With so many new cryptocurrencies coming into the picture constantly, it can be tough to separate the signal from the noise. Even projects that lack clear use cases like Doge and Internet Computer (ICP) are making it into the top 10 or 20 coins these days. But Avalanche coin (AVAX) is the real deal. Avalanche offers unique consensus technology that allows insane transaction speeds. Anything like this that has a clear shot at scaling and handling the volume of transactions that credit card companies need to handle for small fractions of the cost is worth a look.
WTF is Avalanche?
From its website: “Avalanche is an open, programmable smart contracts platform for decentralized applications.” In other words, Avalanche (AVAX) is going to exist in the same competitive niche as Polkadot and Cardano, and like DOT and ADA a bridge to the Ethereum network has been built. This means AVAX can easily accept ERC-20 transfers. Any Ethereum-based assets (like NFTs) can be sent across the chainbridge and have their equivalents minted on the Avalanche network.
Incentives for using dApps on the Avalanche network
As decentralized applications become more popular, gas fees on the Ethereum network have risen tremendously- picture millions of gas-guzzling trucks all having to fill their tanks at the same handful of gas stations. Too few networks and resources have been available to fuel the NFT craze. Some transaction fees are as high as 0.1 ETH, an astronomical figure. This is pricing retail investors and retail dApp users out of the market. They are looking elsewhere- either with Avalanche, Cardano, Polkadot, or other smart contract platforms. If we think about the economic value brought forth by decentralized applications, you could say it’s foolish that we only have one network on which these dApps operate (Ethereum). Imagine (actually, you really don’t need to imagine) that the adoption of digital assets accelerates- platforms like Avalanche will experience extremely high demand.
The most widely publicized feature of the Avalanche network is the ‘Avalanche Consensus’ protocol, developed by Emin Gün Sirer at Cornell University. Consensus is an extremely important part of blockchain technology and is explained more thoroughly in my article about what staking is and how it works. Simply put, consensus is the voting mechanism and how the network of computers writes a new block on the blockchain. Just like in a real life vote, several nodes have to agree with each other to decide which transactions happened. Without going too deep here, classical consensus or the original consensus mechanism was ‘all to all’ communication, where all network nodes had to agree with each other, which is relatively slow. Then came Nakamoto consensus (Bitcoin), in which the network relied on probabilities of yays or nays- this was much faster, and the chance for error was so small that large financial networks (like Bitcoin and Ethereum) could be built on top of this protocol. Still, this protocol is far too slow for real world transaction applications, and uses too much energy. This problem of transaction speed and volume is what countless cryptos have been trying to solve, most namely Ripple (XRP). Imagine leaving your credit card in the reader at your local grocery store for one hour for the transaction to be completely approved- this is Bitcoin’s current speed. Avalanche consensus protocol combines methods from both classical and Nakamoto protocols, and allows computing nodes to shut off or go into low power mode when there is no work to be done, and is still able to maintain an infinitesimally small error margin.
Why Avalanche Consensus is Important
With Avalanche Consensus, irreversible finality of transactions can accurately be confirmed in less than 2 seconds, with most transactions happening in less than 1 second. This is faster than current credit card transaction rates today (think back to our grocery store credit card reader- wouldn’t it be awesome if that shit were faster?) Additionally, the overall capacity of transactions on the Avalanche network exceeds that of Visa, which is 4,500 transactions per second (TPS) when working with low-end nodes. When working with higher-end nodes, this TPS figure can go above 10,000 TPS. The below chart from Avalanche’s website shows some performance comparison. Notably absent here is Cardano, who may have performance that is on par or better than Avalanche.
Where to buy Avalanche Coin (AVAX)
Avalanche is currently available on Binance, Huobi, and Voyager. In order to move your coins off of the exchange, which I recommend everyone do because all coins on an exchange are are “I owe yous” from the exchange to you, you’ll need to do so with the AVAX wallet which is supported by the Ledger Nano X and Ledger Nano S. You can also use the AVAX software wallet without buying any hardware. I would still recommend this- because if you have at least 25 AVAX tokens, you can stake and earn profits.
Of the exchanges listed here, I’d recommend either Binance or Voyager crypto. Voyager crypto is a publicly traded company in Canada, a huge plus. I like it when companies are publicly traded because it means they have to adhere to stringent regulations by investors and regulators alike- essentially, they can’t fuck over their customers. Keep in mind that the crypto space is still new and full of scammers and fear and uncertainty. Double and triple check the address before you send your coins anywhere, and I’d also recommend the process of test sending small amounts before sending the full amount.
The future of Avalanche Coin
A crypto project’s success depends on a lot of factors. First, it cannot merely just have good technology- as Steve Jobs showed us, it isn’t enough to just have a superior product- you have to let the world know about it in a convincing way. One project that’s been doing this very well is Cardano– Charles Hoskinson has been doing everything to get real-world use cases applied for his Cardano network. Real world adoption is what will make a coin a good investment. Due to high demand for networks that have the ability to efficiently field decentralized applications, I see a future for the Avalanche network. However, the crypto world is so full of speculation and gambling that it’s quite possible that the cryptocurrency is overvalued relative to the economic value it’s actually providing the world right now- so much is hype around future promise. As always, be careful with your crypto investments.