Best Places to Buy Solana | The Motley Fool (2024)

Solana is one of several cryptocurrencies that serve as an ecosystem for other applications and cryptocurrency projects. Its super fast processing times and transaction fees of a fraction of a cent have propelled it into the top cryptocurrencies by market capitalization.

Programmable or smart contract cryptocurrencies like Solana soared in popularity in recent years. A big reason for their success is that Ethereum (ETH), the leading smart contract crypto, struggles with high gas fees and heavy network congestion. As a result, Solana and other Ethereum alternatives have taken considerable market share.

Smart contracts are tiny pieces of self-executing code that live on the blockchain. Smart contracts power things like the decentralized finance (DeFi) industry and the booming non-fungible token (NFT) market.

Unless you already own cryptocurrency, you'll need to deposit some fiat currency such as U.S. dollars before you can buy any Solana. Fees vary depending on the platform and payment method you use. For example, if you want to pay by debit or credit card, the fee might come to as much as 4.5%. Bank transfers are usually free, and fees for other methods -- such as a PayPal deposit -- are similar to card payments.

READ MORE: Top Cryptocurrency Apps and Exchanges

If you're going to buy or sell cryptocurrencies on a regular basis, trading fees can add up. Some platforms charge a fixed dollar amount, while others can charge anything from 0.01% to 1.49% per trade. Some exchanges also charge a spread -- the difference between the buy and sell prices quoted for that crypto. You can sometimes reduce trading fees by using the exchange's token to pay, and high volume customers also often qualify for discounts.

Watch out for the spread on platforms that promise zero commission or say they don't charge trading fees. They may not charge a per trade fee, but they will likely charge a larger spread or offer a poor rate of exchange. Crypto platforms have to make their money somewhere. It's a good idea to try out sample trades on different exchanges and see how much Solana you'd get for, say, $100. You don't need to deposit any money to see what rate you'd get.

The final fee to watch out for is a withdrawal fee. Before you put your money onto a platform, be sure to understand what you'll pay to get it back again. These are the two main ways you might want to withdraw your assets:

• Moving fiat money back to your bank account. This is free on some exchanges, others can charge as much as $25 per withdrawal.
• Moving cryptocurrency to an external wallet or another exchange. Withdrawal fees vary from crypto to crypto and exchange to exchange. It's usually pretty inexpensive to move Solana, but look out for platforms that offer a limited number of free withdrawals.

Many long-term crypto investors use a blockchain or crypto wallet to store the keys to their coins. Some are concerned about the potential for cryptocurrency exchanges to be hacked, and want a more secure place for their assets. Others want to use their crypto on decentralized finance or other platforms, which is easier to do from a wallet.

If you do decide to use an external crypto wallet, bear in mind you're essentially becoming your own bank. That means ensuring the password and seed phrase are secure. You'll also need to keep your antivirus and malware protection up to date. If you lose your password, you may not be able to access your funds.

Here are some common ways to use Solana:

• Spending Solana with merchants
• Using it to earn passive income
• Using applications on the Solana ecosystem
• Trading it on crypto platforms

Unlike Bitcoin (BTC), Solana is not designed to act as a form of payment. Nonetheless, some merchants do accept Solana. Plus, some crypto platforms have spending apps or cards that let you transfer your crypto and use it to pay at certain locations.

Earn passive income

For example, you can look for crypto apps or exchanges where you can stake SOL. More experienced investors can stake SOL from a Solana wallet such as Phantom or Sollet. Without getting too technical, staking supports the network validators that verify transactions. By staking your coins, you contribute to the overall network security and earn SOL in return.

You can also earn interest through lend-earn products. Some platforms let you loan out your crypto and earn a cut of the interest paid on the loan. Before you do this, make sure you understand how the platform protects your assets.

READ MORE: Cryptocurrency Availability by Exchange

Spend SOL on the Solana ecosystem

There are over 1,200 projects on the Solana crypto network, including DeFi apps, NFT projects, games, metaverses, and social media apps. Some have their own tokens, but some use Solana. For example, you might need SOL to mint an Solana NFT on its network, or trade on one of its decentralized exchanges.

Ultimately, the best places to buy Solana depend on your personal situation -- where you live, what payment method you will use, how you plan to use it, and where you want to keep it. No cryptocurrency is a completely safe investment, so make sure you guard against the risks as best you can. If you do buy Solana and want to learn more, spend time exploring its ecosystem and the projects being developed on the Solana network.

Compare the top places to buy Solana