Cryptocurrency Explained: What Is Solana?

Key Points 

• Solana is a decentralized blockchain created in 2017 that provides speedy transactions through the use of both proof of history (PoH) and proof of stake (PoS) consensus mechanisms. 

• Solana is both a cryptocurrency and a computing platform that can be used to build decentralized applications (dApps) and smart contracts, making it similar to Ethereum (ETH). 

• Solana is available at CoinFlip ATMs and in the CoinFlip Wallet. We also have certified advisors at CoinFlip Preferred who can buy and sell Solana through bank wire transfers. 

Solana Crypto Explained 

Solana is a blockchain that was built to host decentralized applications, or dApps, and process many thousands of transactions per second (TPS) on the network. While it’s currently able to process about 4000 TPS, its theoretical upper limit is said to be near 710,000 TPS. By comparison, when the Solana blockchain was first conceived, more established blockchain networks could only handle an upper limit of 15 TPS. Solana’s utility for building dApps, facilitating smart contracts, and purchasing non-fungible tokens (NFTs) often draws comparisons to Ethereum (ETH). But unlike Ethereum, where transactions come with noticeable fees, transactions on the Solana network cost a fraction of a penny. 

Solana Labs CEO Anatoly Yakovenko created Solana as a solution that strives to be the best at three of the most important aspects of a blockchain: decentralized, secure, and stable. To ensure that its decentralized network remains secure and accurate, Solana uses a hybrid consensus mechanism combining Proof of Stake (PoS) with a novel technique called Proof of History (PoH). This pairing allows the system to operate with exceptional efficiency. 

Proof of Stake (PoS) is a familiar model in the blockchain world. In a PoS system, validators are chosen to confirm transactions and add new blocks based on the amount of cryptocurrency they have staked, or locked up, as collateral. Validators are rewarded for their work, and the more SOL they stake, the higher their chances of being selected to validate transactions. 

What makes Solana truly distinctive is Proof of History (PoH). PoH is not a consensus mechanism on its own but acts as a kind of internal clock for the blockchain. In distributed systems, agreeing on the order of transactions is one of the most difficult challenges. Traditional networks use communication between nodes to agree on timestamps, which can introduce delays. 

Proof of History addresses this by cryptographically verifying the passage of time between events. It works by creating a verifiable sequence of hashes that proves one event occurred before another. This mechanism enables validators to process transactions without needing to wait for consensus on the current time. As a result, the network can achieve higher throughput with lower latency. 

By integrating PoH with PoS, Solana allows nodes to validate and propagate transactions more efficiently. Validators can rely on this internal timeline to quickly agree on the order of events, reducing the communication overhead and improving scalability. 

When Was Solana Created? 

The Solana blockchain started in 2017 with the Solana whitepaper. Initially, the project had a different name, but the founders of the project settled on Solana in honor of the oceanside town where they lived at the time. After some testing, the Solana network officially launched in in 2020. 

What Is SOL? 

The Solana (SOL) cryptocurrency is the native token that runs on the Solana blockchain and is used to pay for transactions and other processing activities on the network. SOL tokens reached a sizable market capitalization in 2021 to become one of the top five cryptocurrencies by market cap that year. Since then, the total market cap of SOL has nearly doubled on several occasions, according to CoinMarketCap.com. 

The question that some crypto enthusiasts might ask is, “How many Solana coins are there?” Bitcoin is famously limited in quantity – there will only ever be 21 million Bitcoin. Solana, on the other hand, will always add more tokens to the supply.  

Without a supply cap Solana is at risk of inflation; to offset this, a portion of the fees paid in any transaction are destroyed, or “burned”. This keeps the total supply proportional to the level of usage, thus avoiding runaway inflation. 

What Is Solana Used For? 

Similar to Ethereum, Solana hosts smart contracts, which are necessary for the creation and circulation of digital assets such as non-fungible tokens (NFTs). The main programming language for Solana dApps is Rust, which is well known and highly regarded in the open-source world, but other languages are also supported, and there are plenty of resources to help builders through the active Solana developer community. Because of this developer-friendly posture, many dApps and marketplaces exist on the network, like the NFT marketplace Solanart and the memecoin builder site pump.fun.  

What is “Rent” on Solana?  

It’s important to note that Solana, along with other coins like XRP and XLM, require a minimum balance of tokens to keep your account or wallet open. In Solana’s case this minimum balance is referred to as rent. Click here to learn more about wallet reserve requirements. 

Solana and Memecoins 

In recent years, Solana has become a favorite blockchain for memecoin developers thanks to its exceptional scalability, low transaction fees and general popularity. Unlike other networks that often suffer from congestion and high gas costs, Solana’s high throughput allows creators to launch tokens, experiment with creative meme concepts, and engage their audiences without worrying about expensive on-chain interactions. The ecosystem's developer-friendly tools and strong support for rapid token deployment also make it particularly attractive to projects aiming to capture viral momentum. As a result, Solana has seen a memecoin surge that thrives on social media buzz. If you’re curious about memecoins and whether or not investing in them is right for you, click here. 

Where Can I Buy Solana ($SOL)? 

You can buy $SOL through all CoinFlip products in the U.S. except where prohibited.  

At the ATMs 

CoinFlip ATMs now offer $SOL for purchase. To buy Solana you will need a crypto wallet – learn more about wallets here.  

Through the CoinFlip Wallet 

You can purchase $SOL in the the CoinFlip Wallet app using a variety of payment methods including credit and debit card, bank wire, Paypal and more.  

Through CoinFlip Preferred 

Solana is also available through CoinFlip Preferred. Our certified client managers can also answer any cryptocurrency-related questions and even assist with institutional purchases. CoinFlip Preferred also offers USDT (Tether) on the Solana network.