Some crypto companies are fully compliant, fully regulated, and still can't keep their bank accounts. Learn why the financial system is quietly freezing them out.
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Why can't a fully compliant, regulated crypto business secure a bank account in 2025?
If you're operating in this space, you already know the answer. You've lived through it. You've submitted the documentation, walked through your AML procedures, and demonstrated your regulatory compliance… only to be rejected. Or worse still, waking up to find your existing account frozen, with no real explanation and no path forward.
This isn't about isolated cases or bad actors being weeded out. It's a pattern of systematic risk aversion that's creating real barriers to growth across the entire sector, and it's throttling one of the most significant financial innovations of our generation.
We're Tap, and we're building the infrastructure that traditional banks refuse to provide.
The Economics Behind the Blockade
Let's examine what's actually driving this exclusion, because it's rarely about the reasons banks cite publicly.
The European Banking Authority has explicitly warned against unwarranted de-risking, noting it causes "severe consequences" and financial exclusion of legitimate customers. Yet the practice continues, driven by two fundamental economic pressures that have nothing to do with your business's actual risk profile.
The compliance cost calculation
Financial crime compliance across EMEA costs organizations approximately $85 billion annually. For traditional banks, the math is simple: serving crypto businesses requires specialized expertise, enhanced monitoring, and ongoing due diligence. As a result, it's cheaper to reject the entire sector than to build the infrastructure needed to serve it properly.
The regulatory capital burden
New EU regulations impose a 1,250% risk weight on unbacked crypto assets such as Bitcoin and Ethereum. This isn't a compliance requirement; it's a capital penalty that makes crypto exposure commercially unviable for traditional institutions, regardless of the actual risk individual clients present.
In the UK, approximately 90% of crypto firm registration applications have been rejected or withdrawn, often citing inadequate AML controls. Whether those assessments are accurate or not, they've created the perfect justification for blanket rejection policies.
The result? Compliant businesses are being treated the same as bad actors; not because of what they've done, but because of the sector they're in.
The Real Cost of Financial Exclusion
Financial exclusion isn’t just an hiccup; it creates tangible operational barriers that ripple through every part of running a crypto business.
Firms that have secured MiCA authorization, built robust compliance programs, and met regulatory requirements can find themselves locked out of basic banking services. Essential fiat on-ramps and off-ramps remain inaccessible, slowing payments, limiting growth, and complicating cash flow management.
Individual cases illustrate the problem vividly as well. Accounts are closed because a business receives a payment from a regulated exchange. Others are dropped with vague references to “commercial decisions,” offering no substantive justification. Founders frequently struggle to separate personal and business finances, as both are considered too risky to serve.
The irony is striking. By refusing service to compliant businesses, traditional banks aren’t mitigating risk; they’re amplifying it. Forced to operate through less regulated channels, these legitimate firms face higher operational and compliance risks, slower transactions, and reduced investor confidence. Over time, this slows innovation, and raises the cost of doing business for firms that are legally and technically sound.
Debanking Beyond Europe: U.S. Crypto Firms Face Their Own Challenges
Limited access to banking services isn’t exclusive to Europe. Leading firms in the U.S. crypto industry have faced numerous challenges regarding the banking blockade. Alex Konanykhin, CEO of Unicoin, described repeated account closures by major banks such as Citi, JPMorgan, and Wells Fargo, noting that access was cut off without explanation. Unicoin’s experience echoes a broader sentiment among crypto executives who argue that traditional financial institutions remain wary of digital asset businesses despite recent policy shifts toward a more pro-innovation stance.
Jesse Powell, co-founder of Kraken, has also spoken out about being dropped by long-time banking partners, calling the practice “financial censorship in disguise.” Caitlin Long, founder of Custodia Bank, recounted how her institution was repeatedly denied services. Gemini founders Tyler Winklevoss and Cameron Winklevoss shared similar frustrations.
These experiences reveal a pattern many in the industry interpret as systemic risk aversion. Even in a market as large and mature as the United States, crypto-focused businesses continue to encounter obstacles in maintaining basic financial infrastructure. The issue became especially acute after the collapse of crypto-friendly banks such as Silvergate, Signature, and Moonstone; institutions that once served as key bridges between fiat and digital assets. Their exit left a gap few traditional players have been willing to fill.
Why Tap Exists
The crypto industry has reached an inflection point. Regulatory frameworks like MiCA are providing clarity. Institutional adoption is accelerating. The technology is proven and tested. But the fundamental infrastructure gap remains: access to business banking that actually works for digital asset businesses.
This is precisely why we built Tap for Business.
We provide business accounts with dedicated EUR and GBP IBANs specifically designed for crypto companies and businesses that interact with digital assets. This isn't a side offering or an experiment, it's our core focus.
Our approach is straightforward
We built our infrastructure for this sector
Rather than retrofitting traditional banking systems to reluctantly accommodate crypto businesses, we designed our compliance, monitoring, and operational frameworks specifically for digital asset flows. This means we can properly assess and serve businesses that others automatically reject.
We price in the actual risk, not the sector
Blanket rejection policies exist because they're cheap and simple. We take a different approach: evaluating each business based on their actual controls, compliance posture, and operational reality. It costs more, but it's the only way to serve this market properly.
We're committed to sector normalization
Every time a legitimate crypto business is forced to operate without proper banking infrastructure, it reinforces outdated stigmas. By providing professional financial services to compliant businesses, we're helping demonstrate what should be obvious: crypto companies can and should be served by the financial system.
It isn't about taking on risks that others won't. It's about properly evaluating risks that others refuse to understand.
Moving Forward
The industry is maturing. Regulatory clarity is emerging. Institutional adoption is accelerating. But you can't put your business on hold while traditional banks slowly catch up to reality.
That's not sustainable in the long run.
As a firm, you shouldn't have to beg for a bank account. You shouldn't have to downplay your crypto operations just to access basic financial services. And you certainly shouldn't have to accept that systematic exclusion with little to no explanation other than “It’s just how things are."
The crypto sector is building the future of finance. Your banking partner should believe in that future too. If you're ready to work with financial infrastructure built for your business, not in spite of it, here we are.
Talk today with one of our experts to understand how we can help your business access the banking infrastructure you need.
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Tether (USDT) consistently ranks among the top cryptocurrencies by market cap and regularly posts the highest daily trading volume in the entire crypto market. It's become an essential tool for traders worldwide.
While critics point to crypto's volatility as a weakness, stablecoins like Tether offer a different value proposition: the speed and accessibility of digital currency with the stability of the US dollar.
What Is Tether (USDT)?
Tether (USDT) is a widely used stablecoin, a type of cryptocurrency designed to maintain a fixed value by being pegged to a fiat currency, in this case the United States dollar. Unlike Bitcoin, whose price fluctuates based on supply and market demand, USDT is meant to stay close to $1 USD, providing stability in otherwise volatile markets.
Originally launched in 2014 under the name Realcoin, Tether was rebranded and built to act as a bridge between fiat money and digital assets. It enables traders, exchanges, and users to move value quickly, reliably, and with less exposure to cryptocurrency volatility.
Because of its stability and liquidity, USDT is often used as a “parking spot” in crypto trading, when the market is unstable, investors might convert volatile tokens into USDT to preserve value without leaving the crypto ecosystem entirely.
As of 2025, Tether is consistently ranked among the top 3 cryptocurrencies by market capitalization, and its daily trading volume often surpasses that of other major tokens.
In this article, we’ll dig into how USDT works, why people use it, the risks and controversies, and how to buy and use it responsibly.
Who Created Tether?
As mentioned above Tether was initially called Realcoin when it was launched in 2014 and was created by Bitcoin investor Brock Pierce, entrepreneur Reeve Collins and software developer, Craig Sellars. It later changed its name to USTether, eventually settling on USDT.
All three co-founders have profound experience within the crypto industry, each co-founding and actively involved in several cryptocurrency and blockchain projects.
The business has also created a number of other stablecoins solving the volatility problem across numerous markets, notably a Euro-pegged Tether coin (EURT), a Chinese Yuan-pegged Tether coin (CNHT), and a gold-pegged Tether coin (XAUT).
How Does USDT Work?
Reserve Backing & Peg Mechanism
To maintain its peg (i.e. USDT = 1 USD), Tether claims each USDT in circulation is backed by reserves. These reserves include cash, cash equivalents, repos, commercial paper, U.S. Treasury bills, and other short-term assets.
In recent attestations, Tether reports that about 81.5% of its reserves are in cash and U.S. Treasuries, with smaller portions in other assets.
When demand for USDT increases, Tether issues (mints) new tokens; when demand falls, tokens can be destroyed (burned) to reduce supply. This dynamic supply adjustment helps keep the exchange rate close to 1 USD.
Blockchain Infrastructure & Multi-Chain Support
Tether does not have its own dedicated blockchain. Instead, USDT operates as a token on various blockchains, including Ethereum (ERC-20), TRON (TRC-20), Solana, Algorand, EOS, and more. This multi-chain deployment enhances accessibility and interoperability.
Transactions are handled by the underlying networks: you need to send USDT on the same chain type, or bridges/wrapping mechanisms if moving across chains. Mistakes sending USDT on mismatched chains can lead to permanent loss.
Minting, Burning & Peg Maintenance
Tether monitors supply vs demand. If too many redemptions occur, USDT supply contracts; if demand surges, new tokens are minted. The reserve assets are used to maintain liquidity for redemptions and guarantee that each USDT has backing.
To preserve the peg, Tether also relies on arbitrage: if USDT drifts slightly above $1, there’s an incentive to redeem or sell, and if it dips below, it encourages buyers. Combined with market forces and reserve backing, this helps anchor the price.
Why Do People Use USDT?
- Users often convert volatile crypto into USDT during turbulent markets to protect value without exiting the digital asset ecosystem.
- USDT is accepted in a vast array of exchanges and trading pairs, making it a preferred medium of exchange.
- Because it behaves like USD but lives on the blockchain, USDT can move quickly across borders without traditional banking friction.
- Many decentralized finance platforms use USDT as a base asset for lending, yield farming, and stable lending markets.
- In regions with unstable local currencies, USDT often provides a stable alternative for savings, payments, or transfers.
Is USDT Safe? Risks & Concerns
While USDT offers utility, it also attracts scrutiny and criticism.
Centralization & Counterparty Risk
Tether Limited acts as the central issuer. That means users must trust that the company actually holds sufficient reserves and will honor redemptions. This centralized model contrasts with fully decentralized cryptocurrencies.
Transparency & Reserve Audits
Tether publishes regular attestation reports, but has yet to provide a full independent audit by a Big Four firm in many periods.
In 2025, Tether announced it is in talks with a Big Four accounting firm to pursue a full audit.
Historical controversies include a fine by the New York Attorney General in 2021 over misrepresentation about reserve backing.
Regulatory & Legal Uncertainty
Stablecoins face evolving regulatory environments globally. Some jurisdictions may impose stricter rules, reserve requirements, or classification of USDT as a regulated instrument.
Reserve Composition & Liquidity Risk
Though cash and Treasury bills dominate reported reserves, some portion may be in less liquid assets. In times of mass redemptions, liquidity risk may strain backing.
Price Deviations & Peg Risk
While USDT is generally stable, in extreme market stress, the peg might deviate briefly. Arbitrage, reserve liquidity, and market confidence are key to restoring balance.
How to Buy, Sell & Use USDT
Buying USDT
You can acquire USDT on most major cryptocurrency exchanges (e.g. Binance, Coinbase, Kraken). Many platforms allow purchase via fiat currencies (bank transfer, card) or by trading other crypto for USDT.
In the Tap app, you can buy USDT and have it stored in your wallet, making it easier to manage alongside your other assets.
Storing USDT
Store USDT in wallets that support the relevant chain (ERC-20, TRC-20, etc.). Hardware wallets like Ledger or Trezor support ERC-20 USDT (via Ethereum).
Converting USDT to Fiat
On many exchanges, you can sell USDT for fiat (USD, GBP, EUR) and withdraw to your bank.
Using USDT for Payments or Transfers
Some platforms accept USDT as payment. You can also transfer USDT peer-to-peer across wallets quickly and globally, with network transaction fees (gas) depending on the chain used.
USDT Reserve Composition & Transparency
Tether provides quarterly transparency reports detailing reserve breakdowns, but falls short of full independent audits historically.
As of recent attestations, ~81.5% of reserves are held in cash & U.S. Treasuries, while smaller portions are in other assets.
Tether held over $127 billion in U.S. Treasuries as of Q2 2025.
Reserve composition evolves over time; Tether has reduced reliance on commercial paper and shifted toward safer instruments.
While attestations improve transparency, critics assert a full, external audit would bolster confidence.
USDT vs Other Stablecoins
While USDT remains dominant, several alternatives exist:
- USDC: Known for stricter auditing and regulatory compliance
- DAI: Decentralized, over-collateralized stablecoin
USDT held around 62–63% of the stablecoin market share as of 2025. It maintains dominance due to liquidity, widespread adoption, and support across exchanges and DeFi. However, users might opt for alternatives for perceived transparency or regulatory comfort.
Investment Considerations
USDT is not designed as a growth asset; its value is meant to remain stable. Its role is more of a utility token: liquidity provider, trading medium, and stability anchor.
That said, you can earn yield on USDT via lending platforms, DeFi protocols, or savings accounts, though returns may be modest and come with risk.
Consider that holding large amounts of USDT long-term yields little upside, and inflation or counterparty risk may erode value.
Always balance USDT exposure within a diversified strategy, rather than viewing it as an investment vehicle.
Conclusion
Tether (USDT) plays a critical role as the most widely used stablecoin in crypto, offering a digital dollar alternative that combines stability with blockchain utility. While its popularity and liquidity make it indispensable in trading and DeFi, it operates under risks tied to transparency, centralization, and regulatory shifts.
If using USDT, treat it as a tool for stability and liquidity, not speculative growth. Used wisely, USDT helps you move between crypto and fiat more fluidly, manage volatility, and access global financial systems with fewer intermediaries.
Stocks are essentially shares in a company that the company sells to shareholders in order to raise money. Shareholders are then entitled to dividends if the company succeeds, and might also receive voting rights when the company makes big decisions (depending on the company).
What are stocks?
Stocks play an important role in the global economy, assisting both companies (in raising capital) and individuals (in potentially earning returns). Traders can buy and sell stocks through stock trades facilitated by various stock exchanges. The stock price is determined by supply and demand, largely influenced by the company's success and media representation.
These "units of ownership" are sold through exchanges, like Nasdaq or the London Stock Exchange, under the guidance of regulatory bodies, such as the Securities and Exchange Commission (SEC) in the United States. These regulatory bodies set specific regulations on how companies can distribute and manage their stocks.
What are the different types of stocks?
There are two types of stocks, common stocks and preferred stocks, as outlined below.
Common Stock
Shareholders of common stock typically have voting rights, where each shareholder has one vote per share. This might grant them access to attending annual general meetings and being able to vote on corporate issues like electing people to the board, stock splits, or general company strategy.
Preferred Stock
For investors more interested in stability and receiving regular payments rather than voting on corporate issues, preferred stocks are often the security of choice. Preferred stock are shares that provide dividends but without the voting rights. Like bonds, there are a number of features that make them attractive investments. For example, many companies include clauses allowing them to repurchase shares at an agreed-upon price.
Stock vs bond
Although both stocks and bonds signify an investment, they vary in how they operate. With bonds, you're essentially lending money to the government or a company and collecting interest as a return while with stocks you're buying part-ownership of a company. Another key difference is that bondholders usually have more protection than stockholders do.
In contrast to stocks, bonds are not normally traded on an exchange, but rather over the counter (the investor has to deal straight with the issuing company, government, or other entity).
Stocks vs futures and options
Futures and Options contrast stocks in that they are derivatives; their value is reliant on other assets like commodities, shares, currencies, and so on. They are contracts established off the volatility of underlying assets instead of ownership of the asset itself.
Stocks vs cryptocurrencies
While stocks provide a unit of ownership in a company, cryptocurrencies are digital assets that operate on their own network. Cryptocurrencies are decentralised, meaning that no one entity is in charge, while stocks are shares in companies that are heavily centralised and held accountable for their price movements. Both the stock price and the price of cryptocurrencies are determined by supply and demand.
Another key difference is that stocks are regulated while, at present, cryptocurrencies are not.
Where did stock trading originate?
The first recorded instance of stock-like instruments being used was by the Romans as a way to involve their citizens in public works. Businesses contracted by the state would sell an instrument similar to a share to raise money for different ventures. This method was called 'lease holding.'
The 1600s gave rise to the East India Company (EIC), which is considered by many the first joint-stock company in history. The EIC increased its notoriety by trading various commodities in the Indian Ocean region. Today, we see the limited liability company (LLC) as a watered-down version of the joint-stock company.
How does the stock market work?
The 'stock market’ is an umbrella term that refers to the various exchanges where stocks in public companies are bought, sold, and traded.
The stock market is composed of similar yet different investment opportunities that allow investors to buy and sell stocks, these are called "stock exchanges." The best-known exchanges in the United States are the New York Stock Exchange (NYSE), Nasdaq, Better Alternative Trading System (BATS), and the Chicago Board Options Exchange (CBOE).
Together, these organisations form what we call the U.S. stock market. Other financial instruments like commodities, bonds, derivatives, and currencies are also traded on the stock market.
An example: the New York Stock Exchange
The New York Stock Exchange (NYSE) is the largest equity exchange in the world, and it has a long and rich history. Established in 1792, it was originally known as the "Buttonwood Agreement" between 24 stockbrokers who gathered at 68 Wall Street to sign an agreement that called for the trading of securities in an organised manner.
Since then, the NYSE has become a global leader in financial markets, with more than 2,400 companies listed and nearly $26.2 trillion in market capitalization. The exchange has an average daily trade volume of $123 billion.
Investing in common stock or preferred stock on the NYSE can be done through a broker or online stock trading platform. When trading on the NYSE, investors have access to a wide range of products and services, including stocks, bonds, mutual funds and ETFs (exchange-traded funds).
Investors can also take advantage of the numerous benefits that come with trading on the NYSE, such as access to real-time information and the ability to buy and sell quickly. The trading platform is regulated by the U.S. Securities and Exchange Commission (SEC).
How to navigate stock market volatility
Stock market volatility, characterised by rapid and unpredictable changes in stock prices, is influenced by economic indicators, geopolitical events, and investor sentiment. To manage this volatility, investors can diversify their portfolios, set clear investment goals, and maintain a long-term perspective.
Regular portfolio reviews and seeking guidance from financial advisors can also help when it comes to making informed decisions during volatile periods. Investors who stay informed about market trends and use strategic approaches can navigate market fluctuations more effectively, which better positions them for long-term success in stock investing.
The importance of diversification when investing
Diversification is key when investing, and the stock market is no exception. The "don't put all your eggs in one basket" approach offers benefits like risk reduction and the potential for higher returns. Strategies for diversification include investing across different sectors, industries, and asset classes.
By spreading investments, investors can manage risk effectively, ensuring their portfolio isn't overly exposed to any single asset or market sector. This helps cushion against market downturns and enhances the overall stability of the investment portfolio.
Terminology associated with the stock market
- Broker: A broker is someone who buys and sells assets on behalf of another person, charging a commission for their services.
- Stockholders equity: The value of a company's stock can be better understood by this metric, which is the company's assets remaining after all bills are covered (liabilities).
- Stock splits: Conducting a stock split is one way that companies make their stocks more accessible to investors. Although it won't change the market capitalisation or value of shares, it will increase the number available.
- Short selling: If an investor wants to bet on a stock's price going down, they can take a "short" position. To do this, they must borrow the stock from either a broker or a financial institution.
- Blue-chip stocks: Companies that are large and have a lot of capital typically fall into the blue-chip category. They usually trade on famous stock exchanges, like the NYSE or Nasdaq.
- Pink sheet stocks: 'Penny' or 'pink-sheet' stocks are those that trade below the $5 threshold and are typically OTC (over the counter). These can be high risk.
- Buying on margin: Buying on margin is using borrowed money to buy stocks, bonds, or other investments in the hopes of making big returns and paying off the loan.
- Market order: When placing an order for a trade, the investor needs to pick from several types of orders. A market order is executed at whatever the next price is, which can be risky if there's a big gap between what buyers and sellers are offering.
- Limit order: A limit order is an order to buy or sell a security at a specified price, with a maximum amount decided on before executing the trade.
- Stop order: A stop order, also referred to as a stop-loss order, is an order placed with a broker to buy or sell once the stock reaches a predetermined price.
In conclusion
Shares, or stock, are units of fractional ownership in a company that investors buy to gain capital appreciation and tap into a company's earnings if the company's stock pays dividends. Companies, through listing their stock on an exchange, can raise capital to further develop the business.
Stock is traded on an exchange, and the stock prices are determined by supply and demand.
Used across all markets, the spread is the difference between the buy (offer) and sell (bid) prices of an asset. Spreads provide an additional opportunity to traders to make money through buying and selling assets.
The spread of an asset will depend on the current demand or an asset and the market’s volatility and is presented in either a percentage or value form. Assets with markets displaying higher levels of demand will typically have smaller spreads and usually higher price points.
As an example, when you look at an order book for Bitcoin you will usually see prices reflected in green and red reflecting the offer prices and bid prices. The spread will then be indicated above the most recent trades. As another example, consider foreign exchange counters where the buy and sell prices are different, this difference is known as the spread. Market makers use spreads to generate money from transactions completed at market prices.
Let's put this in context: George buys 100 shares for a £2 ask price in “ABC” a publicly listed company. George pays £200 in return for 100 shares. If he decides to sell the shares back at the same price he bought them for, he would sell the 100 shares for the bid price at £1.95 and would receive £1.95 each instead of £2. This would mean he gets a return of £195 and loses £5, which would be paid to the market maker.
Sitting among the 30 biggest cryptocurrencies by market cap, Stellar is focused on bridging the gap between the business of blockchain and the traditional financial institutions. The platform provides a means for users to send assets and money through the blockchain, utilising a decentralised network of authenticators.
Redefining the financial landscape, Steller presents a digital transformation on the traditional services users have become accustomed to. Merging innovation with a practical application, the network is able to help users around the world, as well as financial industries, achieve a more streamlined service. Let's explore what Stellar is.
What is Stellar (XLM)?
Before we dive into the "what", let's first stipulate that one stellar is known as a lumen and uses the ticker XLM. Stellar launched in July 2014 and soon afterwards changed its strategy to be more focused on integrating blockchain technology into financial institutions.
The concept behind Stellar is to provide a space in which users can transfer everything from traditional crypto and fiat currencies to tokens representing new and existing assets, increasing their transaction performance by using lumens.
Similar to the Ripple XRP network, Stellar is designed to cater to both payment providers and financial institutions, building a bridge between the blockchain and traditional financial sector. Developing on the Ripple concept, Stellar has also positioned itself as an exchange as its ledger has an inbuilt order book that keeps track of all the assets on the network.
Who Created Stellar?
The founders of Stellar are Jed McCaleb and Joyce Kim, both previously employees at Ripple. McCaleb, who founded and was acting CTO of Ripple, and lawyer Joyce Kim, decided to create Stellar after they left the Ripple team in 2013 following a disagreement on the direction that Ripple was taking. McCaleb is also credited with creating the first successful Bitcoin exchange, Mt Gox.
McCaleb described Stellar's aim as giving people a means of moving their fiat into crypto and more seamlessly conducting international payments. The network provides cross border transactions with low transaction fees and fast executions. With leading technology and innovative problem solving, the network has made a healthy impression on both institutions and investors alike.
How Does Stellar Work?
Stellar is a hard fork off of the Ripple network with several similarities in design and functionality, however, the platform set itself apart by building in several key features. The platform is secured through the Stellar Consensus Protocol which revolves around these core business concepts: decentralised control, flexible trust, low latency, and asymptotic security.
The biggest upgrade launch came in 2015 when the platform replaced its consensus mechanism with a concept called federated Byzantine agreement. This required nodes to vote on transactions until quorums are reached. Anyone is able to join the consensus, and there are measures in place to inhibit bad actors operating with ill intent on the network.
The software behind the platform is called Stellar Core and can be altered to adhere to the needs of the operation using it. The nodes making up the network can be created to function as either Watchers, Archivers, Basic Validators or Full Validators. For example, watchers can only submit transactions while Full Validators can vote on which transactions are valid and maintain a ledger of all node activity.
Another element to the network is the Stellar Anchors. These gateways are responsible for accepting deposits of currencies and assets and issuing depictions of these on Stellar.
What Is XLM?
Known as lumens, XLM is the native cryptocurrency to the Stellar platform. XLM acts as an intermediary currency for transactions taking place on the network. With cost-effective experience priorities, every transaction on the Stellar network costs 0.00001 XLM, a fraction of a dollar (at the time of writing).
When the platform launched in 2014, 100 billion lumens were minted, programmed to increase by 1% annually until the total supply reached 105 billion. Five years later the Stellar uses voted to end this process.
That same year, in 2019, the Stellar Development Foundation (a non-profit organisation) reduced its share of XLM in order to regulate the Stellar economy. This brought the total supply down to 50 billion. At the time of writing, roughly 49% of this total supply is in circulation.
Solana is a high-performance blockchain that uses a unique consensus mechanism to achieve high throughput and security. Thanks to its user-friendly nature, the platform is already being used by major companies. As we explore what Solana (SOL) is, we take a look at the project's intentions, successes, and of course why it is often referred to as the leading "Ethereum killer".
Since Bitcoin was created in 2009 an entire crypto ecosystem has emerged, valued at almost $1.2 trillion at the time of writing. While Bitcoin was designed to provide a global payment system to address problems in the traditional financial sector, other platforms like Ethereum and now Solana have been created to facilitate the development of the blockchain industry as a whole through programmable functionalities.
What is Solana (SOL)?
Recognised as being one of the fastest-growing protocols in the DeFi space, Solana offers a platform for developers to build decentralized applications (dapps) and smart contracts, similar to Ethereum. However, what sets Solana apart is its remarkable speed and lower transaction fees.
The project is led by two main entities: the Solana Foundation, a non-profit organization based in Switzerland, focuses on promoting the platform and collaborating with international partners; and Solana Labs, located in San Francisco, takes charge of driving the project's development.
Solana implements a unique approach to support a more environmentally friendly crypto ecosystem. While it utilizes a Proof-of-Stake consensus mechanism to maintain its operations on the platform it also utilises an innovative consensus mechanism called Proof-of-History (PoH), created by one of its founders.
PoH is groundbreaking in the blockchain space, allowing the network to process an impressive 65,000 transactions per second. For context, Ethereum can process 30 transactions a second. PoH is described as being a "timekeeping technique to encode the passage of time within the data structure."
Renowned for being one of the fastest programmable blockchains in the cryptocurrency world, Solana has built a dedicated following. This is evident from the wide range of businesses, from finance to travel, using the platform and the strong interest in SOL tokens, the platform’s native coin.
Key features of Solana
Setting itself apart in the industry and making it a hit among the investor community, Solana offers these key features:
Scalability
The platform is able to handle thousands of transactions per second (TPS), using advanced technologies like parallel processing and mempool-based TPUs for scalability.
Smart contracts
Solana supports smart contracts, allowing developers to create and operate decentralized apps.
Proof of Stake (PoS) consensus
It's unique PoS consensus combines Proof of History (PoH) for speedy transactions, quick validation, and swift block confirmations.
Decentralized finance (DeFi)
Solana's fast, low-cost transactions make it a DeFi favourite, facilitating lending, trading, yield farming, and more.
Who created Solana?
Software engineer, Anatoly Yakovenko, is responsible for creating the Solana platform. He started working on the blockchain project in 2017, three years prior to its launch, alongside his former colleagues, Greg Fitzgerald and Eric Williams. They teamed up with several other former colleagues and together built the programmable network we know today.
Anatoly Yakovenko is also credited with developing the PoH protocol, an innovative contribution to the blockchain space that allows for greater scalability, thereby boosting usability. His expertise has been influential in the industry.
How does Solana differ from Ethereum?
One of the platform's main aims is to improve on several of the Ethereum platform's computing functionalities. Solana stands out by making transactions really fast, while also improving how much the system can handle, scalability, and cost structure. This makes Solana a top choice for efficiency and performance in the world of blockchain.
Scalability
While the project's leads say that Solana will process up to 700,000 transactions per second (TPS) as the network grows, it can currently handle around 65,000 TPS, still a far cry from Ethereum's 30 TPS.
Solana is one of the few layer-one solutions from a computing platform that is able to support thousands of transactions per second without the use of off-chains or second layers.
Cost
Due to the nature of the Solana network, it is able to provide much more cost-effective transactions, generally costing around $0.000125 per transaction. 75% less than that of Ethereum, $0.0005 per transaction at the time of writing.
What is SOL?
SOL is the native cryptocurrency to the Solana platform powering its scalability and reduced cost structure. The cryptocurrency acts as a utility token, used to pay for transactions on the network and to secure the network through staking.
SOL is a proof-of-stake cryptocurrency, which means that it is secured by network participants who stake their SOL tokens. The price of SOL is impacted by conventional factors like project updates, investment market sentiment, exchange activity, and the overall economy, alongside variables such as the token's inflation rate, burning amount, and the expansion of the Solana ecosystem.
How Can I Buy SOL?
If you're looking to diversify your crypto portfolio with the likes of Solana, you’ve come to the right place. Tap allows users to seamlessly buy, sell, trade, and store SOL through the convenience of the Tap app. Using crypto or fiat money, users can tap into this growing market and become part of the Solana-driven blockchain revolution. For more content on how to trade Solana, see here on the Tap website.
Risk in trading is the chance that something might negatively impact an investment. Before engaging in any trading activities it is important to evaluate your appetite for risk, determining whether you are able to handle more risk or are more risk averse.
Measuring risk will be dependent on the type of asset you are investing in, the amount of capital you have to use, and the time frames in which you expect to see results. Different assets and trading strategies hold different amounts of risk.
For example, investing in an index fund is considered a low-risk investment and is better advised to investors looking to make a slow and steady return over a longer period of time. Index funds aggregate the performance of the 100 companies listed on a particular stock exchange and pay back dividends accordingly. Because they are large companies the growth is often more likely to be smaller yet consistent.
With a little more appetite for risk, in the crypto markets, the same could be said about choosing to invest in an emerging altcoin versus established cryptocurrencies like Bitcoin or Ethereum. An emerging asset would encompass a higher risk higher reward ratio, however, no returns are guaranteed.
You can speak to a financial advisor to get a sense of your risk appetite.