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What is Solana?

A high-level overview of what Solana is and the basics.

What is Solana?

Welcome! We’re pumped to have you here and look forward to help you learn more about solana, especially if you’re starting from scratch. Also, on this guide you will find many more key terms, topics or definitions linked out, so feel free to explore those as well at your own pace.

These are the topics what will be explored on this high-level guide:

  • What is Solana? Understanding the basics of Solana
  • Solana Vs. SOL 
  • How to purchase SOL?
  • What is a Solana wallet and why do you need one? 
  • Wallets Vs. Exchanges
  • Types of wallets 
  • Transactions and signatures
  • Bridging
  • What are dApps?
  • Solana DeFi
  • Solana NFTs

So, let's get started!

What is Solana?

Understanding the basics of Solana

Solana is a Blockchain. A Blockchain is a distributed network; Think of this network as a group of participants that have a similar level of power among them. Being a distributed network means that the information and actions of said participants is not centralized or concentrated in a single person/authority/custodian. Multiple activities can take place on a Blockchain, depending on if it’s a public or a private one. Solana is a public blockchain and known to be:

  • Fast (see current TPS, Transactions per second, live here), and;
  • Cheap, with the current average cost per transaction to be $0.00025.

In simpler terms, imagine Solana as a Public city square where people gather to carry out day-to-day activities: place and exchange goods or services, and interact with other peers in a direct way with no middlemen involved. These activities take place through a shared, native currency (referred to as SOL, that we’ll learn more about further in this guide) available to all who wish to partake in these activities.

If you’re already familiar with what Solana is, you can jump directly into the Step by Step guide on getting started in Solana clicking here.

Solana Vs. SOL

One important differentiation that needs to be made before moving on further along, is that Solana (the blockchain/network) is different to SOL, the currency that exists within said network to pay for transactions. Just like in real life we require money to acquire and access goods or services, this is also required in the blockchain, so some SOL is needed to participate in the purchase or exchange of assets except to receive them. It’s important to note that SOL is not the only Cryptocurrency available on the Solana blockchain.

Find more Basic Solana Concepts on this guide.

How and where to purchase/obtain SOL

Fiat currency is the kind of money (whether actual, physical notes and coins, or digital as stored in bank accounts and other financial products) that rules today’s world. These are often issued by a Central Bank, that is, a monetary authority of a country or territory.

Just like in the physical, tangible world, the catch-all term for money in the Blockchain is Cryptocurrency. The prefix Crypto refers to Cryptography, which are mathematical methods to encrypt (protect, encode) information as to be seen only to the intended parties.

Turning fiat currency intro cryptocurrency, or viceversa, is denominated as on-ramping and off-ramping, respectively.

Online on-ramping

The process to exchange Fiat currency for Crypto currency is called On-ramp. Many providers currently offer this service, and depending on many factors (e.g.: your geographic region, your legal eligibility, your current financial providers), you may be able to exchange your Fiat currency for crypto online by visiting some of the providers websites and following their steps (e.g.: Moonpay, Coinbase, etc).

OTC on-ramping

In some countries, like Turkey, there are physical stores/specialized places that accept cash and that can support you with this exchange process, and will in turn give you the keys to access your purchased cryptocurrency.

What is a Solana Wallet, and why do you need one?

In Blockchain and Web3 in general, the term Wallet refers to a digital or physical device that stores private information and that allows users to store, access and trade with digital assets (such as SOL). Wallets are “containers” that provide a safe place for you to store your SOL and other digital assets, through cryptography (a series of mathematical methods to protect, in the form of encrypting, information so it’s only accessible or visible by the intended, authorized parties). Through cryptography, a random and unique seed phrase or private key are generated, and this serves as your unique login information. We use and recommend self-custodial wallets since these are the only ones that guarantee that you, and only you have access to your assets.

We’ll learn the general difference between private keys and public keys right here:

  • Seed phrase: 12 or 24 series of words that serve as the “login” information of your wallet. WARNING: Don’t ever share these with anybody, and store them offline/in physical paper, since screenshots are not safe. These cannot be modified since they’re uniquely generated and, hence, cannot be recovered otherwise.

  • Keys:

    • Private keys: encrypted representation of your seed phrase. Consist in a long non-human readable string of 44 letters and numbers.

    • Public keys/public wallet address: this is the shareable, public version of your private keys where funds can be sent to your wallet and you are able to receive other assets. 

Note: Domain names, which are human-readable words/terms are also available and will be discussed later on.

WARNING: If anyone has access to your seed phrase or private keys, they will gain access to your wallet and assets stored therein. While self-custody is the safer way to partake in Solana, we suggest that you be very mindful of safe offline storing practices. Please remember, not your keys, not your crypto! 

Types of wallets

There are two types of wallets:

  • Hot wallets: These are the wallets, more often found in the form of mobile Apps (available on the Apple App Store and the Google Play Store, for instance) that are connected and live on the internet. 

  • Cold wallets: These are also known as hardware wallets and they store your assets in a physical device with high security measures (e.g.: fingerprint reader) that generates a seed-phrase for you to have access to your assets in addition to the physical security measures in place to restrict access to it.

Generally speaking, cold wallets are considered to be safer, since they’re not connected or live on the internet so they are less likely to suffer sudden attacks.

Learn more about the Top Solana Wallets on Top Solana Wallets guide.

The in-app web browser that is often found in wallets is the easiest and fastest way to participate in the various activities that can take place across Solana. We’ll explore the following general concepts before moving on with the detailed guide on how to set up your wallet.

Transactions and signing transactions

Transacting (whether in the form of purchasing an NFT, transferring some SOL or USDC (another cryptocurrency available on the Solana Blockchain)  to a friend’s wallet or sending someone an NFT) requires the user’s approval; This is called “to sign a transaction” and it’s called like that because a (cryptographic) signature is issued as a unique identifier of the modification that took place in the blockchain (purchase, sale, exchange of SOL or other assets, etc). The signature, in short, means that you approved said transaction consciously.

Wallets vs. Exchanges

Wallets are often confused with exchanges. These two differ in that wallets are often self-custodial, meaning that you and only you have access to it, whereas exchanges are often handled by a third or multiple parties that have full custody, access and control over your funds. 

What is Bridging? Bridging to Solana

If you’re already familiar with blockchains like Ethereum, you may be aware of the term bridging. This refers to porting over tokens or assets from Blockchain 1 (origin) to Blockchain 2 (destination). Because the Networks that we talked about at the very beginning are different technically speaking.

Check out how to Bridge to Solana using Wormhole + Mayan Finance in our step-to-step guide 

dApps

Just like we use Apps on our phones or tablets, or programs in our computers, there are Apps that work specifically (but not exclusively) on Solana. In Web3, these are called dApp, short for decentralized application. These will span many fields (gaming, DeFi, NFTs, social, IM, trading) and much more. Depending on your preferences, these are a fun way to get started exploring in Solana. 

Note: Many of these require an active connection to your wallet (which, in turn acts as your unique credential when connected) 

Some of the beginner-friendly dApps in Solana are: Sollinked, DRiP Haus, Step.

DeFi

DeFi is short for Decentralized Finance, and refers to the financial exchange of assets that takes place freely among and between individuals, as opposed to traditional finance (often referred to TradFi) where only certain vetted actors (e.g. Banks, Financial Institutions) are “allowed” to operate within the rules they set for themselves and their consumers.

DeFi is a very wide and rapidly-growing field. In order to participate in DeFi, the following is required:

  1. A Solana-compatible wallet;

  2. Some SOL to pay for the transactions;

  3. Some SOL or tokens on the Solana network;

DeFi platforms such as the Analytics one offered by Step.finance allows you to explore toop trending tokens/coins.

Some of the activities that can take place when participating in DeFi are:

  • Staking;

  • Swapping;

  • Lending;

  • Borrowing;

  • Providing liquidity.

Depending on the activity you want to partake in, now you should connect to a DeFi Platform via the in-app browser of your wallet, or the wallet extension on your computer browser.

NFTs

NFT is the acronym for non-fungible token. What non-fungible means is that it is not divisible. They are unique digital assets that represent ownership of a specific item or piece of content, according to the Solana 

Solana Gaming

One of the most exciting activities on Solana is to participate in games. In Web3 and blockchain, these often come in the form of “play to earn” in which the participant (the gamer) gets rewarded with tokens, power-ups and other rewards for their time interacting with the app.