The macroeconomic environment is driving investors away from risky assets. Consequently, the market for cryptocurrenciescurrencies are down 58% since their November peak, wiping out $1.7 trillion in value. But this kind of sell-off has happened before and the market has always recovered. There is no reason to believe that this crypto crash will be any different.
In addition, blockchain technology has the potential to disrupt the financial system, making payments and savings products more efficient. With that in mind, Ethereum (ETH -2.63%) and Solana (SOL -2.38%) seem like smart long-term investments.
Decentralized finance (DeFi) has the potential to reshape the world. DeFi products allow people to invest, borrow and earn interest on money without the help of traditional financial institutions such as banks. Also see: Top 8 Best Cryptocurrencies to Invest in February 2022 – Reviews and Technical Analysis† Eliminating these middlemen makes the financial system more efficient and Ethereum is at the heart of the DeFi movement.
In particular, Ethereum was the first blockchain designed to support self-executing computer programs called smart contracts. This technology is the foundation of the vast DeFi sector, and Ethereum has taken advantage of its pioneering status to gain a strong competitive edge. With $72 billion invested in DeFi products on the blockchain, Ethereum accounts for 64% of all DeFi investment on all blockchains.
Ethereum also benefits from a strong network effect that should keep it at the forefront of the industry. Every software developer in the Ethereum ecosystem creates added value for every user and vice versa. This momentum should continue to drive innovation on Ethereum. As this trend continues, demand for the underlying cryptocurrency – the ETH coin – is expected to increase, driving its price upwards.
In addition, research from Fidelity suggests that institutional asset managers are increasingly optimistic about cryptocurrencies. This is no small feat considering they control over $100 trillion in assets, and a small percentage of that total could send the entire crypto market to the moon. In fact, Ethereum is the second most popular digital asset among institutional investors, and as adoption continues to increase, the price of ETH could soar. Therefore, this cryptocurrency is a smart long-term investment.
The Solana blockchain aims to be a better version of Ethereum. To be innovation the main one is a hybrid consensus mechanism that combines Proof of Stake (PoS) and Proof of History (PoH). The PoS protocol ensures the fairness of validators by requiring them to have a share in the network; the PoH protocol timestamps transactions as they occur to create a verifiable sequence of events, significantly speeding up throughput.
The Solana blockchain can theoretically process 50,000 transactions per second (TPS). For example, Ethereum currently handles about 14 TPS, although a scaling solution planned for 2023 promises to increase this figure to 100,000 TPS. Also read: Zooming in on an Undervalued Cryptocurrency: What Is NEAR Protocol Crypto and Should You Buy It Now?† Anyway, thanks to its highly scalable blockchain, Solana transactions cost just a fraction of a cent, making it popular with DeFi developers and investors.
Solana boasts more than 1,500 blockchain projects, including Magic Eden, the second most popular NFT marketplace in the past 30 days, according to DappRadar. Solana is also the fourth most popular DeFi ecosystem, with over $4 billion invested in the platform. While this figure has dropped significantly during the current crypto crash, the total value invested on the Solana network is still three times higher than it was a year ago.
Even more exciting, Solana Pay went live earlier this year, bringing fast and low-cost blockchain-powered payments to merchants. Solana Pay allows consumers to transact directly with merchants, eliminating banks, card networks and other middlemen. Even better, consumers can make payments with stablecoins like USD Coin, meaning they don’t have to spend volatile crypto assets. This technology can reshape the business world.
Solana’s pitch is simple: it’s a thriving ecosystem of decentralized software and DeFi services that support fast and low-cost transactions. As blockchain products are adopted, the demand for the underlying cryptocurrency – the SOL coin – is expected to increase, driving the price up. This is why this cryptocurrency is a buy for long-term investors.
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