Business

What is Solana (SOL) Pay and how does it work?

PayPal is a major innovation in the payment processing industry. The intellectual financial product of Peter Thiel, Max Levchin and ultimately Elon Musk aims to be ahead of its time, enabling instant payments between customers, businesses and more while using the internet. .

Solana (SOL) Payments is seen by many as the next innovation in the field of payment processing, facilitating payments while taking into account unusable tokens (NFTs) and Web3. Some even call Solana’s new payment protocol Visa or Web3’s PayPal. This post will analyze Solana Pay and how it works so you can decide if the project is all it has to do with it.

But first, it’s important to understand Solana before joining the Solana Pay digital payment platform.

Related: What is Web3: A Beginner’s Guide to the Future of Decentralized Internet

What is Solana?

Solana was founded in 2017 by Anatoly Yakovenko, a software engineer with experience working at Dropbox and other major tech companies.

Yakovenko believes that while other blockchains work efficiently, or at least work towards efficiency, many of them don’t take into account time. Instead of every block relying on a standardized clock, each block runs in the local time of their relevant node.

Why is this a problem? Without a standardized clock, the transaction timestamp would be different for each block, and confirmation time is another factor that all nodes must confirm. The more elements a node has to validate, the slower the transaction time.

On Solana, all nodes run on the same clock, resulting in the elimination of a factor of authentication and network acceleration. Yakovenko refers to this consensus method as proof of history (PoH) – a modified version of proof of stake (PoS) with a timeliness element for verification purposes.

Validation works similarly to proof of stake in Solana’s case. Solana is just using time as a record of historical evidence on a proof-of-stake approach. As a result, Solana can process an average of 65,000 transactions per second with minimal fees.

Solana is also a Decentralized finance platform smart contract (DeFi) compete with Ethereum (ETH). Both platforms provide all kinds of decentralized finance DApps, some also have their own cryptocurrencies. Instead of Ether at the center of it all, the Solana token is SOL.

SOL is used for transactions in the Solana network, shares for governance purposes and is given as a reward to validators. If not, Solana has its own decentralized exchanges to trade various tokens built on its platform. Each DApp built on Solana will inevitably have its own SOL compatible token, and on-chain decentralized exchanges provide an accessible way to purchase said tokens.

Now, because Solana’s PoH consensus allows it to process tens of thousands of transactions per second with no fees, Solana Labs is building Solana Pay to make that transaction power available to the masses.

History of Solana Pay

While Solana Labs was an important part of the development of Solana Pay, other companies were also involved. According to Shere, Circle, Checkout.com, Citcon, Phantom, FTX and Slope all played a part in setting up the foundation for the Solana Pay digital payment platform.

Team ring Statuses “73% of businesses believe accepting digital payments is fundamental to growth in 2022,” according to a study by Visa. The same study found that 59% of those businesses “have or plan to only use digital payments within the next two years”. These stats are part of the foundation for Solana Pay, as Solana Labs, Circle and their other partners want to be ready for these early adopters. Shere joins Solare Labs in 2021 to work on Solana Pay.

How does Solana Pay work?

The Solana Pay digital payment platform offers businesses and customers instant free transactions that are said to be environmentally friendly by harnessing the power of the Solana blockchain network. The network claims to support 65,000 transactions per second and provides an easy-to-implement software development kit for businesses to integrate products.

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Developers building DApps on Solana can integrate Solana Pay makes transactions easy, just like brick-and-mortar retailers can do it if they have a Solana wallet. That accessibility is why many compare Solana to PayPal, saying that Solana can do for crypto payments what PayPal has done for traditional online payments.

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Related: What is Solana (SOL) and how does it work?

Advantages of Solana Pay

Of course, Bitcoin (BTC), ETH, and other cryptocurrencies claim to provide near-instant crypto payments, but these networks (especially Ethereum) are expensive and not as instant as they might claim. For example, Bitcoin averages seven transactions per second, while Ethereum averages thirteen transactions per second. Both Bitcoin and Ethereum are bad for the environment. Solana’s network is faster and cheaper, which is very appealing to businesses and customers.

Solana Pay allows users to pay in real-time with SOL or any other supported Solana token, such as real-time payments in USD Coin (USDC), without involving a third party such as a bank or payment processor. Furthermore, Solana Pay does not allow refunds, eliminating a costly problem that traditional merchants often face.

Also ideal for merchants, Solana Pay provides detailed reports on every transaction such as wallet destination, currency, transaction amount, and text fields for merchants to describe said transaction. These details are kept completely private from the rest of the network, ensuring that both customers and merchants can transact without prying eyes.

As head of payments at Solana Labs, Sheraz Shere, stated in her blog post notification Solana Pay, the Solana team wants the world to see Solana Pay as something bigger than allowing users to “pay with crypto”. Instead, Shere sees Solana Pay as a platform where “all currencies are on-chain and used for a variety of transactions,” he said.

Disadvantages of Solana Pay

Solana Pay itself, along with the Solana network, is in the early stages of development. For example, businesses switching to Solana Pay risk losing their assets due to programming errors or cyberattacks. Assets can be lost due to basic user errors if the business is not crypto-savvy, as crypto wallet management doesn’t come naturally to everyone.

Also, while Solana is faster than many of its competitors, Ethereum is still a much larger platform overall. Ethereum has more DApps and a larger user base than Solana, and Ethereum’s move to Ethereum 2.0 could eventually prove problematic for Solana.

Solana Merchant Payments

While Solana Pay may sound complicated, the integration for merchants is pretty straightforward. To get started, merchants must set up a Solana wallet, which they can do individually or through the FTX exchange.

From there, the seller must perform some Solana Pay codes to their website and encode their next crypto payment request link into a QR code. Customers can now pay for goods and services both digitally and in person simply by scanning a QR code in their SOL-supported wallet.

Solana Pay for Developers

While Solana Pay has a basic use case in providing merchants with an easy way to accept cryptocurrencies, the Solana community can suggest changes and present new use cases. Documents of Solana Pay invite users open Github issues if they want to suggest changes and updates.

In her blog post about Solana Pay, Shere notes that Solana Pay can facilitate physical and digital transactions through NFTs. His example revolves around buying a pair of shoes. A customer can buy a pair of shoes with Solana Pay and walk out of the store with two NFTs.

The first NFT allows her to use those shoes in the metaverse, and the second is her purchase receipt. That receipt doubles on entry from the retailer Exclusive club of NFT holders get a discount and other bonuses from retailers.

Solana Pay support wallet

Solana Pay is currently supported in three wallets: Phantom, Crypto Please and FTX. Phantom is a Solana-only wallet for buying, holding and swapping cryptocurrencies and NFTs. Crypto Please is another Solana-focused wallet that allows users send cryptocurrency via Telegram, Whatsapp and more. Finally, FTX is an exchange support all cryptocurrencies including Solana. More wallets that support Solana Pay are coming soon.