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How to Buy Avalanche, and What Investors Should Know About This ‘Ethereum Killer’

An image to accompany a story about how to buy Avalanche Illustration by NextAdvisor
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Avalanche is another “ethereum killer” that’s betting on ultra-fast processing speed as it competes with No. 2 cryptocurrency ethereum. 

Lauded for its ability to process more transactions than ethereum, Avalanche and its native coin AVAX offer an alternative for crypto investors and enthusiasts. Avalanche currently has almost the same number of daily transactions as there are on ethereum, which generally is a good thing for investors as high volume and liquidity provide more opportunity to cash out investments when you want to realize a profit.

Fast speeds are important as the crypto ecosystem becomes more crowded with the onrush of new users. “It’s like when you live in a busy city, and there’s a concert downtown, but you just want to go to the grocery store. It’s a huge inconvenience,” says Jonathan Angle, an instructor for the online DeFi school YieldFarming.com.

Along with speed, Avalanche also touts its resistance to cyber attacks. For investors, Avalanche represents an opportunity to buy a crypto that’s similar to ethereum but much cheaper and earlier in its progress. 

If you believe in the lasting power of Avalanche’s technology, you may be considering the blockchain’s native token. The AVAX coin has had a market cap that’s ranged between $6 billion and $27 billion in recent months, as the crypto market has reacted to a massive selloff in May 2022. Like other utility tokens, AVAX can be used in advanced DeFi activity such as staking, lending, pooling, and trading. 

Here’s what you need to know about how to buy AVAX.

Before You Invest

Cryptocurrency is a highly volatile, speculative investment. And altcoins like solana amplify the volatility and risk. Only invest in crypto what you’re prepared to lose, and make sure you have other financial priorities in place first: save money in an emergency fund, contribute to retirement savings, and pay off any high-interest debt balances.

Steps to Buy Avalanche

Buying Avalanche is a straightforward process that involves funding an account on a crypto exchange, and then making your purchase. Different exchanges have different minimum thresholds for buying different tokens, along with different fee structures depending on your trading activity.

Pro Tip

Cryptocurrency is an emerging asset class and must be approached carefully. Do your due diligence and only invest what you can lose.

Find a Cryptocurrency Exchange

You can buy and trade AVAX on top exchanges like Coinbase, Crypto.com, and Kraken, along with other smaller exchanges. To choose the best platform for you, research the different exchanges and poke around their sites to learn about their fees, security systems, and other trading and investing options. In general, experts recommend sticking to mainstream exchanges. While they might charge more to execute your trades, the extra security measures that come with them are well worth the extra cost.

Open Your Account

Each exchange will have its own system for opening an account, but generally you’ll need to complete know-your-customer (KYC) steps including entering your address, phone number, Social Security number, and driver’s license/government ID information.

You will also need to connect your exchange account to a funding source such as a bank account. After that, you can start interacting with the exchange and making trades.

Place an Order

On most major exchanges, you can buy crypto with a debit card, credit card, and/or bank transfer, or sometimes through third-party integrations such as MoonPay and Transak. The crypto on-ramp process may vary depending on where you live. Some exchanges and currencies aren’t available in certain states or countries based on the local rules. Also, an exchange may have minimum or maximum purchase amounts. Fees will vary, but most are between 2% and 10%.

Pro Tip

You can buy crypto with a credit card, but experts strongly advise against it. You’ll pay more in fees by doing it this way, and add to the risk that already comes with a highly volatile investment by taking on debt to buy it.

Storing Your Avalanche

You can store your AVAX on an exchange, and if your holdings are relatively small that’s probably a fine way to go. But many experts do recommend investors keep their crypto in a hot or cold wallet, where it will be more secure.

What Can You Do With AVAX?

You can use AVAX to make purchases, transfers, and trades on any decentralized application (dApp) that operates on avalanche or ethereum. This could include DeFi games, lending protocols, swaps, trades, or staking. 

Best Wallets for Holding AVAX

Take some time to find the right wallet for your needs. It’s important that the wallet you choose supports AVAX, as not every wallet can hold every type of crypto. Ava Labs — the developer of avalanche — offers its own Avalanche Wallet, which is simple and noncustodial, meaning you’re the only one who has access to your private keys. The site doesn’t offer much other information about the wallet. 

Here are three other expert-chosen options to consider:

Metamask

Crypto experts suggest MetaMask for an all-around ethereum-compatible wallet. And most crypto investors prefer self-custodial wallets that are not connected to centralized exchanges, which gives you full possession of your holdings.

“MetaMask is by far the most popular wallet used for all of the blockchains that [are compatible with] ethereum [like avalanche],” says Angle. “You need to download MetaMask and essentially create your own blockchain address to your own wallet.”

You can store NFTs and other collectibles on Metamask, use it in conjunction with a hardware wallet (like Trezor or Ledger), and use it to exchange or buy tokens/cryptos. So if you’re looking to explore NFTs and the metaverse, MetaMask can be a solid choice. 

MetaMask at a Glance

  • Self-custody
  • Hot storage
  • Number of supported coins and tokens: Any Ethereum-based tokens
  • Costs: Free, but transaction fees may apply

Coinbase Wallet 

Coinbase Wallet, from the popular Coinbase exchange, is a top choice for beginning crypto investors, experts say. It’s a hot wallet, easy to use, and free. 

The Coinbase Wallet supports thousands of cryptos including AVAX, plus it’s noncustodial.

Coinbase Wallet at a Glance

  • Self-custody
  • Hot storage
  • Number of supported coins and tokens: Thousands
  • Costs: Free, but transaction fees may apply

Trezor Model T 

Experts recommend a cold storage hardware device for maximum security, and Trezor is among your best cold wallet options.

The Trezor Model T will cost you a bit more at $280, but you’ll get a large, full-color touchscreen display, and add-ons like Shamir Backup, a Trezor-designed security standard only available for the Model T. The Shamir backup lets you create 16 backup recovery phrases, and you can recover your wallet if it’s stolen or destroyed.

Plus it’s user-friendly, intuitive, and easy to set up.  

Trezor Model T at a Glance

  • Self-custody
  • Cold storage
  • Number of supported coins and tokens: 1,816
  • Costs: $280

Is Avalanche Worth It?

It’s impossible to predict whether Ethereum alternatives like avalanche will become just as popular as ethereum is today, especially given ethereum’s planned upgrade targeted toward increasing its processing speed. 

Avalanche announced a partnership with major accounting firm Deloitte in November 2021. Deloitte reportedly plans to incorporate blockchain technology into its work supporting state and local governments in disaster response efforts. The move by a major company like Deloitte to partner with a crypto network is viewed by many experts as a big boost in credibility for AVAX.

But many people speculate that soon there will be just as many blockchains as there are countless softwares and infrastructures that run our internet browsers, mobile apps, and Wi-Fi networks. For this reason, AVAX could be a good investment if you want to get in early on a blockchain’s utility token.

Remember: Crypto is a volatile industry and there are no guarantees. Financial planners suggest always keeping your crypto holdings to less than 5% of your overall investment portfolio, and never invest in crypto at the expense of more urgent financial goals like saving for emergencies or paying off high-interest debt.

History of Avalanche

The avalanche blockchain was developed and founded by Ava Labs, a team of finance and engineering professionals working out of Cornell University. It went live in September 2020, and the team is now headquartered in Brooklyn.

There are hundreds of decentralized apps (dApps) built on avalanche, so a lot of AVAX gets circulated throughout the blockchain every day. Like ethereum, avalanche has the capability for users to write smart contracts, or algorithmic codes that execute certain transactions automatically. Smart contracts are what make decentralized finance (DeFi) possible, and that’s why avalanche is such a strong alternative to the ethereum blockchain. 

Avalanche’s technology was designed specifically so users can avoid network congestion and still use smart contracts. The avalanche blockchain also uses the same coding language as ethereum and has a bridge that lets users more easily move crypto funds between the two networks — an added plus.