Solana, a blockchain platform followed by top crypto investors, says it’s far faster than Ethereum

Solana isn’t widely known yet outside of the crypto community. But insiders think the blockchain platform is interesting for a wide variety of reasons, beginning with its amiable founder, Anatoly Yakovenko, who spent more than a dozen years as an engineer working on wireless protocols at Qualcomm and who says he had a lightbulb moment at a San Francisco cafe several years ago following two coffees and a beer.

His big idea centered on creating an historical record to speed along “consensus,” which is how decisions are made on blockchains, which are themselves peer-to-peer systems.

Right now, consensus is reached on various blockchains when members solve a mathematical puzzle, a mechanism that’s called “proof of work.” These miners are rewarded for their efforts with cryptocurrency, but the process an hour in Bitcoin’s case and a minute in the case of Ethereum, and it’s insanely energy intensive, which is why neither Bitcoin nor Ethereum has proved very scalable. (Bitcoin’s heavy reliance on fossil fuel is the reason Elon Musk cited earlier this week to explain why Tesla is no longer accepting Bitcoin as payment for the company’s electric cars.)

But there is another way. Indeed, crypto watchers and developers are excited about Ethereum and other currencies that are transitioning to a new system called “proof of stake,” wherein people who agree to lock up a certain amount of their cryptocurrency are invited to activate so-called validator software that enables them to store data, process transactions, and add new blocks to the blockchain. Like miners, “validators” take on the role to earn more cryptocurrency, but they need far less sophisticated equipment, which opens up the opportunity to more people. Meanwhile, because more validators can participate in a network, consensus can be reached faster.

Yakovenko is enthusiastic about the shift.  We talked with him yesterday, and he’s certainly not rooting against Ethereum, saying it would be “devastating for the entire industry” if Ethereum weren’t able to pull off its transition to proof of stake given its mindshare and its roughly $500 billion market cap.

Still, he argues that not even proof of stake is good enough. The reason, he says, is that even with proof of stake, miners — and bots — have advance access to transaction information that allows them to exploit users, or front run transactions, because they can control transaction ordering.

Enter Yakovenko’s big idea, which he calls “proof of history,” wherein the Solana blockchain has developed a kind of synchronized clock that, in essence, assigns a timestamp for each transaction and disables the ability for miners and bots to decide the order of which transactions get recorded onto the blockchain. Yakovenko says it also allows for faster block finalization and much faster consensus because the timestamps of previous transactions no longer need to be computed.

“Basically, the speed of light is how fast we can make this network go.”

Certainly, Solana — which has sold tokens to investors but never equity in the company — has many excited about its prospects. In recent interviews with both investor Garry Tan of Initialized Capital and CEO Joe Lallouz of the blockchain infrastructure company Bison Trails, both mentioned Solana as among the projects they find most interesting right now. (We assume both hold its tokens.)

Others say on background that while they understand the developer benefits and need for more scaleable blockchains than Ethereum, Solana still needs to more developer mindshare to prove its long-term worth and it’s not there yet. According to Solana itself, there are currently 608 validators helping secure the Solana Network and 47 decentralized applications (or “dapps”) powered by Solana. Meawhile, they were reportedly 33,700 active validators helping to secure “Eth 2.0” as of late December and 3,000 dapps running on the Ethereum blockchain as of February.

In fairness, the Ethereum network went live in 2015, so it has a three-year head start on Solana. In the meantime, Solana has a lead of its own, says Yakovenko, who is based in San Francisco and has assembled a distributed team of 50 employees, including numerous former Qualcomm colleagues. Asked about other projects that have embraced a proof-of-history approach, he says that while it’s “all open source” and “anybody can go do it,” there “isn’t a set of our biggest competitors saying they’re going to rework their system and use this.”

One likely reason is that it’s almost comically complicated. “It just takes a lot of work to build these systems,” Yakovenko says. “It takes two to three years to build a new layer one, and you can’t really take an idea for one and stuff it in the other one. If you try to do that, you’re going to set yourself back by six to nine months at the least and potentially introduce bugs and vulnerabilities.”

Either way, Solana, which itself has a $12 billion market cap, isn’t interested in competing with Ethereum and other cryptocurrencies on every front anyway, suggests Yakovenko. All it really wants is to completely disrupt Wall Street and the rest of the global markets, even if he doesn’t put it that way exactly.

He knows it sounds crazy. But the way he sees it, what Solana is building is “an open, fair, censorship-resistant global marketplace” that’s better than anything inside of the New York Stock Exchange or any other means of settling trades. It’s certainly a much bigger opportunity than he imagined, backed at that cafe.

As he said yesterday: “Everything that we do to make this thing faster and faster results in this better censorship resistance, and therefore better markets. And price discovery is what I imagine is the killer use case for decentralized public networks. Can we be the world’s price discovery engine? That’s an interesting question to ask.”

He’s far from alone in pondering the possibilities. Pointing to the wild swings in cryptocurrency prices right now, he says he suspects that “part of that is just developers and folks discovering the network and building cool applications on it.” It’s exciting when people can “self serve and build stuff that they want to go to market,” he adds. “It’s the secret weapon of decentralized networks versus any incumbents like Bank of America or Visa or whatever. Those big companies can’t iterate and move as fast as global set of engineers who can just come together and code whenever they want to.”

He saw very similar dynamics play at Qualcomm, in fact. “Working in a big company, it seems like there’s a ton of resources, right? They can accomplish anything. But you saw us working on proprietary operating systems while the Linux guys were just working first for fun, right? And it seemed like it was just a weird hobby that people had; they were coding operating systems at night; they were coding over the weekend. Then all of a sudden, Linux is the de facto mobile iOS of Android.”

If you’re curious to learn more about Solana, we’ll have a podcast coming out soon with our longer conversation with Yakovenko. In the meantime, the outlet Decrypt today published an explainer titled “What is Solana?” that you might check out here.

Vitalik Buterin donates $1 billion worth of ‘meme coins’ to India COVID Relief Fund

Vitalik Buterin, the creator of Ethereum, on Wednesday donated Ethereum and “meme coins” worth $1.5 billion in one of the largest-ever individual philanthropy efforts.

Buterin transferred 500 ETH and over 50 trillion SHIB (Shiba Inu), a meme coin, worth around $1.14 billion at the time of transaction, to the India COVID-Crypto Relief Fund. The transaction sparked panic among some investors, contributing to over 35% drop in SHIB’s price in the past 24 hours.

The meme coin, which has courted retail investors in China and elsewhere following recent surges in the Dogecoin cryptocurrency, managed to garner billions (USD) worth of investment in recent days before today’s crash.

Buterin’s offloading of several dog-themed meme coins — which were sent to him without his consent in the first place — comes at a time when India is grappling with a surge in the coronavirus infections.

Sandeep Nailwal, who put together the Indian relief fund and co-founded crypto organization Polygon, said in a tweet that he won’t do anything that hurts “any community specially the retail community involved with SHIB.”

Buterin, who became the youngest crypto billionaire at the age of 27 earlier this month, also transferred Ethereum and Dogelon Mars (ELON) — another meme coin — worth $336 million to Methuselah Foundation, a nonprofit that supports efforts in tissue engineering and regenerative medicine therapies; and over 13,000 ETH to Givewell, a nonprofit organization that works to curate the best charities around the world. Buterin also donated to Gitcoin Community, MIRI and Charter Cities Institute.

India has been reporting over 350,000 daily infections and over 3,500 fatalities for the last two weeks. The second wave of the coronavirus has overwhelmed the South Asian nation’s healthcare system, leaving countless people to scramble for hospital beds, medical oxygen and other supplies.

A number of entrepreneurs including Balaji Srinivasan have donated to the India Crypto Relief Fund, which maintains a log of all the donations. Buterin himself had donated about $600,000 in ether and maker tokens to the fund last month.

Scores of startup founders, investors and technology giants have stepped up to help India navigate the pandemic in recent weeks.

CryptoPunks NFT bundle goes for $17 million in Christie’s auction

A lot of 9 CryptoPunks portraits ended up selling for just under $17 million in a Christie’s auction Tuesday evening, marking another substantial moment for NFT art sales. The lot of pixelated portraits were from the collection of the NFT platform’s co-creators Matt Hall and John Watkinson.

The CryptoPunks platform is one of the first NFT projects on the Ethereum blockchain. Back in 2017, ten thousand of the procedurally generated characters were given away for free. In the years since, a vibrant NFT community has developed around the ‘Punks. In recent months, on the back of a broader NFT boom, prices exploded.

Last month, TechCrunch profiled the community and some of its buyers who have paid tens and hundreds of thousands of dollars each to join the exclusive club of CryptoPunks owners.

Tuesday’s sale marks a substantial payday for the creators of the project, but comes just days after a much more substantial one: the release of their new project called Meebits which garnered nearly $80 million in sales in just a few hours.

The final Christie’s bid was for $14.5 million, $16.96 million after fees.

Many inside the crypto community had expected the sale to reach an even higher premium in recent weeks, something that had led to a substantial run-up in prices of CryptoPunks in the weeks ahead of the auction. Though the lot sold for a significantly higher dollar amount, when priced in denominations of the surging Ethereum cryptocurrency, the entire bundle sold for slightly less than the sale price of the last alien figure, which sold in March for 4,200 Eth (some $7.2M USD at the time).