Solana vs Ethereum - Full Comparison & Expert Analysis
Ethereum and Solana are two of the biggest smart-contract Layer-1 Blockchains currently, however as of today they are very different — Ethereum is trying to solve scaling through Layer-2 additions and sharding, while Solana is taking a different approach that some have criticized as promoting centralization.
Ethereum has been around since 2015, while Solana was only launched in 2021 — but that doesn’t detract from Solana in our opinion, new things can be good things, and innovation generally takes place on the cutting edge and with new projects, not with old established projects (or companies) with lots to lose.
With that being said, as we’ll go over below we don’t quite think Solana is really at a stage where it competes seriously with ethereum — Solana has had many cases of the blockchain shutting down and being halted since it launched and numerous issues which make it less reliable and trusted relative to Ethereum, and simply doesn’t have the community/developer base that Ethereum has grown over years and years.
To put it simply, what we’re trying to say is that Ethereum is the gold standard of smart contract blockchains, proven, tested, reliable, and with a huge community and economy behind it — Solana isn’t there yet, and it’d be lunacy to replace Ethereum in ones portfolio with Solana. Investing in both might make sense though.
On paper Solana is better currently — with higher transactions per second, lower fees, and better security due to already being fully Proof-of-stake, however in practice, due to the issues Solana has experienced, this is not really the case. In time Solana may prove to be better than Ethereum, but as of today it’s hard to really say that’s the case.
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What Is The Difference Between Ethereum And Solana?
Although each platform has great features, there are some differences that set Ethereum and Solana apart. For instance, Ethereum has historically been focused on decentralization, whereas Solana’s focus has been on achieving higher throughput through the technology that it utilizes.
As mentioned, Ethereum and Solana differ in their underlying technology and mechanisms that they use. Ethereum uses Proof-of-Work or PoW, and Solana uses Proof-of-History or POH. In terms of the underlying technology and consensus mechanism that they utilize.
While Ethereum currently follows PoW, Solana follows POH. Ethereum was launched in 2014 and Solana was launched in 2020. Ethereum offers a much more mature and decentralized network, while Solana offers high-speed and low-cost transactions.
The Main Differences Between These Two Platforms Are
- Ethereum is an open source protocol with no central authority or single point of failure. It is also very expensive to run a full node.
- Ethereum is based on Proof-of-Work, which requires miners to solve complex mathematical problems in order to validate blocks.
- Solana is a private blockchain solution that allows users to build their own DApp on top of a permissioned chain.
- Solana is based on Proof-Of-History, which allows users to stake tokens to become validators and earn rewards.
If you want to build a DeFi platform, then Ethereum is definitely the way to go. If you want to build an app that needs a lot of processing power, then Solana might be the right fit.
How Does Ethereum Work?
In order to understand how Ethereum and Solana work, we need to first understand what a block is. A block is basically a collection of information, including transactions and other data. Every time someone wants to add a transaction to the block, they have to pay a small fee.
Once the miner finds a block that satisfies all the conditions, he will add it to the blockchain and send the reward to the person who created this block. This process continues until every block contains a certain number of transactions. When this happens, the blockchain becomes too large to store efficiently.
So, instead of storing the entire blockchain, nodes keep only the last few blocks. As soon as a new block is added, the old one gets deleted. This makes sure that the size of the blockchain remains manageable. This is why mining is so important. The miner collects fees from all the transactions in the block and keeps them safe. He can sell the collected funds at any time. However, if the miner does not find a block within a specific amount of time, the block gets rejected by the rest of the network and the whole system starts over again.
So, the miner must make sure that his block contains enough transactions for him to get paid. But how do miners know whether the block contains sufficient transactions? They calculate the difficulty level of the block using a formula called “proof-of-work”.
Proof-of-work is a method used to verify whether a block contains enough transactions. To create a valid block, the miner has to solve a difficult math problem. The more difficult the problem is, the longer it takes to complete it. Proof-of-work is done through solving a series of puzzles. These puzzles are known as hashes. Each hash consists of a string of numbers and letters.
For example, suppose there is a puzzle consisting of three strings of characters. Then, each character represents a digit 0 to 9. So, the first string could represent the first 10 digits of Pi (3.141592653). Similarly, the second string represents another set of 10 digits. And the third string represents yet another set of 10 digits, etc.
The miner solves these puzzles by running a program that generates random combinations of characters. Once the miner finds out the correct combination of characters, he adds it to the block. This means that the solution to the puzzle is also part of the block. The miner calculates the hash of the block and compares it with the current hash rate. If the difference between the two values is less than some threshold value, then the block is accepted. Otherwise, the block is rejected.
In the above example, the miner would generate random combinations of characters and compare the result with the current hash rate to see if the block was valid. If it was valid, then the miner would add it to the blockchain. Ethereum works on this PoW system.
Ethereum uses a PoW system, which is the same as what is used by Bitcoin’s blockchain. The network is ultimately secured by loads of miners through a consensus mechanism by staking their computing power. This means that the network is decentralized but has a high barrier to entry, which means that its performance is decreased and will process fewer transactions per second.
Ethereum is also well known for the fact that their transactions are recorded into one state on the network. When another transaction occurs, the whole network must be updated to reflect the new transaction. This increases the time taken to process the transaction because each miner needs to update their records to show the new transaction.
However, Ethereum has excellent decentralization and was a pioneer in creating this for on-chain smart contracts. Additionally, it can support a huge variation in programming because it is what is known as a “Turing-complete” language, so creating different smart contracts using different coding methods becomes easy.
Because Ethereum can only process up to 15 transactions per second, it is not the fastest blockchain out there. However, what it lacks in scalability can be made up with by using layer-two scaling solutions such as side chains, state channels and roll ups as well as Validium or Plasma. It is also unique in that it is able to support multi-chained networks and so can scale without decreasing its security.
Although not the pioneer in Non-Fungible Tokens of NFTs, Ethereum as a protocol was used to leverage the capability to create NFTs, whose popularity boomed in 2021. As mentioned, Ethereum is useful to build DeFi platforms, for stablecoins. These are cryptocurrencies that represent one unit of traditional fiat currency.
Pros And Cons Of Ethereum
- It’s very easy to use because it supports all types of code.
- There are lots of tutorials available online.
- You don’t need any special skills or knowledge to get started.
- It’s free to download and run on your computer.
- If you are wanting to build a DeFi platform, it is the best option.
- Transaction fees are high.
- The transaction speed isn’t as fast as other platforms.
How Does Solana Work?
Solana is a new project that aims to solve some of the problems associated with Ethereum. The team behind Solana have been working on their solution since 2017. They claim to have solved many of the issues associated with Ethereum such as scalability, security, and transaction fees.
Solana is built on top of the Cosmos SDK, a toolkit developed by the team at ConsenSys. The Cosmos SDK provides developers with tools to develop smart contracts, interact with other blockchains, and connect to external services like IPFS.
In short, Solana is a highly scalable blockchain network that enables anyone to build their own DApps.
Where Solana trumps Ethereum, is in terms of its scalability. The biggest issue that both Ethereum and Solana face is how they handle large amounts of data. If you look at the number of transactions that occur every day, Ethereum struggles to keep up.
This means that it takes longer to complete transactions. In addition, it becomes more difficult to add new features to the system.
Both Ethereum and Solana have had attacks on them over the years. Some of these include DDoS attacks, 51% attacks, and even hacks. All of these attack vectors could potentially affect the stability of the network. However, Solana has improved security measures to keep your currency safe.
Because Solana uses POH, it needs sequential computational steps which determine the time it takes between two transactions being added through the use of time stamps. Thus, transactions are done in an orderly fashion.
Additionally, Solana’s network does not need to update for each transaction, thus uses less memory overall making it fast and scalable. Solana can process a block every 400 milliseconds and record 60k transactions per second.
Pros And Cons Of Solana
- Solana processing times and capabilities.
- Solana has high levels of scalability.
- Low application fees.
- No need for layer-two systems.
- May not be decentralized enough.
- Has had ‘haults’ which stopped the blockchain from operating in the past
The Bottom Line & Conclusion
Both Ethereum and Solana offer their users some great benefits. While Solana seems to have a lot going for it, Ethereum still has a lot of potential. So, if you want to get involved with either one, then do your research well before making a decision — personally we’d rather be involved with Ethereum over Solona.
In a nutshell though, even though Ethereum is better known, Solana offers faster transaction times at a fraction of the price.