If you are interested to the previous posts of this series, check it out here:
What is it?
Solana is a blockchain network that can host decentralized applications (DApps), smart contract transactions, and has a wide range of use cases. This includes decentralized finance (DeFi) platforms, censorship-resistant media networks, NFT art and exchanges, Oracle networks, and many more. The native cryptocurrency for Solana is SOL. It is used to pay transaction fees, debt and collateral for stablecoin loan on DeFi app on Solana. There is a big difference between Solana and its "competitor" Ethereum: Solana has the ability to process 50,000 transactions per second (TPS), which is more than 3000 times faster than Ethereum. This speed is also achievable with GPUs, so ASIC miners are not needed.
How does it work?
Solana is a third generation Proof of Stake blockchain. It has implemented a unique way to create a trustless system that determines the temporal order of a transaction, this mechanism is called Proof of History. Keeping track of the order of transactions is vital to the functioning of a blockchain. Bitcoin does this by grouping transactions into blocks with a single timestamp. Each node must validate these blocks with the consent of the other nodes. This mechanism significantly increases the time a node waits to confirm a new block to the entire network. Solana instead takes a different approach. All events and transactions on Solana are hashed (encrypted) using the SHA256 hash function. This algorithm takes one input and produces a unique output that is extremely difficult to predict. Solana takes the output of one transaction and uses it as the input for the next hash. The order of the transactions is now integrated into the hashed ("hashato") output. This hashing process creates a long unbroken chain of hashed transactions. This function creates a clear and verifiable order of transactions that a validator adds to a block, without the need for a conventional timestamp. Hashing also takes a certain amount of time to complete, which means validators can easily verify how much time has passed. The Proof of History differs from the consensus mechanism used by Bitcoin, which is of the Proof of Work type. Blocks on Bitcoin are large groups of unsorted transactions. Each BTC miner adds the time and date to the mined block based on their local clock (time). The timetable can change compared to other nodes or it can even be falsified. The nodes, therefore, must understand if the timestamp is valid. By ordering transactions in a hash chain, validators process and transmit less information in each block. Using a hashed version of the latest transaction status significantly reduces the confirmation time for a new lock. It is important to understand that Proof of History is not a consensus mechanism. Instead, it is a way to improve the time it takes to confirm the order of transactions. When combined with the proof of stake mechanism, it is much easier to select a validator for the next block. Nodes need less time to validate the order of transactions, which means the network has a way to choose a new validator more quickly.
Where to store it?
The best hot wallets for Solana are Sollet.io, TrustWallet and Atomic Wallet. If you want more security, a cold storage like Ledger or Trezor is the right choice.
Pros&Cons
*DISCLAIMER* These lists are subjective, it depends from person to person
Pros
- Super fast blockchain
- Great developers team
- Scalability
Cons
- Not so many validators (which means it's not fully decentralized)
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