This token could change the whole crypto game

One of the hottest crypto performers so far in 2023 is BitDAO (BIT 1.03%), up more than 39% year to date. However, what makes BitDAO so interesting is not its recent performance. Instead, it’s that BitDAO has the potential to change the entire crypto game. This is a new way of investing in crypto that uses the “wisdom of the congregation” to help investors diversify across a wide variety of crypto assets in a way that is both democratic and transparent.

Formally speaking, BitDAO is a governance token for a decentralized autonomous organization (DAO) built on Ethereum (ETH 0.81%) blockchain. This organization manages and invests in crypto-assets, and if you have BIT tokens, you can vote on what the organization should invest in next. At the same time, your BIT token enables you to share the profits from these investments. Let’s take a closer look at what makes BitDAO so unique and why it could be such a game changer.

The rise of the DAO

In many ways, a DAO (pronounced Dow Jones) is simply a new type of governance structure made possible by blockchain technology. In the non-blockchain world, organizations can choose governance structures such as “corporations” or “limited liability partnerships”. In the blockchain world, the preferred structure is the decentralized autonomous organization.

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As the nomenclature suggests, a DAO is fully decentralized, fully autonomous and organized for a specific purpose. Smart contracts drive all activity in the DAO, and it always takes place on the blockchain, so there is perfect transparency about what people are doing in the organization. In other words, there is no shadowy figure in a corner office secretly mixing funds without your knowledge.

While the DAO structure sounds a bit exotic, it’s actually more common than you might think. Some of the most popular crypto tokens in the world – included Aave (AAVE 3.39%) and Uniswap (UNI 0.77%) — are set up as decentralized autonomous organisations. Ethereum founder Vitalik Buterin has called DAOs one of the most exciting new growth avenues for the Ethereum platform, and the number of use cases for DAOs is truly staggering. So, as you can see, BitDAO is part of an important new trend in the crypto space: the rise of DAOs.

A new way of investing

BitDAO has the potential to change how people invest in cryptocurrency. If you think about the current crypto investment model, it’s basically this: A single person analyzes hundreds of possible cryptocurrencies and then invests in a single crypto traded on an exchange. The new model is as follows: A single person invests together with many different investors from all over the world, and together they decide what to invest in next. You are not limited to investing in cryptocurrency either. Recently, there has been a lot of debate about whether BitDAO should branch out into derivatives and high yield financial instruments.

If you check out the BitDAO website, you can see some of the projects it has invested in, such as a new Ethereum Layer 2 blockchain network. And here is the important point to remember: As a holder of a BIT token, you get to share in any profit distributions from the BitDAO tax. If you think about all of this, it’s kind of horrifying. At times, BitDAO functions as a mutual fund or ETF. Other times, as an early stage venture capital fund. And still others, like a hedge fund.

Should you invest in BitDAO?

As mentioned above, BitDAO has had a remarkable run during the first two weeks of 2023. This is primarily based on a single factor: a massive $100 million buyback program that started on January 1st. During the first 50 days of the year, the BitDAO treasury will buy back $2 million of BIT each day. So it is likely that the price of BitDAO will continue to rise through much of the first quarter of 2023, based on all this buying pressure.

But what happens after that? While BitDAO is already the #41 crypto in the world by market cap, the idea of ​​investing in crypto via a DAO is probably so new that it’s unlikely to catch on with the average retail investor in 2023. So I’m just being cautious. optimistic that the price of BitDAO will continue to skyrocket after the buyback program stops.

However, I am optimistic about the “wisdom of the crowd” to uncover great investment opportunities, and therefore I am also optimistic about the long-term prospects of decentralized autonomous organizations like BitDAO. They have the potential to change the way we invest in crypto.