Solana vs. Bitcoin: How Do the Two Cryptocurrencies Compare?
The difference between Solana and Bitcoin is that Bitcoin serves primarily as a store of value and leading cryptocurrency, while Solana is a high-performance blockchain platform built for running decentralized applications, particularly in DeFi and NFTs.
While no competitor has dethroned Bitcoin, its dominance continues to shape the market - surpassing $100,000 in 2024 with a market capitalisation of over $2.04 trillion and commanding a 54.9% share of the total cryptocurrency market cap at the time of writing.
Solana, the fifth-largest digital asset, has carved out its own space as a high-performance Layer 1 blockchain. With a market capitalisation of $114.4 billion, Solana accounts for 3.1% of the total crypto market. Its rapid growth in 2024 has been fuelled by success in DeFi and NFTs. At the time of writing, Solana ranks as the second-largest chain for DeFi, with a 7.67% market share and $10.58 billion in total value locked (TVL).
But are Solana and Bitcoin truly competing for the same crown, or do they serve entirely different purposes? In this article, we’ll compare the two giants and explore how their roles and use cases differ.
Bitcoin: The Digital Gold Standard
Launched in 2009, Bitcoin currently serves as the cryptocurrency with the most established history and the largest market capitalisation. In terms of network design, BTC prioritises security and decentralisation rather than scalability. This has made its blockchain highly resilient against both internal and external threats and less centralised than most of its competitors.
Initially, Bitcoin was created to function as a peer-to-peer (P2P) electronic cash system that facilitates transactions between users without any intermediaries. This is still an important utility of BTC, but not its primary use case.
The reason why BTC is less commonly used for everyday payments is due to its network's limited scalability, which is the cost of its ultimate focus on security and decentralisation. Based on the energy-intensive Proof-of-Work (PoW) consensus mechanism, the Bitcoin network generates a new block roughly every 10 minutes and can process up to only seven transactions per second (TPS).
Bitcoin's scalability trade-off becomes an issue when there's an increase in network activity. In such a case, the blockchain gets congested, exponentially raising transaction fees and processing times. However, even when the network is experiencing average activity, the typical BTC transfer costs $2.72, which is about an hour needed to achieve transaction finality. Together, these make it an unsuitable choice for everyday payments—even if we consider that Layer 2 (L2) solutions like the Lightning Network provide instantaneous and low-cost Bitcoin transactions to users.
On the other hand, Bitcoin's maximum supply cap of 21 million coins and deflationary halving mechanism makes it an excellent store of value. This is a use case that has drawn growing interest from a diverse audience, including retail users, governments, and institutional investors. In fact, Bitcoin is often compared to gold, which has been used by humanity as a reliable store of value for thousands of years.
By reducing block rewards by 50% every four years until the last BTC is mined, Bitcoin cuts its inflation to half after each halving event. This mechanism provides the cryptocurrency with positive supply and demand dynamics, making it a more attractive choice for investors as a store of value.
Solana: Building a New Economic City
Launched in March 2020, Solana is a high-performance Layer 1 (L1) blockchain and currently the sixth-largest cryptocurrency by market cap (SOL). In stark contrast with Bitcoin, Solana focuses on scalability and speed to offer low transaction fees with instantaneous transfers within its network.
In fact, the average Solana gas fee currently stands at $0.000185, which is over 99.99% lower than BTC's $2.72. At the same time, the Layer 1 blockchain also has a 0.4-second block time, with transaction finality only taking up to 12 seconds. With a theoretical maximum TPS of 65,000, Solana's high scalability makes it an attractive choice for everyday transactions - even during periods of extreme network activity.
Solana's approach provides enhanced user experience, encouraging individuals and developers to migrate to the high-throughput chain from blockchains with more expensive fees and slower transactions. While this won't automatically make it the top chain for DeFi, NFTs, GameFi, and other sectors, the L1 network's focus on cost-efficient fees and instantaneous transfers has bore fruits recently.
In addition to scoring the second-best position for decentralised finance protocols, Solana is the third-largest blockchain for NFTs. At the same time, it has a nearly $4.9 billion market capitalisation for stablecoins and has a 45.6% share in the total trading volume of memecoins for the last seven days.
While SOL has some deflationary features, such as burning 50% of the transaction fee - it is an inflationary token that aims to power Solana's platform for building a new economic ecosystem. Unlike BTC, its max supply is not capped, enabling the network to create a virtually infinite amount of coins over time.
Moreover, Solana doesn't focus on decentralisation as much as Bitcoin. Compared to BTC's estimated over 100,000 full nodes, the high-throughput L1 chain only has 5,087 nodes. Solana also has strict requirements for validators - although the sustainability of BTC mining can also become difficult for solo miners due to the increased competition and the post-halving reduction of block rewards.
Why Solana and Bitcoin Are Not Competitors
Considering what we have explored in the previous sections of this article, it should become clear that Solana and Bitcoin are not direct competitors, as each blockchain caters to different needs. As Solana Foundation President Lily Liu frames it, not every person with a website is in competition with others.
With its store of value properties, BTC is like a secure vault for storing valuables. On the other hand, Solana is a city built for innovation and economic activity that encourages both individuals and businesses to move from all across the world with exceptional living standards and opportunities.
Similarly, as the mayor of a city doesn't consider a bank's manager a competitor, Bitcoin does not compete directly with Solana. However, that doesn't mean that the two blockchains and their communities can't collaborate in the future. On the contrary, shared principles like decentralisation, self-custody, and financial sovereignty create new opportunities for Solana and Bitcoin to explore together.
The Future of Crypto: A Multi-Chain World With Solana and Bitcoin
The crypto market is definitely not a zero-sum game. Thus, it is possible to envision a future where multiple successful blockchains exist in peace, each with its own strengths and use cases.
This should apply to the case of Solana and Bitcoin. The former is a platform that offers high scalability, speed transactions, and inexpensive transfers to build a new economic ecosystem with thriving developer and user activity. On the other hand, Bitcoin puts decentralisation and scalability at the core focus, offering investors digital gold as a store of value backed by an established, resilient, and reputable blockchain.
Instead of competition, our focus should be on blockchain technology's potential to create a more efficient and inclusive financial system. This is what Bitcoin, Solana, and many others are building, sharing the same core values that enable new opportunities for future collaboration.
So whether you’re looking to buy Bitcoin, Solana, or both, VALR offers a seamless way to get started. Explore the potential of these two transformative blockchains and grow your crypto journey on a platform built for you.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
