3 Reasons I (Still) Don't Regret Selling Ethereum and Buying Solana

Nearly two years ago, I sold all but a residual amount of my Ethereum (CRYPTO: ETH) and invested even more heavily in Solana (CRYPTO: SOL). I don't regret my decision, even if it might raise some eyebrows among seasoned cryptocurrency investors.

In fact, I would make the same decision again today if I could. Here's why.

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1. Gas fees

Cryptocurrency gas fees are an unavoidable fact of life. Blockchains need to have some way of covering their basic infrastructure costs. But Ethereum's high gas fees, or user fees, were a big part of the reason I don't regret selling my holdings. The issue is still as pressing as ever.

As of Jan. 16, the average gas fees for a transaction on the network are between $0.45 and $0.60. That isn't about to break the bank for the average investor. Still, during peak periods in May 2024, it cost upward of $30 to transact on the network. And even now, transacting to buy or sell a non-fungible token (NFT) costs on the order of $12.50.

Imagine your stockbroker's website told you that it would cost you $30 regardless of how many shares of a company's stock you planned to buy or sell. In the modern era, it's unimaginable, but it's a real possibility with Ethereum.

In contrast, Solana's transactions cost a fraction of a penny under typical conditions. Even during periods of heavy loading on the network, gas fees are rarely more than $0.05.

There's no contest. For the typical investor, the difference in transaction fees between these two networks is not really an issue of direct financial impact. You shouldn't be day trading cryptocurrencies anyway, so there aren't too many transactions you will be making anyway.

Importantly, there are many cryptocurrency investors and traders out there who do actually transact on these blockchains for dozens or hundreds of times per day. For their needs, Solana is a no-brainer. And that will increase the overall level of demand for the coin over time.

2. Transaction speed

Financial systems feel like they are working smoothly when they complete a user's request quickly. When it comes to the speed of Solana versus the speed of Ethereum, Solana wins by a mile, which is another reason I don't regret selling Ethereum.

The typical transaction on Solana takes about 400 milliseconds to process, and the network has a throughput of roughly 65,000 transactions per second (TPS) when operating normally. Ethereum's transactions take anywhere between 10 seconds and five minutes, and the network handles only up to 30 TPS as it's currently configured.

Once again, this isn't exactly an issue of you as an individual investor getting your transactions handled faster and saving time. There's simply no need to be transacting so frequently that shaving a few minutes off the waiting time is very significant.

But for the hardcore cryptocurrency investor set, who command significant sums of capital on these blockchains, the issue is much more pressing. And so transaction speed is another major factor supporting higher Solana prices by encouraging people to swap their Ethereum for Solana, like I did.

3. The ecosystem

The last reason I have no qualms about quitting Ethereum is that the Solana ecosystem of cryptocurrency products and services is generally easier to use in addition to being faster and cheaper. Plus, now that Solana is maturing, there's a full suite of tools for managing investments, lending, borrowing, minting artwork, analyzing transactions, and more.

Take the most basic of cryptocurrency tools, wallets, as an example. Even if you plan to hold your cryptocurrencies in a traditional financial account or via an exchange-traded fund (ETF), it's probably worth at least trying out a self-custodial crypto wallet so that you get a sense of how users interact with the technologies that you're investing in.

There are many different Ethereum wallets available, and many that are capable of holding tokens from different blockchains within the same software interface. Yet in my experience, none of those are as intuitive or as easy to get started with as one of Solana's most popular wallets, Phantom.

The same goes for Solana-based NFT marketplaces. The dominant NFT marketplaces are still largely based on transactions denominated in Ethereum, but between high transaction costs and a bit of clunkiness in connecting wallets to the marketplace to enable transactions, the user experience simply isn't as good. And until that changes, I won't be thinking about reinvesting in Ethereum, nor will I be worried about missing out on its price appreciation in the meantime.

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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.