With the increasing popularity of cryptocurrencies, certain blockchain platforms have stood out from the crowd. Two of the most favored and sought-after cryptos are surely Bitcoin and Ethereum, but they’ve recently received a fierce opponent — Solana.
Solana launched in early 2020, but it still caused a lot of talk in the industry before that. The project didn’t take long to turn many investors’ heads in Michigan and worldwide. It ranks as one of the top 10 cryptos by market cap.
Keep reading to learn what makes Solana so special and whether and where to buy it in Michigan.
What Is Solana (SOL)?
Solana is an open-source, web-scale blockchain developed in Solana Labs and supported by Solana Foundation. It’s a platform used to build and run decentralized finance solutions (DeFi) and apps (DApps). Solana’s main aim is to achieve high scalability without sacrificing security or decentralization.
The reason why Solana can hit these targets is its design and features. Solana uses a unique combination of two consensus mechanisms to process transactions — PoS and PoH. This hybrid structure gives Solana the power to handle over 50,000 transactions per second at an incredibly low price.
The concept for this consensus mechanisms combo came from Anatoly Yakovenko in 2017. Yakovenko is a software engineer who worked at both Qualcomm and Dropbox and has experience with compression algorithms. He partnered with Eric Williams, Greg Fitzgerald, and a few others to build a project that would work similarly to Ethereum but top its performance.
Solana is an ecosystem made up of many components. However, proof of history represents the core of how this blockchain platform functions. So, let’s look into what PoH really is and how it works to benefit Solana.
As you may know, all blockchains use consensus mechanisms to operate. These mechanisms are systems in which all computers in the network come to a consensus on different facts. For instance, Bitcoin leverages proof of work, which uses miners to validate transactions, and Cardano uses proof-of-stake, which chooses validators to verify transactions.
These consensus mechanisms have their advantages, but none proved good enough to solve the major problem blockchain developers have today. They didn’t allow blockchains to be decentralized, secure, and scalable. So, Solana creators came up with a new consensus mechanism called proof of history.
Proof of history records the time and order where specific events occur on the network. It does that by assigning all these events a verifiable hash and count.
This system completely eliminates the need for nodes to communicate with one another when producing new blocks. This way, all nodes in the system can keep track of the network’s time and work in unison. As a result, Solana enjoys high throughput and better overall efficiency.
Solana’s token is known as SOL. It’s both a utility token and a means of transferring value. It has three main uses:
- Investing — Anyone interested in Solana can buy, trade, and sell SOL just like all other popular cryptocurrencies. There are currently around 341 million SOL in circulation, and the coin doesn’t have an established maximum supply. SOL’s current price is $39.20.
- Staking — The Solana network uses the proof of stake consensus mechanism to choose validators to secure the network. Not everyone can become a validator. The role requires having a high level of technical knowledge in the field. Validators secure the network by staking or locking up their SOL in return for rewards. The rewards can be SOL coins or reduced fees.
- Paying fees — Like any network, Solana has to charge fees to run smart contracts or support transactions. So, the network charges these fees to its users. Nevertheless, these fees are quite small for the industry standards. The average fee Solana imposes per transaction is around $0.00025.
Michigan Crypto Laws
Michigan money transmission laws do not mention virtual currencies, so the state’s attitude toward them remained unclear for a long time. Nevertheless, the Michigan government and the Department of Insurance and Financial Service recently updated their official websites to include some crypto-related information.
The MI government’s site features documents that state all virtual currency administrators and exchangers are money transmitters. DIFS’ FAQ section states that holding funds in your e-wallet falls under the category of money transmission.
The MI Money Transmission Act defines money transmission as a process that requires a license. All popular digital currency exchange businesses that operate in Michigan hold valid MI money transmitter licenses.
Where Can I Buy Solana in Michigan?
Individuals interested in buying Solana in Michigan can do so in two ways:
- Using crypto exchange platforms
- From an SOL holder willing to sell the coins
These methods differ in many respects. We’ll discuss both of them in the following paragraphs so you can choose the best option for you. Keep reading.
Crypto Exchange Platforms
Crypto exchanges are the most common method by which crypto users obtain coins. They are digital marketplaces allowing members to buy, sell, and trade various cryptos.
We can categorize all crypto exchanges into two big groups — centralized and decentralized platforms. Centralized exchanges function similarly to traditional financial institutions. A single authority controls all its operations, from securing sensitive data to executing transactions. They are also licensed and regulated, allowing their members to trade fiat currencies for cryptos and vice versa.
Decentralized exchanges don’t rely on a centralized authority to function. Instead, they facilitate peer-to-peer transactions and let users share ownership over the marketplace. They don’t require permits from regulatory bodies and only allow their users to exchange one cryptocurrency for another.
Due to user-friendliness, security, and exchange versatility, we suggest you buy SOL through a centralized crypto exchange.
How to Choose a Centralized Crypto Exchange?
There’s no perfect recipe for the process of finding the perfect crypto exchange. However, the platform you choose must tick a couple of boxes. To help you on this quest, we’ve compiled a list of key features you should check before joining your first centralized exchange. Have a look below:
- Availability and licensing — The first thing you should do when choosing an exchange is to look into its credentials. The platform you’re joining should be available in Michigan and licensed by this state.
- Reputation —An exchange’s reputation reflects how trustworthy and reliable it is. Learn as much as you can about every platform by reading its current and past users’ reviews and comments about them.
- Supported cryptos — All reputable crypto exchanges work with numerous different tokens. Make sure you’re picking a platform that will allow you to trade both SOL and other popular cryptos.
- Security — Centralized exchanges are known as a safer version of these platforms. Nevertheless, checking what security protocols an exchange is implementing before you join it doesn’t hurt. In this way, you’ll know how safe your data and funds will be.
- User-friendliness — Centralized exchanges are typically easy to use. However, their interfaces do differ. We suggest you visit all platforms you’re interested in to find out which one boasts the interface that suits you the most.
- Liquidity — Liquidity levels are one of the most important features of crypto exchanges. Platforms with high liquidity are stable markets with many participants and faster transactions. So, make sure you check what SOL trading volumes your exchange offers.
- Payment methods — Quality exchanges support enough different payment methods to suit different users’ needs. So, don’t forget to check whether the platform you’d like to join works with your favorite payment solution beforehand.
- Fees — All crypto exchanges make a profit by charging fees. Nevertheless, some platforms might have fees that fit your budget better than others. Make sure you read about the expenses you’d have to bear before you choose your platform.
If using a crypto exchange isn’t your cup of tea, buying directly is always an option. This method implies you’ve found an individual willing to sell their coins to you. Naturally, it has its good and bad sides.
Buying directly might allow you to negotiate the price of the coins and forego paying fees that exchange platforms impose. However, you should know that buying directly is not the safest method of obtaining SOL.
The crypto community is no stranger to scams, so you should be extra careful if you plan to do this. Make sure you meet your seller in a public place and bring a mediator with you.
Buying SOL Through Crypto Exchanges — Step-by-Step Tutorial
MI residents who’ve decided to buy SOL on a crypto exchange might wonder what this process entails. We’ve prepared a step-by-step tutorial to help you understand the procedure better. Read through the list below:
- Research crypto wallets available in Michigan and pick a reputable one.
- Create an account where you can store your SOL once you buy them.
- Go through the relevant crypto exchange aspects we’ve outlined earlier and decide on a platform you’d like to join.
- Set up an account by filling in the registration form and verifying your identity.
- Look through the list of available payment methods, choose one, and make a deposit.
- Pick the right crypto/fiat currency pairing, enter the number of coins you want to buy, and confirm your transaction.
- Trade, stake, or send your SOL to your crypto wallet.
Solana is one of the stronger competitors Ethereum and Bitcoin have gotten recently. Its innovative architecture, efficiency, and great potential have made it very popular with investors. If you’d like to invest in Solana, you can now do so in Michigan. Simply choose a crypto exchange, follow our step-by-step guide, and make your first SOL purchase hassle-free.