According to the New York State Department of Financial Services, each company or individual involved in buying, selling, or trading cryptocurrencies must apply for a BitLicense. Despite such strict regulations, Solana and other cryptos remain highly popular among the Empire State residents.
In this article, we’ll discuss what makes Solana stand out from other cryptos and what the safest way to buy it is. Make sure to stay with us until the end.
Table of Contents
What Is Solana (SOL)?
Solana is one of the major new names in the crypto realm. It is not only a cryptocurrency but also a public, open-source blockchain that supports smart contracts. Solana also powers the development of various NFTs and a wide range of DApps. It was created by Anatoly Yakovenko and Raj Gokal back in 2017 but was finally launched in 2020 by the Solana Foundation in Geneva.
Solana promises fast transactions and maintains the scalability of applications. Aside from being low-cost and ultra-fast, Solana also avoids censorship. Therefore, apps will always have access to the network, and transactions won’t be halted. With the scalability of the network, users and developers can expect transaction fees under $0.01.
As a super-fast blockchain and crypto ecosystem, Solana has numerous projects running on its network. This includes Solana Pay, DeFi platforms, Web3, gaming, NFT world, and more.
Solana’s Distinctive Features
Solana’s hybrid consensus model consists of proof-of-stake and proof-of history mechanisms. Aside from that, the platform incorporates a few innovations that keep the network functioning. The distinctive features of the Solana network include:
- Proof-of-history — PoH is the backbone of Solana. Unlike other blockchain networks that struggle with proof-of-stake and proof-of-work mechanisms, which put every new node on the blockchain to consensus, Anatoly introduced another alternative — proof-of-history. To put it simply, PoH means that no consensus is required to add new blocks to the blockchain. This mechanism has a digital record of every event and the exact moment it happened. In other words, it acts as a cryptographic clock, assigning a timestamp to each event (transaction), along with the data structure for it. The team behind Solana claims that this network can process up to 65,000 transactions per second. Plus, all validators have their own cryptographic clocks to keep track of events and don’t have to wait on other validators to verify transactions. This makes the network more efficient and increases the speed of transactions.
- Tower BTF — Tower Byzantine Fault Tolerance algorithm represents a safety belt for the Solana ecosystem. It keeps the cryptographic clock up and running and ensures the network achieves an agreement without delay. Plus, this algorithm allows the nodes to continue working despite repeated failures.
- Turbine — Solana creates smaller packets for each blockchain node. They are primarily designed to increase transaction processing speed. Solana can validate smaller packets of information faster and address issues related to bandwidth.
- Solana cluster — A cluster consists of validators who are responsible for maintaining the ledgers’ integrity by serving client transactions. Although it is a collection of computers that can operate independently, clusters can coexist with others, provided that two clusters share a common genesis block.
- Gulf stream — This is Solana’s mempool. The word “mempool” comes from the terms “memory” and “pool.” It is a crypto node mechanism where unprocessed transactions wait for their turn to be confirmed. Validators process transactions in the mempool area until no unconfirmed transactions are left in the ecosystem.
- Cloudbreak — This is a memory mechanism used to keep track of participant balances. It also establishes a connection between software and hardware.
- Sealevel — Sealevel refers to the technology that enables Solana to run multiple contracts simultaneously. This saves time and reduces the cost of the blockchain network.
- Pipelining — Solana’s ecosystem segregates most tasks to ensure the fast processing of transactions. It assigns input data to various hardware components involved in the network. Multiple hardware can quickly validate the information blocks through a process known as pipelining. Pipelining is common in DeFi projects, and it is used to optimize transaction validation.
SOL Token Explained
Solana’s native token is called SOL. SOL owners can use it in two ways — to stake it and receive rewards or to pay for smart contracts and other transaction fees.
Staking of tokens allows users to safeguard the network while earning benefits at the same time. The awards are proportionate to the number of tokens staked. Validators operate the network and handle transactions — therefore, you can pledge your SOL tokens to them. The more coins you delegate to a validator, the more new transactions they will write to a ledger. And the more transactions they write, the more benefits they will share with a delegator.
Solana in Numbers
Solana is a relatively new cryptocurrency that emerged on the market in 2020. However, it has been among the top ten cryptos, with a circulating supply of over 336 billion SOL tokens and a market cap that exceeded $21 billion. Unlike BTC, there isn’t an established maximum supply of this token.
This inflationary cryptocurrency has a starting annual inflation rate of 8%. It will decrease by 15% every year until it has reached its fixed, long-term rate of 1.5%.
After SOL launched in March 2020, its price fluctuated between $0.50 and $1.50 for the rest of the year. By May 2021, SOL’s price reached $55.91, making it one of the best-performing crypto assets. Although SOL’s price plunged as low as $23.49 in July 2021, it spiked by the end of the year, reaching an all-time high of $258.93 in November 2021.
Crypto Laws in New York
New York is the financial center of the US, with the most comprehensive crypto regulations. In 2014, the state decided to tighten its crypto policies. The New York State Department of Financial Services passed a regulation that stated that each company or person residing in New York who uses cryptocurrencies must apply for a business license (BitLicense). Benjamin Lawsky, New York’s first Superintendent of Financial Services, designed it.
By imposing such a license, the state wanted to have more oversight and regulation over the crypto market. However, the high cost of licenses and the required paperwork resulted in many companies closing their business in 2015. Fast forward to 2022, less than two dozen companies hold the BitLicense.
Currently, the Empire State is the only one with such a licensing requirement.
Where Can I Buy Solana in New York?
Centralized Crypto Exchanges
Centralized crypto exchanges are platforms that allow you to buy, sell, and trade cryptocurrencies. They don’t involve contact between the two parties because a middleman is responsible for managing assets and conducting trades.
Since exchanges are operated by companies, they offer more security and reliability. They execute transactions and protect the users’ data. Additionally, they require all users to go through the KYC procedure. The most popular exchanges are Kraken, Coinbase, Gemini, and Binance.
Aside from them, there are also decentralized crypto exchanges. The main difference is that they don’t rely on any authority, and there is no third party involved. They facilitate peer-to-peer transactions anonymously, without requiring your personal information. Furthermore, they don’t accept fiat currencies, such as the dollar.
Although many CEXs are available in New York, before choosing one, you should consider the following aspects:
- Availability in New York — Just because you are able to enter an exchange’s website doesn’t mean that it is available in your state. Find the platform that has a New York license and that doesn’t limit you in any way.
- Solana as an option
- — When choosing an exchange, it is essential to check the selection of cryptos it offers. Some smaller tokens, like Solana, may not be as widely available as major ones. Therefore, you should know which cryptos are available on each exchange.
- Overall reputation — You should research the reputation of the exchange before joining. Various factors contribute to the poor reputation among users, such as inadequate security, poor customer support, and frequent hacker attacks.
- Fees — Centralized exchanges charge transaction and conversion fees. Some of them may also impose withdrawal fees. Therefore, it is vital to check whether there are hidden costs.
- Limits — Some platforms may impose daily or monthly withdrawal, depositing, and trading limits. Find out if there are such limits before committing to any exchange.
- Liquidity — SOL may be listed as an available token on an exchange, but that does not mean there is enough of it. To be able to trade at any time you wish, you need to make sure there is sufficient trading volume.
- Ease of use — The process of navigating and using all options may not be as easy as it seems if you’re new to the crypto market. So, take some time to learn how the platform works until it becomes convenient for regular use.
Another option for buying SOL tokens is from another owner directly. This is a simple process because there is no verification procedure to go through, unlike on an exchange. You just need to transfer the funds to an SOL holder, and they have to send you tokens in return.
As you can see, this can be very risky, especially if you don’t know the person on the other end very well. Since there is no way to determine their true intentions, it is better to stick to a CEX. They impose state-of-the-art security measures that won’t be present if you purchase any tokens directly from another owner. Additionally, New York state has austere crypto regulations, and without a license, these actions may only cause you a headache.
How to Buy SOL on an Exchange — Step-By-Step Guide
If you have never bought SOL via a crypto exchange, you have come to the right place. The entire process is a breeze, and this list of steps will guide you along the way:
- Get a wallet — Once you buy the SOL tokens, you’ll need a wallet to store them. The best way to pick one is to go to the official Solana website and choose among the supported options.
- Pick an exchange — Think carefully about all the factors we’ve discussed so far, and choose one of the exchanges that we have suggested. Another exchange is also an option, but make sure you research it thoroughly in advance.
- Register an account — Each exchange requires you to register and submit the necessary documents and information. Once you do that, you’ll need to verify your account.
- Deposit fiat funds — Choose the available payment method that suits your needs and follow the instructions. Make sure you deposit enough money to purchase the tokens and cover the fees.
- Purchase SOL — Once the funds are in your account, you need to enter the desired amount of tokens you want to buy and complete the purchase.
- Withdraw SOL to your wallet — The SOL coins are now stored in your account. However, it is advisable to transfer them to your wallet to ensure maximum security.
Solana has been primarily created as a competitor to ETH — to provide the same kind of decentralized ecosystem but at a lower cost. It is a scaling solution with one of the fastest chains and lowest transaction fees. Thanks to these pros, Solana is a fast-growing network that attracts investors worldwide who want to use it to launch various NFT projects, DeFi protocols, and DApps.