1 Emerging Risk to Solana That Could Be Devastating for Holders

Solana (CRYPTO: SOL) holders are no stranger to risk, given the coin's wild volatility and its occasional use by unsavory characters. With such a risky profile to begin with, investors need to be on the lookout for new threats emerging that might make its balance of risk to reward somewhat less favorable.

On that note, there's one critical risk that's now becoming apparent. There is no guarantee it'll become a real problem, but if it does, the result for shareholders could be disastrous. Here's what you need to know.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

The problem is larger here than with other chains

You've probably heard at least in passing that quantum computers will be a big deal someday because, in theory, they will be capable of breaking encryption schemes that are unapproachable with the power of classical computers that we use every day. While the best estimates for when quantum computers will be advanced enough for that to happen suggest that they probably won't be powerful enough to pose a threat for roughly 10 years, for cryptocurrency investors in particular, the issue is quite pressing. If a hacker equipped with a quantum computer were to compromise the encryption of a chain like Solana, they could steal funds, fake transactions, and wreak havoc that'd doubtlessly result in investors losing vast sums of their money.

Some chains, like Cardano, are already developing their strategy for post-quantum computing (PQC) security. While no cryptocurrency chain has started implementing these plans, leaders have identified a serious problem that needs addressing and are taking steps to ensure the technical solution will receive adequate attention over the coming years.

Alas, other chains, like Solana in particular, are both very vulnerable, and also very unprepared, even at this very early stage of the quantum risk emerging. And that could be a huge problem for Solana's holders, especially if quantum computing technology evolves faster than anticipated.

There is a partial solution made by a security researcher, called the Winternitz Vault, in which users can optionally use to store their funds, instead of a standard wallet, to be protected against quantum computing-related cryptography-breaking threats. But using the vault is only possible via an opt-in process that's technically complicated, may slow down the fast transaction times Solana is known for, and it is not implemented across the entire Solana network as a standard feature. So it's far from a comprehensive solution, and it isn't necessarily endorsed by the chain's main developers -- and it might detract a lot from one of the convenience features that users enjoy the most.

In terms of future planning, Solana is more or less devoid of evidence that its developers and leadership are taking the quantum risk seriously. In other words, the optional third-party vault is all there is on the menu right now. That means the chain is completely unprepared, and in a state of hoping for the best rather than planning to protect its investors from the worst.

Don't overreact, but look for an action plan

Solana's vulnerability to quantum computing threats is not at all a deal-breaker for investing in the coin today. Nor is it a valid reason to sell the coin, or should it dissuade you from loading up on more of it to capture the growth that's anticipated from its decentralized finance (DeFi) and blockchain ecosystem. At least, it isn't a deal-breaker for now.

If the chain fails to integrate far more robust protections against quantum attack vectors over the next couple of years, it could only be a few more years after that before its vulnerabilities are exploited. Getting a late start is unlikely to be advantageous, as the technical constraints of implementing protections without compromising the chain's speed or low fees could be challenging. It is very likely that quantum computers are going to continue to become more sophisticated over time, and that the risks of a wipeout will thus continue to rise, even if they aren't present whatsoever today.

All this means that investors need to be on the lookout for a new strategy or roadmap of new features for quantum resistance for Solana in the medium term. If it never shapes up, it'll start to be a headwind to the chain's adoption, as other chains will be more secure during a period when security in that dimension will be of increasing importance.

So keep an eye out. And if the entire issue is confusing, just remember, you don't need to understand a thing about this complicated quantum computing encryption to know that it's better to have a plan to put a padlock on the bank's vault door than it is to have nothing at all.

Should you invest $1,000 in Solana right now?

Before you buy stock in Solana, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Solana wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $526,499!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $687,684!*

Now, it’s worth noting Stock Advisor’s total average return is 818% — a market-crushing outperformance compared to 156% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 14, 2025

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