Solana project started in 2017. A distributed system based on new technologies quickly attracted the attention of cryptocurrency market players. Along with the emergence of the blockchain Solana emerged the cryptocurrency of the same name (ticker SOL), the rate of which increased by May 2020 by almost 3000% (according to the resource Coinmarketcap). The new coin attracted the attention of investment funds and private investors.
Where to buy Solana cryptocurrency?
To purchase the crypto-asset, you need to create an account and a “hot” wallet on one of the major exchanges, which enjoys the trust of users. Examples of such online platforms are Capital.com, Avatrade and Binance. The platforms have a simple interface and pay great attention to information security. Let’s describe the algorithm for buying Solana cryptocurrency at these online exchanges.
To make transactions on the exchange Capital, you need to create an account. After entering the site, you need to switch to Russian. The language selection button is located in the upper right corner of the screen. Then you need to activate the item “Create account”. You can register an account with the help of social networks or a special form, in which you need to specify a password and email address. The user will receive an email with a link to activate the account.
To confirm the identity, you need to send a scanned copy of your passport or driver’s license. It is also necessary to confirm your residential address. You will need an electronic copy of your utility bill or bank statement. Trader’s identity verification is a necessary procedure, the algorithm of which is defined by corresponding normative legal acts.
After completing the registration process, you need to make a deposit using a bank card, wire transfer or e-wallet. The minimum amount required to start work is $20. After depositing funds you need to enter your personal cabinet and go to “Markets” tab. Next, you need to click on the button in the form of a magnifying glass and enter the name of the cryptocurrency in the search bar. After that, you need to select Solana/USD. Click the “Buy” button and specify the amount for which the crypto-asset will be purchased.
If the trader wants to open a short position, he should click the “Sell” button. Once the digital coins are credited to the brokerage account, the investor needs to follow the changes in the quotes. When the desired price level is reached, the trader can lock in a profit.
To start trading, you need to go to the exchanger’s website and click “Registration”. After that you need to choose the type of account (real or demo). In the form that appears you need to enter your name and e-mail address. Then you need to click on “Open an account”. For the verification of the client’s identity the following documents are required:
An electronic copy of the passport or driver’s license. The document must contain the full name, photo and date of birth.
A utility bill with the payer’s name and address (except for a cell phone bill).
The picture and text on sent documents must be easy to see and read. Verification of documents takes 1 business day. After a successful verification green ticks will appear next to the uploaded document copies. The user is given 14 days to send the documents.
If within this period the files are not uploaded, the account will be automatically blocked. After opening an account, the trader needs to deposit money by bank transfer or electronic wallet. The minimum amount required to purchase digital coins is $100. When the deposit is credited, the trader will be able to purchase Solana cryptocurrency through the brokerage company’s website or mobile app.
To perform a transaction, go to “Platforms” and select the desired option. Go to the “Cryptocurrencies” section and enter the name of the coin. Next, you need to specify the number of lots to be purchased and confirm the financial transaction.
To make transactions with cryptocurrency, you need to log in to the site. Click on the “Register” button located in the upper right corner of the screen. Enter your email address and come up with a strong password consisting of letters and numbers. If you have a referral code, you need to enter it in the appropriate field. Next, you need to click the “Create Account” button.
To complete the account registration, you need to enter the activation code in a special form. In order to purchase cryptocurrency, verification of the account will be required. The user needs to provide personal information, residential address and phone number. Also it is necessary to upload a scan of passport and own photo, which clearly shows the future trader’s face.
For the extended verification one should send a scan of the document, confirming the trader’s address. After checking the authenticity of the sent papers, the daily limit of fiat currency withdrawal will be increased to $200,000. When the verification is passed, you need to go to the “Wallet” section and buy Solana coin with a bank card or electronic payment system (point “Buy Cryptocurrency”). The minimum deposit amount on the Binance exchange is $10.
Solana Coin can be paid in fiat money or other cryptocurrency. On the Binance exchange you can buy not only SOL coins, but also futures on them. The leverage provided by the site is 1:50. To view the graphs of price trends, you need to go to the tab “Trade”. After that, it is necessary to enter the name of the coin into the search line. Long positions are profitable to open after the value of the cryptocurrency falls. Deals without coverage are usually made after a sharp rise in quotations.
Tips for Beginners – How to Buy Solana
Solana is still a relatively new cryptocurrency. First of all, you should remember to look for the acronym SOL in the list of available cryptocurrency pairs.
It is possible to buy on different exchanges today. This instruction is presented on the example of Capital.com. How to buy Solana cryptocurrency is not difficult to understand. It requires only a few simple points, which do not take much time.
There are different ways and options for fast, comfortable and safe execution of this transaction. Both via PC and smartphone. Including, different currency pairs are offered, from which you can choose the most convenient option.
Instructions for buying cryptocurrency:
Complete a registration on the Capital.com exchange
This point will not cause difficulties for anyone, as it does not differ from the registration on other sites. To be able to use the services of this broker fully, you will also need to go through the verification procedure. That’s why the documents necessary to confirm your identity should be prepared well in advance. Verification may take some time.
Choose a payment option
In the appropriate tab is required to select and connect the appropriate way, the most convenient for the user. In addition to bank cards you can also choose from several payment systems.
In the section with trading choose the variant of purchase. After that choose Solana from the available list. You can do this quickly through the search by entering the full name of the cryptocurrency or an abbreviation.
Enter the amount you want to spend
In the designated field, enter the amount that the user wants to spend on the purchase of the selected digital currency in digits. The system will automatically show how many coins can be bought with this money.
To make a purchase
Then you only need to make sure that the choice is correct and all data are entered correctly. After which you will need to click on the “Buy” button. The amount specified in the form will be withdrawn from the brokerage account. After that, the cryptocurrency will be credited to the account within a few minutes.
An example of a portfolio that includes Solana cryptocurrency
Let’s assume that you are the owner of $1 million and plan to invest in cryptocurrency. You can divide the sum into 10 equal parts of $100k each and buy digital coins with the highest capitalization (except for stabelcoins).
Our investment portfolio will include the following assets:
- Shiba Inu.
Methods of management of created investment portfolio depend on trading strategy. Long-term investors should hold coins for 8-10 years. Speculators can engage in intraday transactions. The portfolio may undergo rebalancing once financial goals are met. It is also possible to sell crypto-assets and invest the profits in traditional financial instruments.
Regardless of the chosen trading strategy, a financial reserve of 10-15% of the initial investment should be created. It is not necessary to include little-known coins with low capitalization in the investment portfolio. Investing money in such financial instruments can end in serious losses.
Comparing Solana to other cryptocurrencies
Last summer, the cryptocurrency became famous because its exchange rate jumped more than 100%, allowing SOL to reach its all-time high. Therefore, many traders today are wondering what the future prospects of this coin are.
At the time of writing this article, the cryptocurrency is at $111.50, which can be considered a new token record. After all, last summer it only cost $74. Currently, Solana is still in the top ten in terms of market capitalization – it has risen to the seventh place with a capitalization of $34.1 billion. Back in the first half of last year, the course of SOL began to grow actively, and continues to this day. That can’t help but arouse interest not only among investors, but also among speculators.
The advantages of Solana are in the speed and scalability. Many experts believe that this is what allowed Solana to compete even with such “veterans” of the cryptocurrency market as VTS and ETN.
This blockchain is designed for DApps and has a high data processing speed: over 50,000 transactions in just one second. The time to find a block is half a second. In comparison, ETN searches for a block in just over 20 seconds, and VTS searches for a block in about 10 minutes.
It should be noted that the future prospects of Solana cryptocurrency are impressive. This is largely due to innovation, technological sophistication and an impressive list of reputable investors. Therefore, it is safe to say that this is the kind of coin that is good to watch.
It was also argued earlier that SOL is quite capable of reaching the level of ETN and even surpassing this cryptocurrency. Which, in turn, risks losing popularity in the foreseeable future.
A promising outlook and amazing performance are just some of the reasons to buy Solana. Today’s predictions claim that the coin’s value will continue to rise. Which already makes it a good long-term investment.
Let’s compare the annual dynamics of Solana and other cryptocurrency quotes against the U.S. dollar (the period from early 2020 to December 2021). The value of Bitcoin increased from 19445 to 57229 dollars (2.9 times). The Ethereum coin increased from $569 to $4,591 (8 times).
Cardano asset increased in value from 16 cents to $1.55 (9.6 times). Ripple (XRP) rose from 63 cents to 97 cents (1.5 times). The price of Polkadot crypto coin increased from $5.4 to $36 (6.6 times). The value of Dogecoin asset rose from 0.003 cents to 0.21 cents (70 times). Avalanche and Terra coins grew 31 and 124 times, respectively.
The open-source system uses software archivers to distribute information and commit transactions to the Cloudbreak database. Solana blockchain nodes are rewarded for processing SOL token transactions. The following technical solutions are used to expand the functionality and increase the speed of the system:
Turbine Block Distribution Protocol, which divides information about transactions performed into several parts.
The Gulfstream transaction transfer algorithm, which can be used without involving the memory pool.
Pipelining transaction processing block. Pipelining technology allows to quickly verify data on committed transactions in all nodes of the blockchain. The efficiency of the processing unit is ensured by using the hardware resources of the GPU.
The distributed system uses Sealevel technology designed to parallelize transactions. The innovative technical solution optimizes the use of computing resources and facilitates horizontal scaling of the blockchain.
Solana cryptocurrency issuance volume and value
Solana Foundation plans to issue 489 million SOL tokens. Currently, there are about 260 million coins circulating in the market. During the seed investment, 16.23% of the issued tokens were sold. 12.8 % of crypto coins were distributed among the employees of Solana Foundation. 10.5% of the issued assets are on Solana Foundation’s balance sheet. About 13% are in free circulation. The rest of the tokens will hit the market in the coming years.
Solana cryptocurrency began actively trading on exchanges in June 2020. The starting price of the coin was 43 rubles. The value of the asset reached 18,422 rubles at the beginning of November 2021. In 17 months, the price of Solana coin increased 428 times. In the fall of 2020, Solana Foundation programmers created a bridge with the Ethereum blockchain, allowing systems to exchange digital assets.
Cryptocurrency value projections
Cryptocurrency market experts believe that Solana’s blockchain could seriously compete with the Ethereum platform. The creators of the new blockchain plan to attract up to 1 billion users to the system in the medium term. The developed system is suitable for various resource-intensive projects serving millions of users (stock exchanges, marketplaces, game portals, file storages, etc.). By the beginning of 2022, the value of the altcoin may exceed 22,000 rubles. By the end of 2025, the price of the asset may increase tenfold (according to experts at Economy Forecast Agency).
The negative scenario assumes a different price dynamic. The Solana project faces strong competition from Algorand, Cardano and Polkadot blockchains. The creators of these systems are actively introducing various technical innovations and investing heavily in advertising. In the case of a negative scenario related to the actions of competitors, the price of Solana coins could fall to 5,000 rubles.
Decrease of quotations may also be connected with technical problems of the system where new users are constantly being registered. The fall in the value of the coin in September 2021 was caused by a serious failure and the subsequent restart of the network overloaded with transactions. Possible technical problems could negatively affect the value of SOL cryptocurrency.
Stacking the coin
Solana’s blockchain offers investors the opportunity to earn additional profits through stacking (storing a crypto-asset in their account). The amount of reward is determined by the number of coins purchased and the amount of time the validator’s computer (the node that stores the crypto-assets) is running. The average stacking fee in 2021 was about 7% per annum. The income is transferred to the investor every 2 days. The cost of enabling the stacking feature is a few cents.
Part of the remuneration received is transferred to the validator, who can use the money to upgrade the equipment and organize a technical support service. As more coins are put into circulation, the amount of remuneration will drop. You can use specialized resources (e.g., validators.app) to select a validator.
Supporters of the speculative strategy can make transactions with derivatives, the underlying asset for which is a crypto coin Solana. Transactions with derivatives are conducted with the use of leverage. Investors can make transactions with the following derivatives:
Futures contract. The instrument is an exchange agreement to buy or sell a crypto-asset in the future at a fixed price. A futures contract is a financial and trade obligation of the counterparties. The contract has a standardized form that is approved by the exchange.
Forward. A contract is an over-the-counter version of a futures contract that has no standardized form.
Option. A derivative financial instrument that gives the right to buy or sell a cryptocurrency in the future at a fixed price. Unlike futures, the execution of the contract is not mandatory. The seller of the option receives a premium from the buyer.
Swap. A derivative is a more complex version of a futures contract. A derivative instrument consists of two agreements. The first agreement obliges the counterparty to buy or sell the asset. The second agreement specifies the conditions under which a future transaction will be made.
CFD. A contract for price difference. If during the term of the contract the price of the asset falls, then the buyer pays the price difference. If the price rises, the seller pays.
Derivatives are designed for short-term trading. They are characterized by high volatility. Before buying derivative assets, it is necessary to understand how they work. It is necessary to remember that the use of leverage can cause considerable losses. In the case of unfavorable price conditions, the broker can forcibly close the position.
A Million Dollars in One Day
In November 2021, a 14-year-old artist from the United States made $1 million on the sale of NFT (non-transferable token). The girl drew unique digital pictures of white whales. After that, 8,000 unique files were generated using special software.
The tokens were sold through an electronic store, created on the Solana platform. The starting price per image was about $160 (0.8 SOL). Unique images of white whales were sold within a day. The total revenue from the sale of non-exchangeable tokens was about 1.2 million dollars. Young Abigail sent about 200 thousand dollars to charitable organizations. The girl does not plan to stop there and intends to continue her creative work.
The Solana Foundation company periodically organizes and conducts hackathons in order to develop its own ecosystem. Teams of programmers from all over the world take part in the event. They solve problems in the areas of Web3, DeFi and NFT. The prize fund is about $ 1 million. The hackathon is held in an online format. Programmers from India, East Asia, Africa, Europe, Vietnam and Brazil participate in the event.
Risks of cryptocurrency investing
Cryptocurrency transactions carry a high risk of financial loss. Solana coin is no exception in this sense. An increase in the value of the asset by thousands of percent per annum can turn into an equally sharp decline. Cryptocurrencies should not be invested with all available cash. Particular caution should be exercised when trading on margin. Conducting transactions with borrowed funds can lead to the rapid nullification of the brokerage account. To reduce the risk of losses, a trader can place pending stock orders of the stop-loss type.
Buying digital coins involves not only financial but also legal risks. In the coming years, the Russian government intends to tighten control over the activities of crypto-exchanges. It is quite possible that controlling authorities will start to monitor all transactions with digital assets. In addition, there is a possibility of increasing tax pressure on investors.
Taxation of cryptocurrency transactions
According to the current Russian legislation, the income received from the sale of cryptocurrency is subject to taxation. The financial basis for calculating the tax is the difference between the sale price of the digital asset and the documented expenses for its acquisition. A citizen must fill out and submit a tax return to the Federal Tax Service in the form of 3-NDFL for the past year (until April 30). The tax must be paid by July 15.
Let us consider a specific example. Let’s assume that the investor purchased 1,000 Solana coins in December 2020 at a price of 100 rubles per piece. The asset was sold at the end of April 2021 at a price of 3,000 rubles apiece. The trader’s total income was 300000-100000=200000 rubles (excluding exchange commissions and other expenses). The amount of tax will be: 200000*0,13=26000 rubles. Net profit from the transaction will be equal to 174000 rubles.
Solana cryptocurrency has taken a worthy place among the competitors. It is among the top 10 coins in terms of capitalization (according to Coinmarketcap portal). Many financial market experts call Solana blockchain the “Ethereum killer. The project, which uses various technical innovations, is developing very dynamically.
Along with the positive perception of the new blockchain, there are also negative assessments. Some investors doubt that Solana Foundation’s new technologies will continue to be in demand by the creators of distributed applications. The final decision to purchase a crypto-asset should be made by the individual user. Undoubtedly, the new coin deserves attention and may become a part of a diversified investment portfolio.