solarium (SUN -1.21%) has minted many millionaires since its launch in 2020. The cryptocurrency started trading at $0.95 and reached its all-time high of $260.06 on November 6, 2021, which would have turned a $10,000 investment into $2.74. millions of dollars.
Solana was widely seen as an alternative to Ethereum (ETH -1.66%) for the development of decentralized applications. The Solana blockchain was faster, more scalable, and had lower transaction costs than Ethereum. It achieved this by using its unique proof of history (PoH) mechanism to speed up proof of stake (point of sale) mining method used by Ethereum.
Image source: Getty Images.
However, a series of network congestions and security flaws caused Solana to lose its luster, and rising rates subsequently crushed the cryptocurrency market. To make matters worse, the failed crypto exchange FTX hastily liquidated its Solana tokens in several huge auctions to raise more cash to pay its creditors. As a result, the Solana price fell below $10 by the end of 2022.
However, Solana recovered and reached $163; Your original $10,000 investment would still be worth $1.72 million. It was difficult for investors to stick with Solana during those wild swings, but it is now the world's fifth-largest cryptocurrency with a market capitalization of $71 billion. Could you continue to grow and turn a new $10,000 investment into $1 million again?
What's next for Solana?
Solana's powerful rally suggests that it will continue to be a formidable rival to Ethereum as a platform for decentralized token and application development. Their network has already been used to produce a wide range of meme coins, including some notable ones like BONK (BONK -10.29%) and WIF (WIF -0.59%), as well as decentralized exchanges like Jupiter and Orca. The expansion of that ecosystem could make it a fertile environment for more crypto projects.
New decentralized wallets and financial apps could also help Solana (and ethereal) disrupt traditional financial institutions. The introduction of Solana Pay, which was integrated into buy Last year marked an important step in that direction. Visa has also started running its stablecoin settlement program on Solana, while Circle recently added native Solana support for its EURC stablecoin.
Solana Labs subsidiary Solana Mobile even launched its own Saga smartphone last December. The Android device is still a niche device, but it is aimed at Web3 enthusiasts with its integrated digital asset management and Solana blockchain tools.
Solana's rapid expansion is impressive, but Ethereum is struggling to match Solana's speed and scalability with its own network upgrades. In a recent essay, Ethereum co-founder and chief architect Vitalik Buterin proposed the introduction of "multidimensional gas rates" which sounds similar to Solana's project-by-project variable user fees in its "local fee markets." If Ethereum closes that gap, it could strangle the long-term growth of the Solana blockchain ecosystem.
How much higher can Solana fly?
Solana seems to have overcome his initial growing pains. She solved the congestion problems caused by the market's feverish interest in non-fungible tokens (NFTs) in 2021, survived the big FTX sell-offs and still processes transactions faster than Ethereum. Developers are still launching new applications on Solana and promoting their new tokens with airdrops.
However, it is difficult to say how much the Solana blockchain can grow while it is dwarfed by the larger Ethereum network. For now, CoinPedia estimates that the price of Solana could reach $500 by the end of the year and $1,672 by 2030.
Those estimates should be taken with a grain of salt, but they imply that Solana will continue to be one of the world's leading cryptocurrencies as it attracts more developers and becomes more widely adopted for mainstream payments. But even if Solana's price reaches $1,672 by 2030, it would only turn a new $10,000 investment into about $100,000.
So Solana may still have a lot of growth potential, but it probably won't make him a millionaire by the end of the decade. It could also easily be cut in half before it generates further gains, so investors should prepare for a lot of volatility.
leo sun has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Ethereum, Shopify, Solana, and Visa. The Motley Fool has a disclosure policy.
