How does Solana operate?
Solana employs a combination of proof-of-history and delegated proof-of-stake protocols to achieve rapid transaction processing. This unique approach aims to balance the need for quick transaction processing, typically associated with centralization, with the decentralized nature inherent in blockchain technology.
Unlike Bitcoin, which prioritizes decentralization and processes transactions slowly, Solana strives to emulate the transaction speed of centralized entities like Visa while preserving decentralization. This accelerated transaction processing enhances scalability while minimizing environmental and monetary costs.
To ensure security amid swift block additions, Solana incorporates a proof of history algorithm, timestamping each block for system integrity. SOL tokens within the network are staked and serve as collateral for various transactions, including smart contract validation and participation in Solana's non-fungible token (NFT) marketplace. Show Less
