrency exchange. Unlike their paper counterparts, tokenized stocks are available 24/7/365. Swiss-based Digital Asset AG (DAAG) used Solana to set up an infrastructure for offering tokenized stocks such as those for Facebook, Google, Tesla, Netflix, and Nvidia.
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