Big Banks Are Lending Authority to Solana at Ethereum’s Expense

Let’s look to the banking world in order to understand why Solana (CCC:SOL-USD) will become a stronger digital asset moving forward. Both Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM) have made recent comments suggesting the network is becoming increasingly important in the digital asset space. 

It has long been the general consensus that Solana poses a serious threat to Ethereum’s (CCC:ETH-USD) early position of dominance. Traditional finance giants including Bank of America and JPMorgan are lending credence to those earlier assertions. 

Bank of America’s Take is Promising

Bank of America recently hosted Solana Foundation member Lily Liu. Afterward, a research note was released that has pundits excited. It stated that Solana could become the “Visa of the digital asset ecosystem.” 

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That’s high praise given Visa’s ubiquity to payments and well-regarded status. The comment was meant to compare its scalability, low transaction fees and ease of use to Solana. 

All of those attributes are reasons Solana continues to garner increasing favor at the expense of one of its biggest competitors, Ethereum. One factor boosting SOL is that it is more user-friendly than ETH.

Additionally, Ethereum is focused on security and decentralization. Solana, with its relative centralization and lax security, is able to scale quicker than Ethereum. Its fees sit at $0.00025 per transaction. 

Ethereum, on the other hand, has become something of a running joke in that regard. Back in December, its fees rose as high as $63 per transaction.

JPMorgan Is on Board With Solana

A team of JPMorgan analysts led by Nikolaos Panigirtzoglou published a note that also flatters Solana at the expense of Ethereum. It addressed non-fungible tokens (NFTs) and ETH’s eroding dominance. 

Ethereum accounts for roughly 80% of the NFT market. That’s a leading position by any measure. However, it also represents a sharp decline. Ethereum began 2021 with approximately 95% of the NFT market. 

Solana has been the most prominent figure in stealing that share away from Ethereum. The problems for ETH are the same ones mentioned above: High gas fees and network congestion. 

This issue is particularly severe for Ethereum. NFTs are the fastest-growing area of crypto, for one. Second, Panigirtzoglou and his team went so far as to suggest that if the problem persists through 2022, Ethereum’s valuation will suffer. In other words, its loss will become an even greater gain for SOL. 

Solana Is on the Rise

Much of the narrative surrounding Solana’s rise has related to its ability to erode Ethereum’s dominance. The other point to note here is that JPMorgan’s Panigirtzoglou and his team are echoing earlier concerns about Ethereum.

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They already went so far as to warn that Ethereum’s dominant position in decentralized finance (DeFi) is at risk due to scalability issues. That’s a serious accusation coming from a team of that caliber. 

The good news for Solana is, of course, that Ethereum’s loss is its gain. JPMorgan and Bank of America echoing the concerns of crypto pundits reinforces the idea — and to a greater extent than some might like to hear. That’s because banks were slow to accept crypto, and news like this can come across as hypocritical. 

That said, those banks are still extremely influential. That’s why I believe earlier claims regarding Solana’s strengths just gained a lot of credence.

It’s easy to imagine older, more conservative investors testing the crypto waters as traditional financial houses release similar notes. Overall, the news is great for Solana. 

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.