If Solana becomes the Visa of crypto, where does Visa fit in?
Solana’s scalability and transaction fees are some of the best in the crypto space, but Visa is still a connective tissue between fiat and cryptocurrencies.
Solana is on its way to become the “Visa of the digital asset ecosystem,” Alkesh Shah, head of digital asset strategy at Bank of America Bank, told the bank’s clients in a research note. The reasons for Solana taking that role in the crypto sphere are the low transaction fees and ease of use and scalability — something that the major blockchain network, Ethereum, lacks at the moment.
But what about Visa, which is already in the crypto space?
Solana is a powerful blockchain network
Solana can process 65,000 transactions per second (tps), which dwarfs the 16 tps Ethereum can make. What’s more, transactions made on the Solana network are less expensive than Ethereum transactions.
With all these features, Solana makes for a powerful network, especially for NFTs, or non-fungible tokens, and blockchain-based games.
Solana isn’t without drawbacks
“Solana prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, illustrated by several network performance issues since inception,” Shah said.
“Ethereum prioritizes decentralization and security, but at the expense of scalability,” he added. This often leads to network congestion and high transaction fees, which sometimes cost more than the transaction being sent.
Despite that, Ethereum beats Solana in the value locked on the network with more than $150 billion locked, as opposed to the $10 billion locked on Solana.
Where does Visa fit in?
Visa (NYSE: V), though, wants to be a leader in the crypto club itself. It offers crypto-connected cards and advisory services, for example. “True cryptos aren’t fast enough for purchase transactions,” Visa Chief Financial Officer Vasant Prabhu said in a Barron’s interview. “The cost of doing a transaction using fiat currency on the Visa network is minuscule compared to the cost for Bitcoin and Ether.”
Its network can process 65,000 transactions per second, similar to Solana. “We’re trying to be the bridge not only between the fiat world and crypto but even within the crypto world,” Prabhu said.
However, Solana, Ethereum and other blockchain networks also plan to build bridges connecting traditional payment and financial networks. If they are successful, traditional payment networks like Visa could be left out.
But Visa, with a market cap of $455 billion, won’t go easily.
Kliment Dukovski owns Solana and Ethereum as of the publishing date.
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