The Case for Buying Solana Before the Alpenglow Upgrade

Solana (CRYPTO: SOL) has pulled away from the programmable crypto pack, though it still has a long way to go before it catches up with market leader Ethereum (CRYPTO: ETH). Transactions on Solana are not only super fast, but they also cost a fraction of those on Ethereum. That's particularly appealing for developers of things like blockchain gaming apps and meme coins.

Image source: Getty Images.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »

The difficulty with things like meme coins is that they don't have a lot of staying power. A project can soar in value one day, only to fall back to almost nothing a week later. For Solana to achieve dramatic growth, it needs long-term projects. For example, more decentralized finance apps, stablecoins, and real-world asset (RWA) tokenization. It's already making progress: According to rwa.xyz, Solana is second only to Ethereum in the total amount of stablecoins and RWAs issued on its network. Upgrades like Alpenglow will make it even more competitive.

Alpenglow improves performance and security

Alpenglow will be a significant step for Solana. So much so that developers are calling it the blockchain's most consequential upgrade. Back in 2021, when Solana first captured attention, proof of history was part of its secret sauce, letting it process transactions faster than other blockchains. Alpenglow promises to replace proof-of-history validation with a simplified process. The team argues it can do this without sacrificing security.

For investors, what matters is that the upgrade could improve performance in two ways. One is to reduce the transaction finality time from 12.8 seconds to 100-150 milliseconds. Transaction finality is the point at which a transaction gets permanently recorded on the blockchain. With Bitcoin (CRYPTO: BTC), it can take around an hour. A credit card payment doesn't get recorded on the blockchain, but it can take days to fully complete.

The other is security and reliability. The new consensus mechanism aims to make it more difficult for malicious actors to access the chain. It also reduces the risk of outages, improving what Solana techs call liveness. That will be key if Solana is to attract a larger share of the real-world asset and stablecoin market.

Alpenglow has potential, but all upgrades carry risk

Alpenglow is set to go live in early 2026, though the developers may try to bring it to the mainnet even earlier. The Solana community already voted overwhelmingly to move ahead with the upgrade back in September.

The biggest risk for investors is that the Alpenglow upgrade doesn't go as planned and causes a network outage. Or that it introduces new, unknown security issues. Cryptocurrency is still a relatively new and untested industry, and even promising projects can experience difficulties, which is why it's important that crypto only makes up a small part of a balanced portfolio.

As I write this (Dec. 11), Solana is down about 40% year on year. Crypto market sentiment is faltering right now, and even a successful upgrade may not be enough for Solana to regain momentum in the short term. However, for long-term investors, Alpenglow could be what the blockchain needs to take an even larger share of the smart-contract crypto market and narrow the gap with Ethereum.

Emma Newbery has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.