Solana, Zagari explains, presents a distinct steadiness within the ‘blockchain trilemma.’ Blockchains, the expertise underpinning cryptocurrencies, are pressured to strike a steadiness between three elements: decentralization, safety, and scalability. No blockchain presently exists that maximizes all three elements. Bitcoin, for instance, is extraordinarily decentralized and safe, however lacks scalability.
Which means the Bitcoin blockchain is much less able to processing fast micro transactions required for features of in-game transactions, content material monetization, tipping, crowdfunding, meme cash, and day after day purchases. Solana, conversely, is much less decentralized and subsequently usually much less safe than Bitcoin, however is extra scalable and able to internet hosting extra fast transactions. Many notable meme cash, together with the $Trump coin, are hosted on the Solana blockchain platform. He likens the expertise to WhatsApp, which lower out a lot of the expense and complexity that used to return with texting exterior of 1 nation. Solana, he says, is attempting to hurry and simplify international transactions with fewer fee intermediaries.
Traders and advisors contemplating these new ETFs might wish to body it as a distinct expertise with a distinct utility, Zagari says. “What’s the expertise attempting to resolve?,” he asks. “Proper now the [Solana] expertise is attempting to resolve quick transactions. Have a look at the variety of transactions per second. Visa can course of one thing like 24,000 transactions per second, Bitcoin can solely do seven, however Solana can course of as much as 65,000 transactions per second. It’s sooner, however that comes with commerce offs.”
One of many dangers in Solana, Zagari explains, is that the community can shut down and pause the motion of belongings. There have been pauses previously on the Solana blockchain, he notes, whereas Bitcoin has by no means seen a shutdown. Furthermore, whereas Bitcoin has reached a degree of widespread adoption, the uptake of Solana is extra nascent. There’s a danger that if uptake slows or current customers are corrupted, the blockchain might lose a few of its performance.
The dangers related to a more recent blockchain, Zagari notes, might be balanced towards the diversification advantages of accessing extra blockchains. Whereas funding in a Solana ETF may be seen as a ‘wager’ on its underlying expertise, advisors can incorporate it into a way more various set of cryptocurrency and blockchain methods now out there in securitized packages like ETFs. Zagari contrasts the present ‘menu’ of choices with the state of affairs solely 4 years in the past when Canadian advisors have been restricted to a couple Bitcoin ETFs and publicly traded securities with crypto exposures. With out endorsing anybody particular technique, he views a widening variety of choices as a broad constructive for advisors and traders.