Cryptocurrency continues to capture the interest of investors around the world, with budding investors looking for the next big opportunity beyond Bitcoin and Ethereum. Solana (SOL), launched in 2020, is a promising blockchain platform with high transaction speeds and low fees.
If you’re interested in learning more about Solana, why it’s quickly gained popularity, and how to trade Solana with CMC Invest, this beginner’s guide is for you. Whether you’re new to the world of cryptocurrency or looking to diversify your existing portfolio, here’s how to start investing in Solana.
What is Solana?
Solana is a high-performance blockchain platform used to develop and execute decentralised applications (dApps) and crypto-related projects. Like other cryptocurrencies, Solana works on blockchain technology – a distributed ledger system that records transactions across a network of computers. This technology helps guarantee transparency and security without the need for intermediaries like banks or payment processors.
Solana stands apart from other blockchains, particularly Ethereum, in its scalability and speed. Solana’s Proof of History (PoH) consensus mechanism means it can process thousands of transactions per second, making it one of the fastest blockchains available. Given its high transaction speed, it’s no wonder Solana’s popularity has grown in leaps and bounds among developers and investors.
Why invest in Solana?
Solana's features and potential applications are just some of the reasons investors have shown interest in this cryptocurrency. Let’s take a closer look at what makes Solana stand out:
High transaction speed and low fees: One of the biggest drawcards of Solana over Ethereum is its much lower transaction fees. While Ethereum’s popularity has led to network congestion and high gas fees, Solana promises faster transactions at a fraction of the cost, making it more attractive for developers and users alike.
More sustainable: Unlike some blockchains that burn through large amounts of energy, Solana is known for its energy-efficient protocol (a single Solana transaction consumes just 0.00051 kWh). This makes it one of the most eco-friendly crypto options, which can be appealing to investors who are concerned about the environmental impact of cryptocurrency mining.
Diversify your portfolio: Investing in Solana allows Australian investors to diversify their portfolios beyond traditional assets like stocks and bonds. However, while investing in cryptocurrencies may offer diversification, it also comes with significant risk. As more institutional and retail investors open themselves to cryptocurrency, Solana’s unique position within the market may offer a long-term investment opportunity and the benefit of diversification.
Real-world use cases: Decentralised finance (DeFi) projects have leveraged Solana’s infrastructure to develop more innovative financial services, such as lending, borrowing, and trading without intermediaries. Non-fungible tokens (NFTs) and gaming platforms have also used Solana because of its ability to process high volumes of transactions quickly and at a low cost. Moreover, some businesses in Australia are beginning to explore the potential of blockchain solutions to improve supply chain management, adding a layer of real-world utility to platforms like Solana.
Different ways to invest in Solana
There are several ways to gain exposure to Solana. It’s important to thoroughly research each option before investing, as they can carry varying levels of exposure and risk:
Buy Solana (SOL) directly: One way to invest in Solana is to purchase it directly through a broker like CMC Invest, allowing you to gain exposure to its price movements.
Investing in Solana-related companies: Another way to gain exposure to Solana is by investing in companies that hold, partner with, or offer Solana-related services. For example, Coinbase (COIN:US), a prominent cryptocurrency exchange, could benefit from the growth of Solana. However, it's important to note that Solana represents only a small portion of its overall activities.
How to buy Solana in Australia with CMC Invest
If you’re an investor in Australia looking to buy cryptocurrency, CMC Invest offers access to Solana and a selection of other coins through its integrated investing platform, providing an accessible way to start investing. Below is a step-by-step guide for new and existing CMC Invest customers on how to invest in Solana:
Open a CMC Invest account: Get started by opening a CMC Invest account. You’ll get access to a wide range of investment products, including unregulated Solana and other cryptocurrencies like Bitcoin and Ethereum, as well as traditional asset types.
Opt-in for cryptocurrency investing: Once your account is set up, you’ll have access to over 45,000 stocks and ETFs as standard. If Solana or other crypto interests you, you’ll need to opt-in to access unregulated blockchain assets like Bitcoin.
Research Bitcoin: Before investing, you’ll want to give yourself a solid base of understanding Bitcoin’s fundamentals and general market trends. CMC Invest has a range of educational resources and powerful charting tools to help investors make the best decisions for their portfolios.
Start investing in Bitcoin: Once you’ve opted in, you can start buying Solana directly from the CMC Invest platform via the mobile app or desktop version.
Risks of investing in Solana
While Solana could seem like a promising investment opportunity, it’s crucial to thoroughly evaluate the risks involved.
Volatility: Solana’s value can fluctuate greatly over short periods of time, driven largely by factors like market sentiment, regulatory news, market cycles and even geopolitical events. Investors must be prepared for unexpected price swings, so consider whether you have the risk appetite for such volatility.
Regulatory risks: As Solana and other cryptocurrencies have gained popularity, they have faced regulatory scrutiny. Changes in regulations could impact Bitcoin’s price and long-term viability as an investment.
Speculative nature: Solana is still a relatively new asset, and its long-term role in the global financial system remains to be seen. As a speculative investment, you should only commit capital you are willing to lose.
Conclusion
Given the unpredictable nature of the cryptocurrency markets, only invest capital you are willing to lose. Risk management and diversification strategies should be an essential part of any investment strategy when dealing with digital assets like Solana.
Solana offers a relatively new opportunity for investors who want to diversify their portfolios with crypto. However, like all cryptocurrencies, investing in Solana comes with risks.
To get started with Solana, sign up for a CMC Invest account today and see how this innovative cryptocurrency can fit into your overall investment strategy.
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