What a difference a year makes. Coming in 2021, avalanche (CRYPTO: AVAX) was a relatively little-known cryptocurrency with a market capitalization of less than $ 300 million. That was an impressive feat considering Avalanche only launched a few months earlier.
Fast forward to today. Avalanche now has a market cap of more than $ 27 billion, making it dizzying hot Shiba Inu. That’s enough to rank its native AVAX token as the number 11 largest cryptocurrency in the world, according to CoinMarketCap. But could you make a fortune buying this hot cryptocurrency now?
Buyers make a lot of money
There’s no denying that Avalanche’s early buyers are way richer now. An initial investment of $ 1,000 in early 2021 would now be worth well over $ 34,000.
However, this is not a case where only the early birds get the worm. Even if you waited half the year to collect Avalanche tokens, you would still do very well. The cryptocurrency has seen almost 11x returns since the beginning of July.
What if you still missed the boat and only bought Avalanche a month ago? Do not worry. Your profit would still be around 90%.
Sure, Avalanche seems to have leveled off for now. However, this is the case with many other cryptocurrencies. Given his historic performance, it might only be a matter of time before Avalanche bursts into tears again.
Behind the success of Avalanche
There are thousands of cryptocurrencies out there. Why did an avalanche break out when many didn’t? The best answer is its blockchain architecture.
Like ether (CRYPTO: ETH), Avalanche’s platform supports smart contracts. But it’s the differences to Ethereum that have made Avalanche increasingly popular. In particular, Avalanche is much faster and has much lower fees. These advantages are made possible by Avalanche’s three interoperable blockchains:
- Exchange Chain (X-Chain): supports the creation and trading of the native AVAX tokens.
- Contract chain (C-Chain): Enables the creation of decentralized apps based on smart contracts.
- Platform chain (P-Chain): Coordinates validators that verify transactions and supports the creation of dynamic sets of these validators, known as subnets.
Thanks to this triple blockchain design, Avalanche can process more than 4,500 transactions per second and is still highly scalable. Its “time to finality” (if a transaction has been irreversibly completed as a complement to the blockchain) is less than two seconds. In comparison, Ethereum can process on the order of 14 transactions per second with a transaction final of six minutes.
These advantages lead to an increased acceptance of Avalanche. Deloitte announced last month that it is partnering with Ava Labs to develop a disaster recovery platform based on the Avalanche blockchain. This system will help state and local governments demonstrate eligibility to receive federal funds for emergencies.
Avalanche already has more than 150 projects in its ecosystem. These projects include wallets for decentralized finance (DeFi) and marketplaces for non-fungible tokens (NFT).
A fortune for your future?
Let us return to the core question. Can You Make A Fortune Buying Avalanche? I think the answer is yes.
However, allow me to qualify this answer. I don’t expect Avalanche to be 34x profit next year like it has been in the last 12 months. If it were, it would be bigger than any other cryptocurrency on the market, except Bitcoin. It is possible, but not likely.
It’s also important to note that Avalanche’s future success is linked to wider adoption of cryptocurrencies in general. While I expect continued momentum for cryptocurrencies, there is always the possibility that circumstances will change.
However, I do believe that Avalanche could very well generate great returns in the future. I can definitely see how Deloitte’s introduction of the blockchain could generate interest. Increasing interest would almost certainly lead to an increasing price for the AVAX token.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.
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