In a little over a decade, cryptocurrencies have become a profitable investment, and Illinois is fertile ground for this fast-growing digital asset industry. Aside from its pro-crypto stance, the Prairie State strives to become one of the country’s major financial centers.
This is why more and more Illinoians are looking to invest or trade various cryptos, including Solana. One of the reasons so many crypto enthusiasts have flocked around this technology is that it introduced some revolutionary aspects to the world of cryptocurrencies. Despite constant fluctuations, it is one of the biggest cryptos on the planet.
This piece will discuss what Solana is and how it works and present all the facts and figures. Additionally, we’ll discuss where to buy SOL tokens and whether this crypto is a good investment. Thus, make sure to stay with us until the end.
Table of Contents
What Is Solana (SOL)?
With more than 10,000 cryptocurrencies on the market, Solana ranks among the top ten. It is an open-source blockchain project designed to provide a secure, scalable, and most importantly, decentralized platform.
A key feature that makes Solana different from Bitcoin and Ethereum is that it allows users to develop decentralized applications called DApps. Solana also supports decentralized finance solutions (DeFi) and nonfungible token marketplaces (NFT).
This promising crypto was created in 2017 when Anatoly Yakovenko partnered with Eric Williams and Greg Fitzgerald to create an infinitely scalable blockchain. However, Solana didn’t take off until 2020. Currently, this project is run by the Geneva-based Solana Foundation, with its blockchain developed at the San Francisco-based Solana Labs.
How Does Solana Work?
Unlike other major cryptos, Solana utilized a hybrid protocol combining the proof-of-stake and proof-of-history consensus mechanisms. PoH is a new concept unique to Solana. It introduces a cryptographic clock that records every transaction. Thanks to the built-in timestamp, network nodes instantly organize transactions, eliminating the need to wait for the validator’s confirmation.
Furthermore, this hybrid model makes Solana more scalable and enables it to process around 65,000 transactions per second. This is also possible because Solana doesn’t employ sharding solutions and its transactions are ridiculously cheap ($0.01).
All these aspects make Solana extremely attractive to investors. Unlike most decentralized blockchain protocols that face difficulties scaling, Solana excels in this area. Aside from being decentralized, it is also cost-effective and secure.
SOL Token Explained
Solana has a native token — SOL. SOL can be used as a payment method or for covering network costs. Furthermore, using the delegated staking options on the network, users of this cryptocurrency can earn passive rewards. Solana’s high staking rates enable SOL owners to reap around 6% interest. However, staking results don’t come overnight, as this is a long-term process.
Solana in Numbers
Solana currently ranks among the top ten cryptocurrencies globally. During its initial coin offering in 2018, its price was $0.04, but just two years later, in 2021, it reached its all-time high of $256.96. Solana’s current worth is $45.56 (as of June 2022).
Approximately 500 million SOL tokens have been created, with over 339 million currently in circulation. The Solana Foundation and its founders control around 60% of the token’s total supply, while approximately 38% belong to the general public.
Reasons to Invest in Solana
There are many reasons Solana intrigues investors. The most obvious is that this crypto skyrocketed in less than two years since its creation. Here we present you three reasons why investors keep an eye on this promising cryptocurrency:
- Solana can drive innovation — Unlike many other large-cap crypto tokens, Solana has some real-world use cases. One thing that draws investors is that users can make online purchases using this coin. Another most discussed use case is Solana’s NFT marketplace — Solanart. It enables investors to purchase and sell popular NFTs.
- Solana has an attractive mining model — Recently, many investors have started searching for more eco-friendly cryptos. Solana’s hybrid model combines proof-of-stake and proof-of-history, making transactions super fast and fees very low (allegedly $0.01 per transaction). This system allows Solana to process 65,000 transactions per second.
- Solana has a broad market acceptance — A wider acceptance of any crypto is directly proportional to its performance. This was the case when Solana was listed on Coinbase, which instantly increased its liquidity. Soon after, Osprey Funds announced the launch of the Solana Fund, while Grayscale started considering creating a Solana trust.
Crypto Laws in Illinois
Illinois has been among the states that recognized the immense potential of blockchain technologies and crypto-assets right off the bat. Numerous bills proposed attest to that.
Illinoian legislature and the Internal Revenue Service recognize virtual currency as property rather than currency. Consequently, the general tax principles that apply to real estate transactions also apply to virtual currency transactions.
Intending to lead the way on cryptos and blockchain technology, The Prairie State passed a bill that can potentially transform the state into a financial and technology hub for companies. House Bill 3968 unanimously passed the Illinois House, but it is yet to be written into law. If the bill becomes law, Illinois would be the second state (after Wyoming) to allow special trusts to hold digital assets. The Prairie State was also considering introducing tax incentives to crypto mining companies.
Where Can I Buy Solana in Illinois?
You have two methods to purchase SOL tokens in Illinois — via a crypto exchange or from another SOL holder directly. Crypto exchanges are more popular and provide a security layer you don’t have when purchasing directly. Let’s describe both methods.
Centralized Crypto Exchanges
There are two types of crypto exchanges — centralized and decentralized.
Centralized exchanges are licensed by the appropriate authorities and run like regular marketplaces, allowing the purchase of various cryptocurrencies. They allow you to trade fiat for crypto or crypto for crypto. They are licensed, widely trusted, and act as mediators between you and other SOL holders. You need to go through the KYC procedure to register for such an exchange.
On the other hand, decentralized exchanges are entirely unregulated and often unlicensed. They don’t rely on any authority and have their internal system of users and devices. Since they don’t require any documentation, you can perform the trades relatively anonymously. However, it is pretty tricky to find Solana on them.
Therefore, we will concentrate on the former and review all the factors one should take into account before joining one:
- Availability — It is vital to check whether an exchange operates in Illinois. It must be licensed under federal and state law.
- Solana support — The majority of US exchanges are available nationwide. Nevertheless, there are always some differences between states, so a particular exchange might not be open in Illinois.
- Security — In the crypto world, safety is paramount. You should check the security features the exchange employs and how it has handled breaches in the past.
- Privacy — When you sign up with an exchange, you give them a lot of sensitive information, along with your payment information. Verify that they store all of that data safely and that no third parties can access it.
- Reputation — Online reputation plays an important role today, and crypto exchanges are no exception. Read some reviews from users to determine whether the exchange is reputable.
- Fees and limits — Each exchange imposes different fees, such as trading and withdrawal fees. Ensure the expenses are reasonable and similar to those charged by other businesses. Additionally, most exchanges limit your trading and how much you can deposit and withdraw. Ensure the limits work for you.
- Liquidity — Solana should have a high trading volume on the exchange, showing that there are enough tokens in circulation. In this case, you will not have to wait long to finalize a trade, and the prices will be fair.
- User interface — The website of your chosen exchange needs to be both functional and easy to use.
- Payment methods — Exchanges offer various deposit and withdrawal options, but you should still verify that your favorite ones are included.
It is possible to trade SOL directly with people rather than using registered platforms that collect your data and charge you various fees. Unfortunately, it is not as easy as it first appears.
First and foremost, it will be challenging to find a trustworthy individual to sell Solana. Additionally, if you are not familiar with the buyer or seller, you should ensure the trade is safe. Ideally, you should conduct the transaction in person at a public location. However, if that’s not possible, you can find a mediator to protect yourself. Since the outcome of such trades is highly uncertain, we always recommend sticking to licensed and reliable platforms.
How to Buy SOL on an Exchange — Step-by-Step Guide
- Set up a wallet — The first step is to find an appropriate crypto wallet that supports SOL and follow the instructions to set it up.
- Choose an exchange — Once you have the wallet ready, you can select an exchange from the list we recommend.
- Register an account — Follow the instructions on the exchange’s website to create an account. It mainly involves entering your personal information and verifying your account.
- Make a deposit — Choose from the available deposit options and deposit fiat currency once the account has been activated. Make sure to deposit enough money to cover exchange margins and fees.
- Buy SOL — Select the pair you’d like to trade, in this case, USD for SOL, enter the amount, and then confirm the transaction.
- Transfer SOL tokens to the wallet — If you don’t intend to trade your DOT tokens anymore, you should transfer them to your wallet as this is a much safer way to keep them.
Even though thousands of cryptocurrencies are on the market, Solana stands out with its remarkable growth consistency and future potential. However, only time will tell if this robust crypto will live up to its potential.
We hope that our guide sheds some light on how Solana works and where you can obtain it. If you want to start using it, you should be aware of the risks, as you could lose your entire investment. Remember that you should invest wisely and only the money you can afford to lose since Solana is as volatile as other cryptos.