Since the beginning of the year, the prices of many cryptocurrencies have come under a lot of pressure. BTC and its counterparts have now settled well below last year’s levels. Uncertainty in the crypto market is further fueled by calls for regulatory measures, which some countries are also already implementing. Solana investors have also been affected by the downward trend: In November 2021, Solana still marked an all-time high of 260.06 US dollars, it is now only just below 120 US dollars at the beginning of February.
Solana blockchain with network problems
In addition to the general weakness of the crypto market, however, Solana is facing other challenges. According to reports from Coinbase and crypto portal Wu Blockchain, Solana is reportedly experiencing repeated outages and speed slowdowns, and was reportedly unavailable for several hours in early January. According to Wu Blockchain, Solana’s official Telegram group even rumored that a DDoS attack could be behind the connection outage. However, Anatoly Yakovenko, co-founder of Solana, was able to dispel these fears a short time later. “It is not a DDoS, but just problems with the commercialization of a new runtime environment,” the developer said in a tweet.
A few days later, developers noted “performance issues” in a status report, which they said were due to an earlier software version. However, with an update released later, the problems are said to have been largely contained. An update is now expected to remedy the situation. The network advertises that it processes transactions particularly quickly by using “proof of history” technology: This integrates the timestamp directly into its own blockchain. “Every block producer has to go through the VDF [verifiable delay function], this proof of history, to get to their assigned slot and produce a block,” Yakovenko said. To that end, the hashed records of previously generated states are inserted into the sequence – “almost in real time.”
A few days after the recent network problems, Yakovenko again reported via Twitter errors in the network’s handling of duplicate transactions. This had contributed to the slowdown in transfer speed and had been detected by trading bots. The 1.8.14 update has improved the speed, but has not completely fixed the problem. Another upgrade, to be rolled out by the end of February, is expected to fix that.
Solana Pay connects NFT business to retail
The new “Solana Pay” service is designed to allow users to conduct transactions with various tokens at the lowest possible cost based on the Solana blockchain. According to a press release, this makes it possible to use it in retail, which could make it much easier to process payments in local stores: By scanning a QR code, customers could instantly transfer the payment amount to the merchant’s account. Another benefit: In addition to an NFT version of the purchased item, a certified NFT receipt of the purchase could also be sent to the customer’s smartphone. The customer could then use the cap from a local sports store to outfit his or her own avatar in the virtual Metaverse.
With Solana Pay, the creators are primarily relying on stablecoins tied to fiat currencies. These are far less volatile than BTC and ETH, for example, and therefore much more attractive for customers. However, merchants would also benefit from the introduction of the payment service, mainly due to the lower fees compared to credit card providers. JPMorgan, for example, believes in the crypto provider: Solana, for example, has challenged rival Ethereum for a large market share in the NFT business, analyst Nikolaos Panigirtzoglou said in a note.
If that succeeds and the network issues are addressed, Solana may be a new star to have on the radar and in the portfolio.