Despite all the gloom and doom about the current crypto winter, the blockchain and crypto industry remains remarkably innovative. If anything, the ability to develop next-generation products and services might actually be easier now that there’s not the constant media hype to produce something immediately.
That’s why I really like what I’m seeing with three different tokens that are changing the crypto landscape: Uniswap (UNI -4.49%), Polygon (MATIC -5.13%), and BitDAO (BIT -2.27%). Each of these tokens is altering the way we think about crypto, as well as helping to lay the foundation for a stronger, more resilient crypto industry. Let’s take a closer look at each of these.
With the continued fallout from the meltdown of cryptocurrency exchange FTX, it’s perhaps no surprise that Uniswap is making headlines. Unlike FTX, which is a centralized exchange, Uniswap is a decentralized exchange. This has several important consequences for the average investor looking to avoid the risk of holding their crypto with a potentially untrustworthy exchange.
The most important of these consequences is that you never have to keep your funds on Uniswap to trade. Instead, you keep your funds in a digital blockchain wallet that only you control. If you want to trade, you simply connect your wallet to Uniswap.
Another important consequence is that you get access to a much wider set of cryptos to trade on Uniswap than on centralized exchanges. This, combined with better pricing for most cryptos, makes for a very attractive value proposition for Uniswap.
Uniswap faces plenty of competition, but it remains the biggest decentralized exchange in the world by trading volume. It’s also ahead of the curve when it comes to trading other digital assets, such as non-fungible tokens (NFTs).
What many investors may not realize about Polygon is that it’s a Layer 2 blockchain built on top of the Ethereum (ETH -4.15%) blockchain, so there’s a very symbiotic relationship between the two. Ethereum, as a core base layer, provides security and stability.
Polygon provides faster transaction speeds, lower costs, and a superior user experience; it says it can process 65,000 transactions per second at a cost of just a fraction of a cent. This makes it lightning fast and incredibly cheap, compared to Ethereum. If you use Polygon, you really get the best of both worlds: fast speeds, low costs, and full interoperability with the Ethereum blockchain.
Based on this unbeatable value proposition, Polygon exploded onto the scene in 2022. The blockchain lined up a number of high-profile partners throughout the year, including the likes of Disney, Starbucks, Meta Platforms, and Nike. All of them are working on innovative NFT projects with Polygon, and this trend looks likely to continue in 2023. Starbucks, for example, created an NFT-based customer loyalty program that runs on Polygon.
BitDAO is unique in that it’s a decentralized autonomous organization (DAO). In layman’s terms, this means that it’s an organization that’s held together by a decentralized blockchain network. Every decision and every transaction of this organization is posted to the blockchain and coordinated via smart contracts.
This leads to tremendous transparency and trust. Imagine if your boss working in the corner office had to publish a complete list of all actions taken during the day to a public ledger for all to see.
While every DAO can be set up to accomplish different goals, BitDAO is set up to invest in different cryptocurrencies and blockchain projects. In many ways, it’s like being part of an investment club in which you partner with people around the globe to choose your next investment.
Once you own a BitDAO token, you have a voting right in this process. If you take a look at the BitDAO website, you can see some of the projects it has invested in, such as a new Layer 2 blockchain. If DAOs ever become more popular, it could change the way we think about investing in blockchain and crypto. Instead of investing in solo cryptocurrencies, the focus might shift to blockchain projects and digital assets.
Which of these is the best investment?
All three of these cryptos have interesting long-term growth prospects and rank as top 50 cryptos by market capitalization. Right now, Uniswap and Polygon are strong long-term buys. The jury is still out, however, when it comes to BitDAO, simply because this type of crypto token is so new.
As a result, if you already hold Bitcoin, both Polygon and Uniswap could be great ways to diversify your crypto portfolio in 2023.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Dominic Basulto has positions in Bitcoin, Ethereum, and Polygon. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Meta Platforms, Nike, Polygon, Starbucks, Uniswap Protocol Token, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long January 2025 $47.50 calls on Nike, short January 2023 $92.50 puts on Starbucks, and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.