What Is Avalanche?
Avalanche is a smart contract platform designed for the creation of decentralised applications (dApps). The project aims to solve a problem known as the blockchain trilemma—namely that a blockchain can’t be decentralised, scalable, and secure at the same time. Avalanche claims to have achieved all three, with a secure network of thousands of nodes that can process more than 4,500 transactions per second.
This is possible thanks to a unique blockchain architecture and a Proof of Stake (PoS) consensus mechanism that makes Avalanche highly efficient and eco-friendly. At the heart of the PoS system is the native AVAX token, which is also used as a means of value exchange and for paying network fees.
The ecosystem of dApps on Avalanche is constantly evolving and growing. It already includes decentralised finance (DeFi) applications such as decentralised exchanges (DEXs) and lending protocols, assets and applications launched by governments and institutions, and non-fungible tokens (NFTs) in the form of art and digital collectibles.
Ways to Invest in Avalanche
People often purchase AVAX with different intentions. Some may want to sell it for a small profit as quickly as possible, while others might want to hold onto it for the long term. Both of these are valid options and it is simply a matter of preference which you choose.
Buy and hold Avalanche
Avalanche is fast becoming a popular asset for long-term investors. Retail and institutional investors alike often buy and hold the native tokens of programmable blockchains and Avalanche has proved itself a worthy contender in this field. A long-term investment is an easy strategy to follow and, with the right asset, can lead to significant returns over time.
It’s also possible to generate even more returns while holding AVAX. Holders can stake their tokens to help secure the network and be rewarded with interest in the form of more AVAX.
Best Avalanche wallets
Those who buy and hold AVAX may prefer to transfer their tokens to a private wallet. This ensures that the holder is the only person capable of accessing the wallet, and security is especially important when a significant amount of AVAX is being stored for the long term. The proprietary Avalanche Wallet is a popular choice.
Private wallets may be software or hardware. Software wallets are free, easier to use, and often preferred by those who want to move or check on their funds regularly. Meanwhile, hardware wallets provide the strongest security available, though they are more complicated and often expensive. Popular hardware wallets include Trezor, KeepKey, and Ledger.
Trade Avalanche
As with most cryptocurrencies, AVAX is a volatile asset, which means it is also possible to take advantage of short-term price fluctuations to generate more frequent returns. Traders are able to speculate on AVAX price without even owning the asset through derivative products such as futures, options, and contracts for difference (CFDs).
People who do so don’t require a wallet as they don’t actually hold any AVAX tokens. Short-term investors who do hold AVAX may also not want to set up a private wallet as the web wallet provided by their exchange or broker is often more convenient than regularly transferring tokens between a private wallet and their platform.
Should I Buy Avalanche Now?
This is something each investor will have to decide for themselves but information about Avalanche’s fundamentals and its future prospects should help inform that decision. There is a scarce supply of AVAX, which is encouraging for investors as it may prove to be a strong store of value, while the ability to earn staking rewards also drives demand for this coin.
While Ethereum is still the most popular smart contract blockchain, many people like to invest in its rivals as well to hedge against any potential issues with Ethereum. The cheap, fast, and high-throughput nature of Avalanche make it a popular diversifier, while its efficiency also makes it attractive to investors with environmental concerns.
In fact, Ethereum dApps can easily be deployed on Avalanche—and many have been already. This, along with the development of bridges to other networks, has created a vibrant and interoperable Avalanche ecosystem.
In some respects, Avalanche is already ahead of the competition, and continued growth and development could see AVAX establish itself as one of the strongest investments in the blockchain space.
