Read this post ‘What is an Avalanche (AVAX) Coin?' to know how Avalanche works and why it is one of the best cryptos to invest in. Avalanche’s current market capitalization of more than $15 billion makes it the 9th most valued cryptocurrency (as of 29th Dec 2023). Avalanche’s faster and cheaper smart contract functionality makes it one of the strongest rivals of Ethereum. So, joining the list of Cardano and Solana, Avalanche is also a potential ‘Ethereum killer’.
According to Avalanche’s official website, you can use Avalanche to “Build anything you want, any way you want on the lightning-fast, scalable blockchain that won’t let you down.” While Avalanche is a scalable and decentralized blockchain (it promises to be the world’s fastest smart contract blockchain platform), AVAX is the cryptocurrency that powers its internal economy.
In this beginner's guide to Avalanche, we are going to discuss how Avalanche works, how its innovative design offers greater speed and scalability, and what Avalanche is used for. Also, in this guide to AVAX, we will evaluate Avalanche’s potential to explode in 2024.
- 1. What is Avalanche?
- 2. How does Avalanche work?
- 3. AVAX explained - What is the AVAX crypto?
- 4. Is AVAX a good investment?
- 5. How to purchase AVAX?
- 6. What is an Avalanche (AVAX) coin – FAQs
1. What is Avalanche?
The Avalanche blockchain is a secure, decentralized, fast, scalable, and energy-efficient platform supporting smart contracts. Avalanche offers state of the art smart contract functionalities by resolving the blockchain trilemma (the problem most blockchains face while simultaneously achieving its 3 core goals - decentralization, security, and scalability).
With its innovative design, Avalanche is capable of settling thousands of transactions each second (compared to Ethereum’s 15 transactions per second). On par with leading payment processors like PayPal and VISA, Avalanche can process up to 6,500 transactions every second. Avalanche achieves this high scalability without compromising on decentralization and security. Moreover, Avalanche claims to offer lower transaction fees. It enables millions of users to deploy Avalanche smart contracts to build blockchain-based applications (also called decentralized applications or dApps). Moreover, Avalanche offers interoperability by connecting different blockchains.
The Avalanche network was launched in 2020 by Ava Labs to improve the existing blockchain technologies. Let’s now see how Avalanche introduced a range of innovations to improve scalability and security while lowering costs.
2. How does Avalanche work?
The Avalanche blockchain is markedly different from blockchains like Bitcoin or Ethereum in several ways. It has a unique blockchain architecture and an innovative consensus mechanism. Let’s look at the core components that set Avalanche apart:
A. Three interconnected blockchains
Avalanche is not a single blockchain - rather, it is made up of three different blockchains to carry out different responsibilities. The reason Avalanche has this type of architecture is that it enables Avalanche to achieve greater speed, decentralization, and scalability. It helps Avalanche designate different functions for these three blockchains rather than burdening a single blockchain with all the tasks.
Here is how Avalanche’s three in-built blockchains work:
- The Exchange Chain (X-Chain): This blockchain is given the task of creating and exchanging tokens (including its native AVAX token).
- Contract Chain (C-Chain): This blockchain supports the creation and execution of smart contracts.
- Platform Chain (P-Chain): It manages Avalanche subnets by coordinating with validators.
B. Avalanche subnetworks
Avalanche enables its users to launch specialized blockchains that can work independently. These subnetworks are a type of Avalanche’s scaling solutions. These blockchains achieve consensus through subnetworks (also called subnets). A subnet is a group of nodes that validate an assigned blockchain.
C. Avalanche consensus mechanism
Avalanche has a novel consensus mechanism that uses a unique take on the proof-of-stake (PoS) mechanism. This distinctive consensus mechanism conducts a random sampling of the network’s nodes to validate transactions. It helps Avalanche improve efficiency, scalability, decentralization, and security. Check out our handy PoS vs PoW guide here to learn more.
3. AVAX explained - What is the AVAX crypto?
AVAX is the native cryptocurrency of the Avalanche blockchain. AVAX can be used to transfer value within the Avalanche network, pay transaction fees, stake to earn returns, keep the network secure, and trade on exchanges. AVAX is a deflationary cryptocurrency with a maximum total supply of 720 million AVAX. It’s the AVAX users who decide how fast new AVAX is put into circulation. They get to vote to decide the amount of rewards validators would get for adding blocks to the Avalanche network.
Now, you may be wondering what an Avalanche coin is worth. The value of an Avalanche coin or AVAX depends on its demand and supply. Since, AVAX has a fixed maximum supply, a rising demand (with more users and developers joining Avalanche) will increase AVAX’s value.
Developers and users of the Avalanche network pay their transaction fees in AVAX. However, to maintain the scarcity of AVAX, the transaction fees are eventually burned and put out of circulation. AVAX’s PoS-based consensus mechanism allows users to earn rewards through staking AVAX and validating transactions. Staking is an additional source of income offered by PoS-based blockchains. If you want to know more about how staking works? Read our detailed crypto staking guide here.
4. Is AVAX a good investment?
Avalanche is an innovative crypto platform that powers a range of blockchain applications like decentralized applications (dApps), decentralized finance (DeFi), and NFTs. Developers can use Avalanche’s scalable and efficient smart contracts to build any applications they want at a low cost. Therefore, Avalanche can potentially capture a significant market share dominated by Ethereum and other smart contract providers.
As blockchain-based applications have more and more mainstream adoption, the demand for smart-contract blockchains is set to rise. Avalanche improves on earlier blockchains to provide best-in-class smart contract functionalities. Therefore, AVAX coins can experience significant demand in the near future. As more developers and users join the Avalanche platform, it would boost AVAX’s demand and put upward pressure on its price. This is a reason we believe AVAX is one of the top cryptocurrencies that can explode in 2024-25.
Despite AVAX’s bright potential, remember that crypto investing is riskier compared to investing in stocks or other assets. Therefore, always stick to the basic rules of investing and follow risk management principles. Moreover, never invest your entire capital in a single crypto asset.
We publish a range of other crypto coin guides, cryptocurrency exchange reviews, and bonus codes for crypto casinos at our homepage. We suggest to check it out after reading this article about AVAX. Now, let’s answer questions like ‘Where can I buy Avalanche?’ and ‘How can I buy and sell Avalanche?'.
5. How to purchase AVAX?
The best and most convenient way to purchase AVAX is through a reputed crypto exchange. AVAX is among the top-10 most valued crypto coins. This is a reason AVAX is available across almost all leading crypto exchanges.
Top Crypto Exchanges to Trade Avalanche (AVAX)
To purchase AVAX you need to register with a crypto exchange, fulfill the KYC obligations, and add a payment method. Most leading crypto exchanges support a range of payment options (debit cards, bank transfers, and third-party payment apps like Google Pay) to buy AVAX. Also, some exchanges allow you to buy AVAX with credit cards.
Even though AVAX is available across most crypto exchanges, not all have the same ease of use, reputation, reliability, and customer support. Moroever, trading cost and efficiency of the mobile apps are some other key factors to consider before selecting a crypto exchange. Considering a range of factors, we have shortlisted these top-5 crypto exchanges for trading AVAX:
- KuCoin (we have an exclusive KuCoin referral code for our readers)
Once you purchase AVAX from an exchange, you need a reliable crypto wallet to store your coins. There are a range of crypto wallets (like desktop-based wallets, hardware wallets, and custodial wallets offered by exchanges) where you can store your AVAX coins.
6. What is an Avalanche (AVAX) coin – FAQs
6.1 🔐Is Avalanche safe and secure?
Avalanche uses several technological innovations to increase the safety and security of its blockchain platform. It promises top-level safety and security to users and developers.
6.2 🪙Where can I buy AVAX?
You can buy AVAX from any reputed crypto exchange like KuCoin, BTSE, and Tapbit.
6.3 📈How can I trade Avalanche?
Once you buy AVAX from a reputed exchange like KuCoin, BTSE, or Tapbit, you will be able to sell the coins on the same exchange or another exchange.
6.4 🤑Is AVAX a good buy?
AVAX can potentially give cool returns in the next bull run because of its increased use cases and technological superiority. It’s one of the fastest and most scalable blockchains. This post ‘What is an Avalanche (AVAX) Coin?’ discusses everything you need to know about AVAX.