What is Solana (SOL)?
Solana is a blockchain network seeking to displace Ethereum as the dominant smart contracts platform. Smart contracts are self-executing pieces of code hosted on decentralized blockchain networks. Examples of these include decentralized finance (Defi) apps, NFTs (non-fungible tokens), and decentralized autonomous organizations, or DAO. Despite its dominant position, Ethereum has several drawbacks, such as slow network speeds, high transaction fees, and the use of the highly criticized mining consensus mechanism, which is not energy-efficient. Solana was launched in 2017 by former Qualcomm executive Anatoly Yakovenko to solve these challenges. Given that most of Ethereum’s drawbacks are as a result of the use of an inefficient consensus mechanism, the biggest difference that Solana introduces is the use of staking. Particularly, the project uses a blend of Proof of Stake (PoS) and Proof of History (PoH) to achieve high network speeds. PoS enhances decentralization and security, while PoH is used to increase transaction throughput. As a result, Solana can, theoretically, process as many as 50,000 transactions every second (TPS) compared to Ethereum’s 15 TPS. Similar to how Ethereum uses Ether (ETH) as its native platform token, Solana also has SOL tokens which play a key role in maintaining and operating the Solana ecosystem.
Why invest in Solana (SOL)?
Since Solana is a smart contract platform, the SOL tokens have multiple uses that make them appealing to investors. Some of these uses are:
Currency – SOL tokens may not be designed to be used as currency, but they can perform this function, enabling holders to make payments for goods and services;Transaction fees – Solana network validators get compensated for their services in SOL tokens which are paid by the network users. Additionally, smart contracts have to pay gas fees in SOL tokens;NFT sales – SOL tokens are the native assets used for value transfer within the Solana-based NFT marketplaces such as Solanart, Solsea, and Margin Eden. SOL is used during the creation, sales, and purchases of these non-fungible tokens;Decentralized finance – think of Defi as conventional financial services except without the mediators or ‘middlemen.’ To participate in this new financial world on the Solana network heralded by apps such as Solend and Apricot Finance, you will need SOL tokens;Staking – Solana, being a PoS network, allows entities to stake their SOL tokens and either run validator nodes or delegate their stakeholder rights to validators for a reward.
The Solana ecosystem is still growing, which might see the SOL tokens have additional uses beyond their utility at the moment.
Where to buy Solana tokens
The easiest way to get your hands on some SOL tokens is to buy them on an exchange, but there are a few other ways to do so, such as accepting them as payment for goods and services, participating in competitions with SOL as a reward, among others. Crypto beginners will probably prefer using an exchange over some of the other ways. Two types of exchanges exist when it comes to buying cryptocurrencies:
Centralized exchanges (CEX);Decentralized exchanges (DEX).
CEX platforms are those that are run, operated, and maintained by a single entity, i.e., governance decisions are made by one individual or a small group of individuals. Typically, there is a company behind the exchange with a number of employees that help maintain it. The advantages to using a CEX platform to buy SOL tokens are:
Users are often protected by government regulations that dictate how these exchanges are operated;CEX platforms typically offer customer support, have well designed and intuitive user interfaces, and, more often than not, are beginner-friendly;They typically come with companion mobile apps for on-the-go access, among others.
On the other hand, these centralized platforms have inherent drawbacks, which include:
They are more prone to security incidents due to their centralized nature, making them less secure;Since they have to comply with operational regulations, their services and products are often geolocation limited. Not only that, but also some of these centralized exchanges support fewer assets than their DEX counterparts.
DEX platforms are run in a decentralized manner by a community of individuals making governance decisions collectively. Maintenance is often done by volunteers from amongst the community members. Advantages of using a DEX include:
Ease of access – since they are not regulated by any government, these platforms are accessible to anyone globally;Security is often at the hands of the users.
Note: For this tutorial, we are keeping things simple. If you are a beginner to cryptocurrency, we highly recommend using a centralized exchange that is compliant with relevant regulations and is accessible to you. Below, we will guide you on a step-by-step process to buying SOL tokens using Uphold, one of the leading crypto brokerage platforms that are fully regulated and secure. Check out our full review on Uphold exchange for more details.
How to buy Solana (SOL) on Uphold (step-by-step)
Step 1 – Sign up for an Uphold account.
The first step to using Uphold is to create an account and verify your identity. Uphold adheres to KYC (know your customer) and AML (anti-money laundering) regulations which require that their customers provide accurate information identifying them. To sign up, visit Uphold.com and tap/click on the [Sign Up] button on the top right (as shown below.) Provide your email address, country of residence, citizenship information, and then create a strong password. Next, you will be requested to verify your email address by checking for a link sent to your email address. The following steps will require you to provide further identifying information such as your location, phone number, and employment details. For a detailed walkthrough of the signup process, check out this guide.
Step 2 – Log in to Uphold.
Access your account by logging back through the wallet.uphold.com page and using the email address and password combination you provided while creating an account. The first thing you will notice when you log in to Uphold is the simple user interface. There are three columns with which to interact, and that’s about it. The first column gives you a rundown of any recent activity and some information about assets you are watching. The second one has information about your asset portfolio. Here you can take a glance at which assets you have, their quantity, and their performance over the previous 24 hours. It is the last column, labeled ‘Anything to Anything,’ to which we will be paying particular attention. This is the trading section with three options where you can execute a spot transaction, set up a repeat trade, or a limit order to buy or sell Solana coins. Let’s go through each setup in greater detail.
1, How to buy Solana (SOL) on the spot using Uphold
Step 1 – Select the [Transact] tab.
Ensure that the first tab labeled [Transact] is selected. This is the basic transaction form with just three input fields: one to specify your payment method, another to select the receiving asset, and one for convenience purposes to show the value of the trade in fiat currency.
Step 2 – Add a payment method.
Click/tap on the [From] tab to open up a list of available options to choose from. Uphold allows users to make bank deposits, transfers, credit card transactions, or even deposit cryptocurrency from external wallets. From the pop-up display list, scroll down to locate the bank and credit card sections. Click on the plus button corresponding to the payment method you would like to add. The debit card method is the simplest route to buying Solana. All you need is to provide your credit card details, as shown below. Click on the [Add card] button after filling in the details above. If you wish to use the bank deposit method instead, you will need to make a transfer from your bank account to Uphold. To do that, first, you need to select the currency with which you will be transacting. There are three options. Next, choose your preferred deposit method between a direct bank or wire transfer. The latter is ideal for larger deposit amounts (above $5K). However, it is worth noting that the bank account method is instant, while the wire transfer takes a few (business) days to settle. Finally, Uphold will display the bank account details that you will use to make the transfer. Copy the details. Click [Done] to revert back to the home screen. Note: Uphold allows for crypto deposits from external wallets therefore, you can easily convert from your other digital asset, such as Bitcoin, Ethereum, Litecoin, etc., to Solana. In this tutorial, however, we will focus on the fiat purchase for simplicity.
Step 3 – Select Solana as a receiving asset.
To choose which asset to buy, click the [To] selection field from the initial Transact screen. The exchange will display a list of its supported assets. Use the search bar at the top to locate Solana (SOL) or first select [Cryptocurrencies] to filter out other asset types, then scroll down and locate Solana. Once you do, click on it to revert back to the initial screen.
Step 4 – Specify how much to spend.
Now that you have your payment method set up and have chosen which asset to buy, you need to specify how much you wish to spend. You can do that using any of the three fields provided and fill in the amount to deduct from your payment method or the amount of SOL tokens to purchase. However, using the middle form field that represents the fiat value of your transaction is much simpler and less prone to error. This way, Uphold will convert and autofill the other two fields according to the exchange rate at that time.
Step 5 – Preview and confirm the transaction.
Next, click on the [Preview] button to open the confirmation page. Check the accuracy of the information listed here, including the payment method, whether you have selected SOL as the receiving asset, and the amount to deduct from your accounts. You will also notice other details such as the fees and the rate at which the exchange is selling Solana to you. Click [Confirm] to execute the order. Solana tokens will be deposited into your portfolio wallet once the transaction is settled.
2. How to Buy Solana (SOL) Using the Repeat Feature on Uphold
The repeat feature enables Uphold users to set up automatic recurring trades for buying, selling, or converting between different assets. In the case of buying Solana, the repeat feature will enable the user to schedule regular purchases occurring daily, weekly or monthly. The benefit of using this feature is that it saves you the trouble of having to make a manual transaction. You can set it and forget it. To do that, follow these simple steps:
Step 1 – Select the [Repeat] tab.
Switch to the middle tab with the label [Repeat]. You will notice the extra panel below the transaction form. This panel provides the settings for the repeat feature. You can use it to specify how frequently you want the transaction to recur when it starts and ends. Plus, you can also label the repeat transaction.
Step 2 – Activate the Repeat feature.
Click on the [Repeats] or [Never] buttons to open a list of options. Choose whichever frequency you prefer. You have activated it by switching from the [Never] option to one of the three options.
Step 3 – Define start and end dates.
Next, choose when you want to execute the first and last trades. Here, you have two options: either to set an end date or to specify the number of occurrences. When you click on the [Ends] tab, you will be presented with a calendar. Scroll through to find a preferable date to execute the last transaction. Alternatively, you can select the [Occurrences] tab within the Calendar pop-up and fill in the number of times you would like to repeat the trade. Click [Set] to return to the order form. The rest of the form can be filled in as though you were setting up a normal trade as outlined in the previous section. Click [Preview] and confirm the transaction. The trade will be executed religiously on the dates and time specified unless manually canceled. Note: The Repeat feature only works in conjunction with the debit card payment method.
3. How to Buy Solana (SOL) Using the Limit Feature on Uphold
The Limit-order feature enables users to trade at preferable conditions by specifying the price at which they are willing to make a trade. When buying Solana, for example, the buyer can dictate which price they wish to buy the coin, and the buy order will remain pending until the market price falls to match the execution price. Follow the steps below to set up a limit order to purchase SOL coins on Uphold.
Step 1 – Select the [Limit] tab.
From the start screen, click on the [Limit] tab. Notice the slight changes to the input fields where there are arrows pointing in up and downward directions. Also, note the green chain link symbol in the middle form field. As opposed to the previous two transaction forms (normal and repeat), where the middle form field served as a convenience feature when setting up a limit order, this field is a necessity. You have to specify exactly how much money you are willing to spend in fiat and the quantity of the receiving asset you are willing to buy with that amount. This way, you are locking the price of each unit.
Step 2 – Fill in the transaction form.
Choose a payment method using the [From] field and Solana coin as the receiving asset using the [To] field. Nothing changes here. In the middle section, enter the amount you want to spend for your purchase, then enter the exact amount of tokens to receive for that amount in the [To] field below it.
Step 3 – Specify the validity of the limit order.
Below the transaction form, click on the [Duration] tab to reveal the validity options. Here, you can choose to manually cancel the order or have the order expire automatically if the market price of the asset does not fall to a preferred level within a given period. The manual option is preselected (Good ‘til canceled), but you can change it so that the order can automatically cancel itself at the end of the day or on a particular date.
Step 4 – Preview and confirm the order.
Click the [Preview] tab, which opens up the confirmation page. Here check to ensure that you have set up your limit order correctly, then confirm it. The order goes into pending status awaiting execution at your preferred price.
Final thoughts
Buying Solana is as simple as ABC. You identify a credible platform, sign up and make the purchase. We have outlined in this tutorial how to identify a trustworthy exchange and how to sign up for one using the example of Uphold, a fully regulated and highly secure platform. Whichever digital asset exchange you opt to use, protect your funds by performing exhaustive background research before buying Solana. Tip: Anyone new to the cryptocurrency space may look up all of the supported crypto exchanges to buy Solana and other asset-related metrics on the largest cryptocurrency market aggregator Coinmarketcap. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative and digital assets are highly volatile. Your capital is at risk when investing, so only invest what you are willing to lose.
As a utility token used for payment of transaction fees;It can serve as digital money;SOL is the payment method supported on Solana-based Defi and NFT marketplaces;Staking – SOL tokens can be staked for passive income and governance participation.
