After experiencing network difficulties, Solana has been declining in value since early November.Despite being ‘the new kid on the block,’ Solana is the key competitor to Ethereum as it continues to make big moves in the world of smart contracts, NFTs and web 3.0.If Solana can overcome technical issues, it is set to rise in value moving forward, with some experts predicting a $1000+ valuation by 2023.
Everyone wants to know what the next big thing in crypto is going to be. Fomo-fuelled investors look to the charts of Bitcoin & Ethereum and yearn for similar, life-altering gains. Solana (SOL) is the most recent cryptocurrency project to enjoy the exponential growth crypto markets are famous for, soaring in value from just $2 AUD on Jan 1 and reaching an all-time high of $350 AUD this November.
Solana 12 month price graph. Image Credit: CoinMarketCap
However, after suffering a series of technical attacks and network difficulties, SOL has shaved off 27% of its total value in the past 30 days (at the time of writing), currently trading for $234 AUD. This has led many investors to question whether or not Solana is robust enough to survive moving into 2022.
So, what is Solana? Is it a good idea to buy right now? And what can we expect to happen going into 2022 and beyond?
What is Solana?
Created in 2017 by Anatoly Yakovenko, Solana is the native token of a blockchain network that has grown massively in 2021 after gaining its well-deserved reputation as the “Ethereum killer”. Where the Ethereum network is slow and expensive, Solana is fast and cheap; offering up a competitive alternative for crypto aficionados to create new applications, mint NFTs and develop new projects in the rapidly expanding worlds of DeFi and web 3.0.
Did Solana get hacked?
On December 10, the Solana network was victim to its second major cyber-attack in 3 months, which significantly slowed down the network and sparked concerns as to whether or not the blockchain it runs on is safe for developers and users. The first major attack on Solana occurred on September 14, which rendered the network completely unusable for 17 hours.
While the consequences of the most recent attack were not as severe as Septembers’, it’s still not a great sign for the Solana network. According to Justin Bons, the founder and CIO of Cyber Capital, the repeated attacks on the Solana network are the result of major design flaws in Solana’s Proof of History (PoH) protocol.
As an increasing number of investors are starting to look at SOL with a healthy dose of scepticism, several cryptocurrency experts have come to its defence.
What do the experts think about Solana?
As reported by Forbes: Loan Venkatapen, co-founder of Blocklabs Capital Management speaking on the problem of security, stated that:
“Solana’s long term potential is not affected. Ethereum during their early years also experienced similar issues that have since been largely corrected… What’s important in this kind of situation is not the bug, but how the network is actually able to come together and bring a solution. This is exactly what we are seeing today with Solana.”
Kyle Samani, a managing partner at crypto investment firm Multicoin claimed that both developer activity and the flow of money into Solana’s blockchain are still growing at an astounding rate. He went on to add that while Ethereum may not be “replaced” by Solana, it’s very clear that Solana will remain competitive moving forward.
Solana’s end-of-year price prediction (2021)
Amidst a broader crypto downturn, SOL has fallen 26% in the past 30 days. However, analysts remain divided on how SOL will perform in the remainder of this year and into 2022.
Technical analysts from FXStreet predict that SOL is entering a strong bearish pattern and will end the year at a low of $188 AUD.
A recent report from the cryptocurrency exchange Kraken is far more bullish, stating that the current decline in price is merely a “price discovery phase”. Due to a large increase in the volume of “staking”, which temporarily reduces the overall supply of a token, Kraken expects SOL to surge above $800 AUD in late-January 2022.
Solana 5 year price prediction (2025/2026)
Over the long term, experts remain divided as to whether Solana will continue to surge in value as it outpaces its competitors, or whether its security issues will drag it into obscurity.
According to Finder: Paul Levy, a senior lecturer at the University of Brighton, SOL will be worth $3,000 USD in 5 years time, declaring that it’s strong and rapidly expanding user base will create substantial growth, regardless of Ethereum’s performance.
Solana 9 Year price prediction (2030)
Contrastingly, the CEO of the crypto exchange Coinmama, Sagi Bakshi offers a completely bearish prediction, asserting that SOL will be worth less than $50 AUD by 2030.
“I have no idea if Solana can survive, there is nothing that indicates to me that it will succeed.”
Solana price prediction conclusionsThe biggest risk when looking at SOL is security. If it were to suffer a larger attack that showed growing gaps in the functionality of the network, it could lose a substantial amount of its value quite quickly. If developers can’t ensure that their network is robust and safe to use, it could spell serious trouble for SOL.
The second largest cause for concern is Ethereum. SOL has grown exponentially in value because it gained a serious competitive advantage over the slow speeds and high “gas” fees of Ethereum. If Ethereum can successfully move to a Proof of Stake network (scheduled for early 2022) which drastically reduces cost and increases transaction speed, SOL may suffer a decline in price.
Despite this, SOL remains the fastest and cheapest platform service in the crypto space today, meaning that users of the network will continue to create decentralised applications, digital assets and smart contracts more efficiently than anywhere else.The number of users and developers on the Solana blockchain continues to expand massively and it seems quite likely that it will grow alongside and compete with Ethereum over the long term.