The payments processing business underwent a major revolution with PayPal. The financial invention of Peter Thiel, Max Levchin, and finally Elon Musk had far-reaching goals, including enabling fast payments online between customers, corporations, and more. Many believe Solana (SOL) Pay is the upcoming payment processing breakthrough because it allows for payments while considering nonfungible tokens (NFTs) and Web3. Some have even compared Solana’s new payment mechanism to PayPal or Visa for the Web3. Solana Pay will be explained in detail in this post so you can judge whether the idea is all it’s cracked up to be.

But before using the online payment system Solana Pay, it’s critical to comprehend Solana.

Describe Solana

Anatoly Yakovenko, a software developer with experience at Dropbox and other significant tech firms, launched Solana in 2017. While other blockchains, in Yakovenko’s opinion, other blockchains are efficient or at least aim toward efficiency, many disregard time. Each block operates on the local time of the relevant node rather than relying on a common clock.

Why does this matter? Without a common timekeeper, transaction timestamps will differ for each block, and all nodes will need to verify the confirmation time as another component. The validation time of a node increases with the number of factors.

Solana eliminates one validation element and speeds up the network because all nodes operate simultaneously. Yakovenko refers to this consensus technique as proof-of-history (PoH), a modified proof-of-stake (PoS) variant that takes time into account for verification.

In Solana’s situation, validation functions similarly to proof-of-stake. In addition to the proof-of-stake method, Solana only employs historical records of the past as additional proof. Solana can handle 65,000 transactions per second on average while charging little.

Another smart contract decentralized finance (DeFi) technology that competes with Ethereum is called Solana (ETH). Both platforms provide a wide range of decentralized finance DApps, some of which also use their own cryptocurrencies. The Solana coin, SOL, is at the center of everything instead of Ether.

The Solana network uses SOL for transactions, governance stakes, and validators’ rewards. Solana has decentralized exchanges to trade different tokens on top of its platform. Every Solana-based DApp will have its SOL-compatible token, and on-chain decentralized exchanges offer a convenient way to purchase these tokens. Solana Labs is developing Solana Pay to make this transaction capacity available to the general public. Solana’s PoH consensus allows it to handle thousands of transactions per second without charging fees.

Background of Solana Pay

Other businesses were involved in the development of Solana Pay, even though Solana Labs played a significant role. In Shere’s opinion, circle, Checkout.com, Citcon, Phantom, FTX, and Slope all contributed to laying the groundwork for the digital payment platform Solana Pay.

According to Team Circle, Visa research found that “73% of firms feel accepting digital payments is vital to success in 2022.” That same analysis revealed that 59% of those businesses “already are, or plan to, use solely over the following two years, digital payments.” these numbers formed the basis for Solana Pay, as Solana Labs, Circle, and their other partners want to be prepared for these early adopters. In 2021, Shere started working at Solare Labs on Solana Pay.

How is Solana Pay implemented?

By utilizing the strength of the Solana blockchain network, the digital payment platform Solana Pay provides companies and customers with rapid, fee-free transactions that, according to the company, have no negative environmental impact. The network states that it can handle 65,000 transactions per second and offers a simple software development kit for companies to incorporate the solution.

Just as traditional stores can use Solana Pay if they have a Solana wallet, developers creating DApps on Solana can use it for simple transactions. Because of its accessibility, many people liken Solana to PayPal and claim that it can do for cryptocurrency payments what PayPal did for conventional internet payments.

Solana Pay’s positive aspects

Of course, cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and others claim to offer almost instantaneous crypto payments. Still, these networks—especially Ethereum—are expensive and are not as quick as they might claim. For instance, while Ethereum contains an average of thirteen transactions per second, Bitcoin features seven on average each second. Both Bitcoin and Ethereum harm the ecology. Businesses and customers are drawn to Solana’s network because it is faster and less expensive.

Without requiring a third party, such as a bank or payment processor, Solana Pay enables its users to make real-time payments in SOL, or any other supported Solana token, such as real-time payments in USD Coin (USDC). Furthermore, Solana Pay does not permit chargebacks, eliminating an expensive problem that conventional merchants frequently encounter.

Solana Pay is also perfect for businesses because it provides thorough reports on every transaction, including the wallet destination, currency kind, transaction amount, and text sections for the business to characterize the transaction. This information is kept completely secret from the rest of the network, allowing the customer and the merchant to conduct business anonymously.

The Solana team wants the world to view Solana Pay as something bigger than just allowing users to “pay with crypto,” as Sheraz Shere, head of payments at Solana Labs, writes in his blog post announcing Solana Pay. Shere sees Solana Pay as a platform where “all currencies are on-chain and used for a wide range of transactions.”

Also Read: What Are The Pros And Cons Of Investing In Solana In 2022

Negative aspects of Solana Pay

The Solana network and Solana Pay are both in their early stages of development. Businesses that migrate to Solana Pay risk losing their assets, for example, due to a programming error or network assault. If the firm is unfamiliar with crypto, assets could be lost due to common user mistakes, as maintaining a crypto wallet isn’t something that everyone can do effortlessly.

Furthermore, even though Solana outperforms several of its rivals in terms of speed, Ethereum still has a far larger user base overall. The eventual switch to Ethereum 2.0 by Ethereum, which has many more DApps and a larger user base than Solana, may also cause issues for Solana.

Top 3 Uses Of Solana Pay

Solana Pay for businesses

Although Solana Pay can sound complicated, merchant integration is actually quite straightforward. A merchant must create a Solana wallet, which they can do on their own or by using the FTX exchange.

Next, the business must integrate the Solana Pay code into its website and turn the subsequent link for a crypto payment request into a QR code. Customers can now use their SOL-supported wallet to quickly scan a QR code to pay for goods and services online and in-person.

To pay developers, Solana

While offering retailers a simple way to accept cryptocurrency is Solana Pay’s primary use case, the Solana community is free to suggest modifications and present additional use cases. According to the Solana Pay documentation, users who want to suggest improvements and adjustments are encouraged to create a GitHub issue.

Shere points out that Solana Pay might use NFTs to speed up digital and physical transactions in his blog post about the service. His illustration centers on purchasing a pair of shoes. A consumer may use Solana Pay to purchase a pair of shoes and leave the business with two NFTs.

She may utilize those shoes in the metaverse thanks to the first NFT, while the second is a receipt for her purchase. This receipt also gives admission to the retailer’s special NFT club, which offers members discounts and other benefits.

Wallets compatible with Solana Pay

Soon, there will be more wallets that work with Solana Pay. Phantom, Crypto Please, and FTX are the three wallets offering Solana Pay. Phantom is a Solana-only wallet for purchasing, storing, and exchanging digital currencies and NFTs. Another Solana-focused wallet, Crypto Please, enables users to send cryptocurrency over Telegram, Whatsapp, and other services. Finally, FTX is an exchange that accepts Solana and all other cryptocurrencies.