Is Avalanche (AVAX) a good investment?


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In recent months, Ethereum gas fees have skyrocketed. For the past few years, Ethereum has been the go-to blockchain for all things decentralized finance (DeFi).

However, with these high gas fees, many users are starting to drift away from the crypto giant. Those leaving Ethereum are looking for new blockchains to call home, and Avalanche (AVAX) might be a top choice. Learn more about investing in AVAX now.

What is Avalanche (AVAX)?

Avalanche is a blockchain that hopes to offer speed and low fees to its users. It does this using a unique model that involves three separate channels that each serve their own purpose. With these chains, Avalanche hopes to create a more scalable and affordable blockchain for everyone.

The first chain in the Avalanche Network is the Exchange Chain (X-Chain). This chain allows users to create and trade AVAX-based tokens. It uses a Proof-of-Stake (PoS) consensus model to verify transactions.

Next comes the contract chain (C-Chain). This allows users to create smart contracts on the blockchain. These smart contracts are a fork of the Ethereum Virtual Machine (EVM). This chain uses a consensus snowman method. It is essentially a version of PoS where users continuously vote until a consensus is reached.

The last chain is the Platform Chain (P-Chain), which is used to coordinate the consensus protocol. This also uses the snowman method of consensus.

When users contribute to PoS or snowman consensus methods, they can earn rewards in the form of AVAX. The blockchain makes new tokens to pay these rewards and burns all their transaction fees. This allows the total supply to grow very slowly and possibly even decrease.

Avalanche (AVAX) Price History

As of December 2021, AVAX is trading between $100 and $120 with a market capitalization of just under $30 billion. It has a circulating supply of around 250 million with a maximum supply of 720 million.

In 2021, it saw highs near $150 and lows under $3. It currently ranks in the top 10 of all cryptocurrencies by market capitalization.

Advantages and disadvantages of avalanche

The Avalanche blockchain has a few key advantages, as well as areas in need of improvement:

Advantages

  • Perfect subnets for gaming and institutional use
  • Finality of the transaction < 2 seconds
  • Infinite transactional rates
  • More decentralized than most competitors
  • EVM compatibility to simplify the use of Ethereum dApps on AVAX

The inconvenients

  • The number of developers is low compared to other Layer 1s
  • Fall of more than 75% in 2022
  • Must compete with Ethereum and its many layers 2

Avalanche competition (AVAX)

Avalanche’s main competitor is Ethereum. Ethereum has reigned supreme for several years, as it is a robust blockchain that provides users with easy access to DeFi technology. However, recent fee increases and much slower throughput have paved the way for blockchains like Avalanche.

Avalanche hopes to provide everything Ethereum can and more. It essentially offers the same smart contracts and token protocols, but Avalanche adds a few distinct features that set it apart from Ethereum.

Using three separate chains is a revolutionary idea that helps distribute the workload on the blockchain. Ethereum is made up of a single chain, and everything works on that chain. Avalanche has three separate chains that form the largest blockchain, and each chain has its own purpose.

Avalanche also uses a PoS verification system. It is much more energy and time efficient than Ethereum’s proof-of-work (PoW) system. PoW uses computers that compete to win the ability to verify transactions and earn rewards, while PoS simply requires users to donate their tokens to the blockchain in order to win a reward. POS is often much faster and more energy efficient. However, it should be noted that Ethereum is migrating to ETH2.0, which will use a PoS system.

Finally, Avalanche burns all of its transaction fees, while Ethereum redistributes them to its validators. This means that Ethereum’s supply can increase much faster. However, Ethereum burns tokens with every transaction, as implemented in EIP-1559. Only a fraction of transaction fees are burned on Ethereum. Avalanche burns all transaction fees, which decreases the overall supply.

So which is better: Avalanche or Ethereum?

Is it impossible to say for now which channel is definitely the best. Ethereum is currently struggling with high gas fees, but ETH2.0 may be the solution to this problem. Avalanche has seen a recent surge in popularity, but the gains may not continue if Ethereum can increase speeds and reduce costs. The success of ETH 2.0 could be the deciding factor for the future of Ethereum.

How to buy Avalanche (AVAX).

Avalanche has become increasingly popular, both in terms of market capitalization and public attention. For this reason, it is becoming more common and easier to buy.

Coinbase and FTX are the two exchanges that offer AVAX. Creating an account only takes a few minutes and users can usually start trading within 24 hours.

Best Hardware Wallet for Avalanche (AVAX)

If you are looking to buy AVAX or already have some, you might want to think about where you are going to keep your tokens. While a trading platform is the easiest place to store tokens, a hardware wallet is often considered the safest place to store them.

Hardware wallets store the private keys needed to send cryptos. Without the physical device, the crypto cannot be sent.

Best Hardware Wallet: Ledger

Ledger is a leading hardware wallet brand that supports AVAX sending, receiving and staking. It currently offers Nano S and Nano X models.

The Nano S is the introductory hardware wallet and only offers the necessary features. The Nano X supports ease of use, with a larger screen and Bluetooth connectivity.

Bonus section: Keep an eye on the output and receipt of ETH2.0. This will almost certainly have an effect on Avalanche and AVAX.

Cryptocurrency Market Outlook

Heading into the new year, most cryptocurrencies have been pretty stagnant. This comes off a tumultuous and volatile fourth quarter of 2021, where tokens flew up and down in huge amounts.

While things may appear to be calming down, some are predicting that the start of 2022 could be a turning point for cryptocurrency prices. If you want to see where they are right now, be sure to check out our up-to-date price chart.

Is AVAX a good investment?

Avalanche certainly has some defining characteristics that could propel it to the front of the blockchain race. However, it may be a bit late for the party. If ETH2.0 is released and fixes the fees and scalability issues, then Avalanche may not have as many uses.

If ETH2.0 continues to lag or isn’t as useful as expected, then Avalanche may continue to grow in popularity. Either way, ETH2.0 will definitely play an important role in the future of Avalanche.


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