PayPal was a major innovation in the payment processing industry. PayPal, the financial genius of Max Levchin, Peter Thiel and finally Elon Musk, was a revolutionary payment system that enabled instant payments between customers and businesses.
Many consider Solana (SOL Pay) to be the next innovation within the payments processing industry. It facilitates payments while taking Web3 and nonfungible tokens, NFTs, into account. Some have even called Solana’s payment protocol the Visa and PayPal of Web3. This article will explain Solana Pay’s operation and help you decide if it is worth your time.
Before you can use Solana Pay digital payment platform, it is important to first understand Solana.
Similar: Web3: A Beginner’s Guide to the Decentralized Internet of the Future
What is Solana?
Anatoly Yakovenko (a software engineer who worked at Dropbox and other large tech companies) founded Solana in 2017.
Yakovenko believes that other blockchains can be efficient, or at the very least work towards efficiency, but many fail to account for time. Each block is not dependent on a standard clock; instead, it runs according to the local time at their relevant node.
This is why it is a problem. Transaction timestamps for each block will differ without a standard clock. All nodes must validate the confirmation time. Transaction times will be slower if there are more factors that a node must validate.
Solana allows all nodes to run at the same time, eliminating one validation factor and speeding the network up as a result. Yakovenko refers this consensus method to as proof-of history (PoH), a modified form of proof-ofstake (PoS), which factors in time for verification purposes.
In Solana’s example, validation works in a similar way to proof-of stake. Solana uses time to add historical proof to the proof-of stake method. Solana is able to process 65,000 transactions per second on average with minimal fees.
Solana, a smart contract platform for decentralized finance (DeFi), is also competing with Ethereum (ETH). Both platforms provide a variety of decentralized finance DApps. Some even include their cryptocurrencies. The Solana token, instead of Ether being at the heart of it all is SOL.
SOL can be used to transact in the Solana network. It is also used to stake for governance purposes. To trade various tokens, Solana also has its own decentralized exchanges. Each DApp that is built on Solana will have its own SOL compatible token. On-chain decentralized exchanges make it easy to purchase these tokens.
Solana Labs has created Solana Pay because Solana’s PoH consensus allows the system to process thousands of transactions per second, without any fees.
Historiography of Solana Pay
Solana Labs was a major part of the Solana Pay design process. However, other companies were also involved. Shere says that Circle, Checkout.com and Phantom were all involved in the creation of Solana Pay’s digital payment platform.
According to Visa’s study, Team Circle claims that 73% of businesses think accepting digital payments is essential to their growth in 2022. According to Visa’s study, 59% of these businesses are already using digital payments or plan to use them in the future. Shere joined Solare Labs 2021 to help with Solana Pay.
What does Solana Pay do?
Solana Pay is a digital payment platform that allows customers and businesses to make instant, free transactions. It uses the Solana Blockchain network’s power to harness the Solana blockchain network’s power. It claims that the network can support 65,000 transactions per minute and offers a simple software development kit to help businesses integrate the product.
Solana Pay can be integrated into DApps by developers who use Solana to create them. This allows for simple transactions just like traditional retailers can do it if they have a Solana account. This accessibility is what makes Solana a popular choice for developers.
Related: What Is Solana (SOL), and How Does It Work?
Advantages of SolanaPay
Bitcoin (BTC), ETH, and other cryptocurrencies claim they provide instant crypto payments, but these networks, especially Ethereum, are expensive and take a while to set up. Bitcoin, for instance, averages seven transactions per second while Ethereum averages thirteen transactions. Both Bitcoin and Ethereum can be harmful to the environment. Solana’s network works faster and is cheaper than other networks, which makes it attractive for customers and businesses.
Solana Pay lets its users pay in real time in SOL, any supported Solana token or real-time payments with USD Coin (USDC) without the need for a third party such as a bank/payment processor. Solana Pay does not allow chargebacks which is a relief from the costly problem that traditional merchants face.
Solana Pay is also a great option for merchants. It provides detailed reports on each transaction, including the wallet destination, currency type and transaction amount. Merchants can also use the text fields to describe the transaction. The merchant and customer can both transact with Solana Pay without being seen by anyone else.
Sheraz Shere is the Solana Labs head of payments. He states in a blog post announcing Solana Pay that the Solana team wants people to see Solana Pay more than just allowing them to “pay with cryptocurrency.” Instead, he views Solana Pay a platform where all currencies are “on-chain” and can be used for a broad range of transactions.
Solana Pay’s Disadvantages
Solana Pay is still in its early stages of development. Businesses that switch to Solana Pay risk losing their assets to programming errors or attacks on the network. It’s possible to lose assets due to basic user errors if the business isn’t crypto-knowledgeable, as managing a crypto wallet doesn’t come naturally to everyone.
While Solana is quicker than many of its rivals, Ethereum is still a larger platform overall. Solana could be affected by Ethereum’s eventual move towards Ethereum 2.0, which has more DApps than Ethereum and a wider user base.
Solana Pay for merchants
Although Solana Pay may sound complicated, merchants can integrate Solana Pay quite easily. A merchant must first create a Solana wallet. This can be done either individually or via the FTX exchange.
The merchant will need to embed the Solana Pay code on their website, and then encode their crypto payment request link in a QR code. Customers can now pay digitally or in person for goods and services by scanning a QR code from their SOL-supported wallet.
Developers can get Solana Payment
Solana Pay’s base purpose is to allow merchants to accept crypto quickly. However, the Solana community has the ability to propose new uses and make changes. If you have any questions or suggestions, Solana Pay documentation encourages users to create a Github issue to share their ideas and to update the documentation.
Shere writes in a blog post about Solana Pay that Solana Pay could facilitate digital and physical transactions via NFTs. He uses the example of buying shoes to illustrate his point. One customer might purchase a pair of shoes with Solana Pay and leave the store with two NFTs.
The first NFT gives her the ability to wear the shoes in the metaverse. The second NFT is a receipt. This receipt doubles up as a receipt for her purchase. It also allows her to join the exclusive club of NFT holders who receive discounts and other benefits from the retailer.
Solana Pay wallets
Solana Pay currently supports three wallets: Phantom (Crypto Please), and FTX (Fortran). Phantom is a Solana wallet that can be used to buy, hold, and trade crypto and NFTs. Another Solana-focused wallet, Crypto Please, allows users to send crypto via Telegram and Whatsapp. FTX, an exchange that supports all types cryptocurrencies, including Solana, is also available. Soon, there will be more wallets that support Solana Pay.
Eileen Wilson –Technology and Energy
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