Michelle Jackson is the host and founder of the award-winning podcast “Michelle Is Money Hungry.” Michelle loves…
Solana is a top altcoin and part of a group of cryptos commonly referred to as “ethereum killers.”
Like ethereum, the solana (SOL) blockchain supports various decentralized finance (DeFi) projects such as NFTs, smart contracts, and decentralized app development (dApps). You can also use the solana token to stake and earn coins, and pay fees when transacting on the blockchain.
Solana has some good qualities and some issues, says Mark Fidelman, host of YouTube’s “Cryptonized” and founder of crypto marketing agency SmartBlocks. Solana “is faster and has much lower costs than ethereum, which is ideal for building dApps,” he says. “Solana’s current problem is lack of traffic. It needs a killer dApp that attracts people to the platform.”
If you’re interested in adding solana to your crypto portfolio, here’s what you should know, along with how to buy it.
Cryptocurrency is a highly volatile, speculative investment. And altcoins like solana amplify the volatility and risk. Only invest in crypto what you’re prepared to lose, and make sure you have other financial priorities in place first: save money in an emergency fund, contribute to retirement savings, and pay off any high-interest debt balances.
Buying Solana via a cryptocurrency exchange is a straightforward process that involves funding your account with the amount needed to make your purchase. Keep in mind that different exchanges have different minimum thresholds for buying different tokens, as well as different fee structures depending on how you execute trades.
Cryptocurrency is an emerging asset class and must be approached carefully. Do your due diligence and only invest what you can lose.
For most newer crypto investors, experts recommend using a prominent, mainstream exchange such as Coinbase, which we think is the best overall exchange for most investors. Other popular mainstream exchanges are Gemini, FTX.US, Kraken, and eToro.
Coinbase and other top exchanges do often charge higher fees than other crypto exchanges, but experts say you get what you pay for and point to the security standards, ease of use, and transparency as good reasons to pay the higher fees.
Funding your account is a straightforward process on most exchanges. You will typically connect your funding source to the exchange and deposit a designated amount of money into your wallet, which can then be used to place orders for various cryptocurrencies offered on the exchange.
The details and exact process for any order will vary per exchange, and each exchange may designate a minimum or maximum amount that can be purchased within a single transaction or a single day.
Understanding an exchange’s terms of service is a key part of successfully placing an order. While most transfers happen pretty quickly, occasionally there may be a delay in your transactions, due to factors outside of your control.
You have a few options for storing your new SOL tokens after buying them. If you want to keep things simple, you can store your tokens directly in your exchange account. But if you’ve got an array of holdings and want some added security or privacy, you might move your coins off the exchange into your own crypto wallet.
Cold wallets are considered the most secure way to hold crypto investments, and you would purchase and manage this on your own. There are also hot wallets in which your crypto is kept digitally. Many exchanges offer their own hot wallets, and there are also hot wallets that are separate from any exchange.
While the Solana blockchain is a robust ecosystem that offers various dApps you can use, its native token can be primarily used for staking on the blockchain. Along with potential rise in value over time, staking allows investors to effectively earn interest on their SOL.
Choosing the best wallet for holding your Solana doesn’t need to be overwhelming. You can choose a wallet specifically designed to support Solana, or give yourself a place to store other coins as well. Here are three wallets that support the Solana ecosystem.
Coinbase Wallet, from the popular Coinbase exchange, is a top choice for beginners. It’s free, easy to use, and supports thousands of cryptos. It’s also noncustodial, so you maintain control over your private keys. The wallet started supporting SOL this year, and plans to further integrate with the Solana ecosystem over time. You can use it to store your coins as further options develop, like support for Solana NFTs.
Exodus supports Solana and more than 180 other currencies. While other wallets may support more coins, Exodus gives you the ease of storing your crypto in one place while connecting with multiple exchanges. And you can directly interact with other users with the wallet’s built-in exchange. It’s a bit advanced, but you might find it worth it for the options.
You can get the Exodus wallet on desktop, mobile, or as a hardware wallet. The hardware option is a Trezor wallet integration, meaning a Trezor wallet with an Exodus hot wallet running on it.
The Ledger Nano X, which we think is the best cold wallet you can buy on a budget, added support for SOL this year via its Ledger Live app. A cold wallet offers stronger security than a hot wallet since it’s not connected to the internet at all times, so it’s harder to hack.
You can hold SOL with your Nano X, and buy, send, and receive it with Ledger Live. The Ledger Nano X supports thousands of coins, and it runs on Bluetooth so you don’t need to plug it in. Its Secure Element security chip is similar to what is used to secure credit cards.
Ledger Nano X at a Glance
Like any smaller altcoin, investing in Solana comes with plenty of risk. Experts point to its potential and relatively stable (albeit short) history among top cryptos by market cap as factors investors might consider before buying Solana.
“There are those who invest because they see a healthy crypto asset with great potential. I fall in that category,” says Tally Greenberg, head of business development at staking and hosting platform Allnodes. “Solana has a sound market cap of $35 billion, and it has been a constant in the top 10 crypto assets for quite some time.”
While the blockchain has a wide variety of use cases, the Solana coin is primarily used in staking.
If you’re looking to invest in Solana (SOL), consider the risks associated with investing in cryptocurrency, a market still in its infancy and considered to be a highly speculative space. While the token’s price more than tripled in the summer of 2021 due to interest in DeFi and NFTs, it took a huge dip in early 2022, briefly bounced back, and has made only small gains since May’s massive crypto crash.
The Solana blockchain was created and co-founded by Anatoly Yakovenko in 2017. He saw the challenges of using the ethereum blockchain, and he implemented proof of history, which creates a record of when transactions occur, and speeds up activity while lowering the cost per transaction.
If you do decide to buy Solana (SOL), make sure you’ve paid off any high-interest debt and have a secure retirement account and a well-padded emergency fund.
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At NextAdvisor we’re firm believers in transparency and editorial independence. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by our partners. We do not cover every offer on the market. Editorial content from NextAdvisor is separate from TIME editorial content and is created by a different team of writers and editors.
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