How to Buy Solana (SOL)

How to Buy Solana 

Do you want to buy Solana? Here is everything you need to know!

What Is Solana?

The Solana blockchain was launched in 2020 as an alternative to Ethereum. The blockchain supports NFTs, dApps, and smart contracts like Ethereum but uses a method known as Proof-of-History to be faster and more scalable.

As you may know, Ethereum started with a Proof of Work (PoW) consensus mechanism and later switched to Proof of Stake (PoS) to decrease its energy consumption. However, both PoW and PoS require significant computing power to operate. In contrast, Solana’s Proof of History (PoH) method combined with the PoS consensus mechanism is more energy efficient and considerably faster.

How does PoH help Solana? Ethereum can only process 15 to 40 transactions per second, depending on the implemented layer two solutions. In contrast, Solana can process up to 50,000 transactions per second, making the blockchain much more scalable than its competitor.

Furthermore, a lack of scalability often means higher transaction costs, which is reflected in Ethereum’s gas prices. Solana transactions, on the other hand, cost very little compared to Ethereum transactions.

However, while Solana’s incredible scalability put it ahead of Ethereum in terms of future usability for a while, the blockchain suffered a lot of outages and hacks that caused the public to question its long-term usefulness.

Network outages are not unheard of for most blockchains, but Solana had frequent and long-lasting outages that pushed its value down considerably. The network was down for 17 hours on September 14, 2021, followed by another outage that lasted seven hours on the first of May and again on the 31st of May for about four hours.

In 2021 and 2022, the network experienced 8 total outages, raising questions about Solana’s stability. In 2023, the blockchain recorded only one outage that lasted about 19 hours. 

But power outages aren’t the only issue plaguing Solana. The blockchain has been targeted by hackers several times since its inception. In August 2022, over 9,000 Solana wallets were drained by hackers, who stole around 8 million USD worth of cryptocurrency.

As of 2023, the value of SOL, Solana’s native cryptocurrency, seems to be going up, but whether the asset will recover its 2021 prices remains to be seen. The SEC has recently designated SOL as an unregistered security in a lawsuit against Coinbase and Binance, which may also impact the asset price in the long term.

Where Can I Buy Solana?

If you want to invest in Solana, all you have to do is purchase its native cryptocurrency SOL on a cryptocurrency exchange. 

As of August 2023, there are roughly 10 billion SOL tokens in the market, which makes SOL the 9th largest digital asset in the cryptocurrency market per market cap.

Overall, that means SOL is a very accessible asset on almost any cryptocurrency exchange. Solana is also available from third-party payment providers like MoonPay or Banxa.

Unfortunately, there are a couple of exceptions: Bitstamp and the finance app Robinhood delisted Solana, along with ADA and MATIC, following the SEC lawsuit against Binance and Coinbase, in which the tokens were named as unregistered securities.

However, you can still buy SOL on many exchanges. In fact, you can buy it on too many exchanges, including a couple that are known as predatory and should be avoided. We suggest looking at our guide to the most popular exchanges in the market to help you decide where to buy digital assets like Solana.

When deciding on a crypto exchange, it’s important to do your own research and figure out the exchange’s fee schedule and its reputation among crypto traders. Many exchanges have poor customer service and should not be trusted with your personal information.

This can be a daunting ask but don’t worry! We have a couple of suggestions that will help you.

How to Buy Solana

So then, how to buy Solana? Well, first, decide on the exchange. Then, decide on a storage method. Finally, purchase through the exchange platform. 

Let’s break each step down.

Where to Buy Solana?

First, you must understand that no cryptocurrency exchange is perfect. Most exchanges suck in one way or another. They often trade against their customers, fluff their trades to fatten their order books and trading volume, freeze crypto wallets for long periods during bull or bear runs, increase their withdrawal limits to prevent users from withdrawing their assets, and most are in hot water with law enforcement and authorities over some issue, including charges of breaking sanctions, money laundering, or fraud. 

Of course, these are mostly “the good ones.” The bad ones straight up steal your assets and your money, and you are in luck if your information doesn’t end up on some hacker forum on the dark web.

Welcome to the world of crypto! Isn’t it fun?

It sounds a bit dire, but it’s better to be prepared than naive, especially regarding crypto. Crypto trading is a cut-throat business that evolved over the years with little to no oversight from authorities, and therefore, despite its marketing, it’s quite risky.

Knowledgeable traders try to minimize the risks by implementing security measures, including choosing a reputable exchange and storing their assets in secure wallets. 

But picking a reputable exchange can be quite hard as well. Consider the fact that until its tragic demise, FTX was generally regarded as the best cryptocurrency exchange in the market. The platform seemed to have it all: institutional backing, regulatory checks, regular audits, excellent credit, and all the other nice things that ultimately turned out to be hiding a huge financial mess.

With that in mind, you should know that we can’t guarantee safety. No one can know which exchange is 100% secure. But we can help you minimize the risks.

For example, Coinbase is a veteran exchange and a public company. While the exchange is under pressure from US authorities due to its crypto offerings, it’s also considered one of the most transparent and trustworthy businesses in the market. Coinbase is also vested in protecting its reputation since it’s a publicly traded company, so we can expect fewer scandals than we’re used to in the crypto market.

Kraken also has a pretty good reputation, as the exchange has never been hacked. It’s rare for an exchange to be able to make this claim. Kraken’s biggest rivals, including Binance and Coinbase, have been hacked several times, although they managed to compensate their customers for their losses. Kraken management, on the other hand, relies on complete paranoia to prevent any hacking attempts, as documented by journalists and ex-employees whose children had to sign NDAs to participate in office parties. To be fair, their strategy seems to be working. And is it paranoia if hackers are after your coins?

Now the list wouldn’t be complete if we didn’t mention Binance. However, we don’t suggest you use Binance US, as this platform has recently swung from “authorities suspect serious fraud” to “authorities are out for blood due to serious fraud.” Binance’s US arm may be on its last legs, so there’s no need to get into that mess. You can quickly sign up, buy SOL, and move your assets to another wallet if you are very set on it, but we don’t recommend it for long-term use.

If you are not in the US, you can still use Binance to buy SOL. While it’s undoubtedly shady, it’s still the world’s largest crypto market and will probably remain that way for a while. 

Once you purchase your first digital asset, you can trade your crypto on decentralized exchanges like Sushiswap or Uniswap. Decentralized exchanges are secure, low-fee alternatives to the centralized exchanges we suggest above. Unfortunately, they don’t allow fiat to crypto transactions, so you can’t buy SOL on these right away, but you can trade other assets for SOL.

How to Buy Solana

Buying Solana, or any other major crypto asset, is incredibly easy once you decide on an exchange. Most platforms have an easy buy feature that lets you purchase your desired assets in just a few minutes.

However, most platforms require you to pass a KYC check, especially if you’re based in the US. That means you may have to upload an official photo ID to the platform. But once you do that, you can simply click the “Buy Crypto” button in your dashboard to get to the easy buy feature

Binance, for example, has a nifty three-step purchase form. You enter the amount you would like to pay, select your asset, and add a payment method. Voila! You can instantly buy SOL or other assets.

Most platforms offer several payment options, including credit and debit cards. If you don’t want to entrust your card information to the platform, you can make a cash deposit via your bank account. Most people also find it easy to use third-party payment channels like Banxa, Simplex, or Moonpay.

The easy buy feature is the most convenient way to buy digital assets, but there are a few negatives: Usually, easy buy costs around a 1% processing fee, plus any processing fees. Credit and debit card purchases may include a 5% processing fee.

Still, for most beginners, this is the best option. However, you can also dive into the deep end of the pool and buy SOL via the spot market.

The spot market is where crypto trading takes place. Big exchanges usually have fiat markets that allow you to exchange between national currencies and digital assets like SOL. The fees are much cheaper on the spot market.

However, spot markets have uniformly intimidating interfaces no matter which exchange you prefer. Expect complicated charts, several panels, and many indicators unhelpful to the untrained eye. 

But no need to be intimidated. You can quickly figure out how to place a market order quite easily after watching a couple of videos or perusing the help section.

If you want to try your hand at the spot market, click the “Trade” or “Buy Crypto” tab on your dashboard and select “Spot Market.”

You can’t make a SOL purchase on the spot market with a credit card, so make sure you deposit cash to the platform beforehand. Once that’s done, you are ready to buy SOL cheap on your exchange.

How to Store Solana

We’re almost at the end! Now all you have to do is to pick a wallet to store your SOL, and you are good to go.

Of course, you can always leave your SOL deposited in the exchange wallet after your purchase. But we recommend against using exchange wallets for larger purchases. Why? As we discussed earlier, most exchanges are not to be trusted with your cryptocurrency.

You can trust certain exchanges enough to give them your credit card information (and your personal information, considering most necessitate a KYC check), but leaving your money and assets on exchange is an entirely different matter.

Basically, the exchange can go bankrupt, be hacked, or be closed down by the authorities, and you may have to say bye to your assets forever.

There are, of course, some benefits to using an exchange wallet, and we’ll explain them in the next section. But be aware that this should be a calculated risk, not a decision made out of impulsivity.

What other options do you have? Let’s check them out.

Custodial Exchange Wallets

Alright, so let’s start with the advantages of an exchange wallet.

There are actually quite a few benefits to exchange wallets. First, it’s effortless. You don’t have to work on managing a wallet by yourself, and all you need is to remember your password. 

Secondly, exchange wallets are super practical. All your assets are on one platform, and you can seamlessly trade multiple assets in the spot market without taking time to move an asset in and out of the wallet.

If you are a frequent trader, it might get exhausting (and expensive) to constantly move around your crypto between the exchange and your wallet.

Thirdly, exchanges offer you money to store your crypto on their platforms. Well, not exactly. But exchanges usually operate staking schemes, where you can lock up your crypto for a while in return for passive income. You can, for example, stake your SOL on an exchange and earn more SOL tokens in return.

However, staking can be troublesome as well. Most exchanges don’t operate their staking businesses. It’s usually hidden in the fine print, but they pass it off to other companies that loan your assets to other companies for profit. If everything works out, you get your tokens plus the interest, but if something goes wrong…it can cause a 900 million USD loss for the users, as it happened with Gemini Earn.

Basically, when you leave assets in a centralized cryptocurrency exchange wallet, you leave your assets at the mercy of people and institutions you don’t know and can’t control. If something goes wrong (and crypto history has repeatedly shown us that if it can go wrong, it will go wrong), you can’t protect your assets or withdraw them after the fact.

Of course, you can use an exchange wallet to store small amounts of crypto, but it’s a pretty big risk to take with bigger sums.

Software SOL Wallets

Next, we have software wallets. These are non-custodial software platforms you can install on your computer or mobile devices to manage your crypto assets. Once you install them, you can use your device to manage your crypto and make transactions.

Software wallets seem like an excellent alternative to exchange wallets because, at least, you are in charge of your assets. However, that power over your assets is a double-edged sword. Because with great power to manage your currencies comes the responsibility of actually keeping them safe.

The problem with software wallets is that they are, by definition, “hot wallets,” i.e., they’re hosted on devices connected to the internet like your computer or phone.

On one hand, that’s great because you need the internet to connect to the blockchain and make transactions. On the other hand, it is pretty risky because hackers, viruses, and crypto stealers can also access your wallet through the internet, which is a common problem. 

A software wallet is only as safe as the device it’s stored on, and an internet-connected device is never completely secure. Of course, if you are a security expert, you may have a chance, but even most professional crypto enthusiasts have not been safe from hackers, so we advise you to proceed with caution.

If you want to try using a software wallet to store your SOL, you have a couple of options. 

Solflare is a Solana-only wallet that supports SOL and other Solana-based tokens. It’s available on several platforms (mobile and online) and supports hardware wallets like Ledger. It can be a good option if you are looking to invest in Solana-based tokens.

If you are looking for something a bit more flexible, you can also consider Atomic Wallet, which supports over 300 cryptocurrencies from different blockchains. The atomic wallet also offers several staking opportunities with high interest rates. Unfortunately, it doesn’t support hardware wallets.

Finally, you can also check out Exodus, a non-custodial wallet with hardware integration, support for over 290 cryptocurrencies, and an incorporated exchange.

SOL Hard Wallets

So if exchange wallets are unsafe because you don’t have any control over the assets, and software wallets are risky because of internet access, how do you keep your assets safe?

Well, it has been argued that the very best way to keep your crypto safe is to store it in a cold wallet: away from internet access. 

First, cold wallets were actually simply pieces of paper with wallet keys written on them to ensure asset security.

But, as you can imagine using paper wallets is kind of inconvenient. Paper is quite flimsy, and it can be stolen, destroyed, wet, or burnt. You can keep it in a safety deposit box for security, but it’s a pain to go to the bank every time you want to make a trade.

Well, not to worry, as technology made hardware wallets possible. Hardware wallets are basically hard drives with wallet software on them, and they are technically cold wallets as these devices aren’t accessible via the Internet.

Even if your computer is compromised, these devices are safe from hackers. They can also be protected from theft via PINs and other methods.

Most hardware wallets can be used in tandem with software wallets to manage your assets easily. Some, like Trezor and Ledger wallets, even have built-in exchanges to trade crypto without moving your assets to an exchange.

So why doesn’t everyone use hardware wallets? Well, they are somewhat expensive, which is really the only downside. A basic model may cost around 70-100 USD, and more advanced models usually cost around 250 USD.

So, it doesn’t make sense to buy a hardware wallet if you plan to buy a little crypto to test the waters. Serious investors, on the other hand, will probably benefit from a hardware wallet.