How to buy Solana (SOL) – Forbes Advisor UK
Solana is a public, open-source blockchain that supports smart contracts, including non-fungible tokens (NFTs) and a range of decentralized applications (dApps). Solana’s native currency is called the SOL token.
When Solana was founded in 2017, Anatoly Yakovenko and Raj Gokal wanted to create a blockchain that could meet global demand with blockchain speeds limited to 15 transactions per second (TPS) at that time.
One of Solana’s differentiators is its high transaction processing speed, with a theoretical throughput of 65,000 TPS, compared to Bitcoin and Ethereum’s 5 and 10 TPS respectively (based on Binance estimates). Solana is also a low cost option compared to other cryptocurrencies such as Ethereum.
Solana’s investors include prominent cryptocurrency venture capital firms such as CoinShares, Coinfund, Alameda Research, and Parafi Capital.
Nearly 50% of Solana’s initial token allocation went to “insiders” such as employees and investors, according to cryptocurrency research provider Messari, raising question marks over Solana as a true decentralized cryptocurrency system.
SOL was priced at £29 at the time of writing, an 85% drop from its November 2021 peak of around £192.
The volatility in price movements has prompted UK regulators to warn investors about the risks of cryptocurrency trading. The Financial Conduct Authority said investing in crypto-assets “generally involves taking very high risks” and investors “must be prepared to lose all their money”.
If you’re still looking to buy Solana, having been made aware of the risks, here’s how to do it.
Remember that cryptocurrency trading is speculative and you can lose some or all of your money. Cryptocurrency trading is unregulated in the UK and you would have no recourse for compensation if something went wrong.
Choose an exchange
You will need to register with an exchange such as Coinbase or eToro in order to purchase cryptocurrencies. There are many exchanges to choose from, each with their own advantages and disadvantages.
The following factors should be kept in mind when deciding which exchange to choose:
- Payment methods: check if your exchange accepts your preferred payment method, as well as the fees charged. As an example, not all exchanges accept PayPal as a payment method, while a 3.99% fee is usually charged for debit or credit card payments. It is generally considered inadvisable to use a credit card, or any other credit facility, to purchase cryptocurrency.
- Wallets: check if you can use an in-app wallet to store your SOL. If you decide to store your Solana in a third-party wallet or offline storage device, you should check whether the exchange allows outgoing transfers and what fees are charged (if any).
- Currencies available: make sure the exchange is trading in SOL.
Choose a payment method
Paying by direct bank transfer is usually the most cost-effective way to buy cryptocurrencies, as fees are usually not charged for this.
Although you can pay by debit card, fees may apply and not all card providers allow the purchase of crypto. For example, Virgin Money, TSB, and Tesco Bank will block transactions with cryptocurrency exchanges. Although some providers may allow you to purchase crypto on your debit card, be aware of the transaction fees involved.
The following table shows the fees charged by other providers:
In the UK, PayPal is not widely accepted as a method of payment by cryptocurrency exchanges. However, eToro will allow PayPal deposits but charge a $5 fee on withdrawals to a PayPal account.
Place your order of Solana
After selecting an exchange and payment method, go to the Solana page on your exchange’s website or app and enter the amount you wish to invest.
Choose your storage method
You have the option of keeping Solana in your exchange’s built-in wallet, although you can keep it elsewhere as long as your exchange allows transfers.
You can store your Solana online in a “hot” wallet or offline in a “cold” wallet. Hot wallets are more susceptible to hacking because cold wallets, such as hard drives and USB drives, are not automatically connected to the Internet. You will have to pay to use a third-party hot wallet.
If you lose your login credentials for an active wallet, your exchange or wallet provider may be able to help you retrieve them to regain access to your cryptocurrency. If you lose your access codes to a cold wallet or misplace the reader itself, you have no recourse to recover it.