It’s no secret that cryptocurrency is going through a rough patch, with the total market’s value down 13% to $1.9 trillion so far in 2022. That said, crypto has a track record of bouncing back over the long term. And some assets will likely perform better than others.
Let’s explore why Solana (CRYPTO:SOL) and Ethereum (CRYPTO:ETH) fit the bill and could make top picks for long-haul investors.
1. Solana
Often dubbed an “Ethereum killer” because of its blazing fast speeds, Solana is the ninth-largest cryptocurrency with a market cap of $31 billion. The network can maintain its long-term edge with an exciting expansion into fintech and financial services.
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According to data from coinbase.com, Solana can handle 50,000 transactions per second compared to Ethereum’s 15. And this makes it ideal for decentralized application (dApp) development. These are complex self-executing programs that dramatically increase the workload on a blockchain and will benefit from Solana’s high capacity.
So far, Solana hosts around 500 dApps, which is a far cry from rival Ethereum’s 3,000. But Solana looks poised to gain ground because of its technical prowess. And it isn’t limiting itself to just dApps.
In February, the platform’s developer Solana Labs announced Solana Pay, a payments system designed to help merchants accept cryptocurrency payments (including Solana’s native token SOL) directly from customers. Solana’s fintech expansion highlights its potential for real-world utility, which is excellent news for long-term investors.
2. Ethereum
Never underestimate the power of a strong brand. Ethereum’s staying power comes from its first-mover advantage as a platform for dApp development, offering this functionality back in 2015. And planned upgrades can help the platform stay relevant in the increasingly competitive blockchain industry.
As mentioned earlier, Ethereum is being challenged by new rivals like Solana in technical specs. This is because of its cumbersome proof-of-work (PoW) consensus mechanism where miners solve puzzles to verify transactions. To fix these drawbacks, Ethereum plans to implement what it calls the consensus layer upgrade to transition it to a proof-of-stake (PoS) system where miners verify transactions using existing coins.
It is unclear when Ethereum’s upgrades will go live. But the platform has a track record of implementing improvements, so changes like this are not unprecedented.
In the meantime, Ethereum continues to attract the majority of dApp development, with almost 3,000 of the roughly 4,000 total projects. And this means its shortcomings are not scaring away users. Ethereum’s reputation as an established and trustworthy blockchain will be key to its long-term success.
There is room for multiple similar blockchains
While Solana and Ethereum compete as a platform for dApp development, cryptocurrency isn’t a zero-sum game. History shows us there is room for many similar assets to benefit as the overall opportunity expands.
For example, Ethereum improved upon Bitcoin but didn’t kill it. Likewise, Solana won’t necessarily kill Ethereum, either — despite its technical advantages. Both assets look poised for long-term success because of their strong brands and active development teams.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.