The AVAX token broke records on November 20th, and briefly surpassed the top 10 cryptocurrencies by market value. AVAX token is part of the Avalanche platform, which supports smart contracts. According to CoinGecko the token is currently ranked 11th. However, it has seen a 33% increase in the last week and a more than 3,000% increase over the past one year.
It is possible to find out everything you need about it, including how it works and why it is considered a competitor to Ethereum. We also tell you whether it is worthwhile to invest in it.
After the Ava Labs team that developed the Avalanche blockchain announced their partnership with Deloitte, the AVAX token’s explosive growth was achieved. They want to “improve safety, speed and accuracy” at the U.S. Federal Emergency Management Agency.
Deloitte will make use of the Avalanche blockchain in order to “build more efficient platforms and tools for disaster relief.”
It was however “the right news at just the right moment” for the market. Matt Hoogan (chief investment officer at Bitwise Asset Management) says that it coincided with discontent about the rising cost to use the Ethereum blockchain.
Because both Avalanche and Ethereum support smart contracts, or code collections that execute a set number of instructions on the Blockchain, it is often compared with Ethereum. This technology is crucial for the operation decentralized financial services (DeFi), apps, and non-fungible tokens(NFT).
Avalanche, however, aims to speed up transactions and charge lower fees than Ethereum. Hoogan said that the agreement with Deloitte doesn’t imply any changes in technical terms but that it suggests that Avalanche might have all the advantages necessary to compete with Ethereum in the long-term.
Avalanche is a popular investment opportunity. However, it is important to understand the risks involved before you invest. According to financial experts, cryptocurrencies can be unstable and speculative investments. Their value may fall just as fast as it rises.
What is Avalanche?
Avalanche, a platform that supports smart contract support, was launched in 2020. It’s designed to create decentralized apps (dapps), and subnets, or custom blockchains.
John Wu, president at Ava Labs, says that subnets are secure, reliable, and powerful private or public blockchains that are created offshoots of the main Avalanche platform. He said that their developers are able to customize the design but must meet one condition: to ensure Avalanche’s safety.
Wu views subnetworks as an effective way to use this blockchain in the near future.
Avalanche uses a proof of stake (PoS), which allows transactions to be verified using the number of coins owned by the user. PoS supporters argue that it is more energy-efficient than other methods and has a lower impact on the environment.
Avalanche and Ethereum: Similarities and Distinctions
The popularity of Ethereum, the most popular blockchain, has increased this year. Many projects are now trying to rival Ethereum. Hoogan says that Ethereum is the most popular universal blockchain but that the demand for it is significantly higher than its capabilities.
Avalanche is faster and more affordable than Ethereum. It can process approximately 4,500 transactions per second while Ethereum can only process around 13.
The most popular blockchain still has its benefits, such as fame, reputation, and potential. Ethereum uses a proof of work (PoW), in which miners compete to complete complex tasks to confirm transactions.
Ethereum supporters claim that the Eth2 update will increase its security, scalability, and environmental friendliness. The update will be in effect by 2022. Additionally, the network will switch to a PoS-based model.
Is Avalanche worth the investment?
Due to the risk involved, experts recommend that you only invest in cryptocurrency if you have the means to lose it.
AVAX’s price has risen rapidly in recent months. It is worth noting that AVAX’s price can fluctuate as with other cryptocurrencies. Hoogan says that it is the most risky investment in one blockchain. “It is hard to identify the winner in breakthrough technologies in their early stages.”
He predicts that some universal blockchains will be more prominent in five years. But don’t expect there to be one universal blockchain. Just look at other technologies that were a breakthrough but quickly faded away.