Should You Forget Bitcoin and Buy Solana?

Bitcoin has seen a notable price surge of 60% over the past year, drawing investment interest driven by institutional purchases and regulatory support. In contrast, Solana has underperformed significantly, showing only a 7% increase and lagging over 50% from its high. Despite its technological advantages, such as faster transaction speeds and innovative uses, Solana’s inflationary nature, competition from Ethereum’s solutions, and limited compatibility raise questions about its viability compared to Bitcoin as a long-term investment.

Bitcoin’s price has surged roughly 60% over the past year, currently sitting about 7% shy of its all-time high. This upswing has been fuelled by factors like fresh inflows into spot price ETFs, increased institutional investments, and a generally positive regulatory environment under the Trump administration, which even established a Strategic Bitcoin Reserve. Many believe Bitcoin’s appeal is also strengthening in light of inflation concerns and geopolitical instability, alongside expectations for lower interest rates, which could be pushing more investors toward crypto.

But while Bitcoin has thrived, many lesser-known cryptocurrencies like Solana have not fared as well. Over the same period, Solana has only managed a modest 7% increase and remains more than 50% below its peak value. So, what caused this lag for Solana? And could it potentially be a smarter long-term buy than Bitcoin right now?

To understand the differences, we need to look at how Solana operates versus Bitcoin. Unlike Bitcoin, which relies on an energy-intensive proof of work (PoW) system, Solana utilises a proof of stake (PoS) mechanism. This system is much less power-hungry and allows for staking—where tokens are locked up to earn rewards. Furthermore, PoS blockchains like Solana support smart contracts, enabling the creation of dApps, games, and NFTs, whereas PoW chains focus solely on token mining.

Because of this, the value of Solana and similar tokens is often linked to transaction speeds and developer activity rather than just token scarcity. Solana is also unique in that it’s inflationary—unlike Bitcoin’s cap of 21 million tokens—having no upper limit on its supply. Currently, around 528 million Solana tokens are circulating, but its inflation rate will gradually drop from 4.5% to 1.5% over a period of epochs (450 to 630 days). Bitcoin, in contrast, is regarded as more akin to gold in terms of scarcity.

Now looking at Solana compared to other PoS tokens, it’s worth noting that while many PoS options were built on Ethereum’s platform, Solana operates on its own. This independent blockchain has implemented a novel proof-of-history (PoH) mechanism that enhances transaction speed markedly—boasting a theoretical capacity of 65,000 transactions per second (TPS), far exceeding Ethereum’s max of 30 TPS. In practical terms, though, Solana averages between 600 and 1,500 TPS, while Ethereum measures at about 15 TPS. Other Layer 2 solutions for Ethereum can elevate speeds to between 1,000 and 4,000 TPS.

Although Solana is quicker, it still lags in popularity relative to Ethereum. Its developer ecosystem is smaller, it struggles with cross-compatibility with other blockchains, and its main programming languages, Rust and C, have steeper learning curves than Ethereum’s Solidity. Additionally, Solana has experienced more frequent network congestion and outages than its counterpart.

Despite these drawbacks, there are several upcoming catalysts that might boost Solana’s market position. Notably, companies like Visa and Shopify have incorporated Solana Pay into their platforms for quick, low-cost stablecoin transactions. Furthermore, increasing numbers of developers are creating games featuring NFTs and other crypto collectibles on Solana.

Some projects are also emerging on Solana’s blockchain to tackle decentralized tasks like wireless networking, GPU sharing, and real-world maps. Recent network upgrades are expected to alleviate existing congestion problems. Plus, there’s buzz around potential Solana ETFs, which, if approved by the SEC, could entice a wave of institutional investors.

But amidst all these developments, is Solana a realistic choice instead of Bitcoin? Solana’s high-speed performance and growth outlook are certainly attractive, possibly better than many so-called “meme coins.” However, it’s hard to argue for Solana over Bitcoin for three main reasons: it’s inflationary, it’s competing heavily with Ethereum’s Layer 2 solutions, and it lacks cross-compatibility with other blockchains, both of which hinder its position in the market.