What is Shiba Inu and how does it work?
Everyone familiar with crypto exchanges will likely have heard about the rise of the memecoin that looks suspiciously like Dogecoin yet seems to be popular with a lot more people. We are, of course, talking about the Shiba Inu token (SHIB).
SHIB is one of many memecoins that uses the image of the Shiba Inu, a japanese breed of hunting dog, as its mascot. Memecoins became really popular recently so if you are curious about whether you should buy Shiba Inu coins, this article hopes to give you some insight first.
It’s important to point out that memecoins are cryptocurrencies that are associated with a certain theme (such as the Shiba Inu dog), yet are often launched as a parody rather than a digital product.
In the case of SHIB, it is merely another Ethereum blockchain-based altcoin that has been widely considered to be an alternative of Dogecoin.
A brief history of Shiba Inu
In fact, the token was referred to as the “Dogecoin killer”, created in august 2020 to knock off Dogecoin and soon after, becoming an alternative that outpaced Dogecoin. The label “Doge killer” came straight from the team of developers behind the Shiba Inu coin who claimed it to be an experiment in a decentralized ecosystem, namely a decentralized spontaneous community building.
The parody becomes clear when reading about SHIB’s basic features outlined in the official white paper, the Shiba Inu ecosystem Woof paper. It states that the coin represents an answer to a simple question: what would happen if a cryptocurrency project was run entirely by its community?
Shiba Inu coins were introduced to the world on 1 August 2020 with a total supply of one quadrillion (1 million billion) tokens - a really vast number. While Dogecoin was launched in December 2013, Shiba Inu coins were created seven years later by an anonymous person or group under the name Ryoshi. Similar to Bitcoin and Satoshi Nakamoto, the creator(s) may very well be an anonymous individual or even a group.
The decentralized cryptocurrency was created at first to poke fun at Dogecoin, yet the coin found a way to propagate and gain popularity. SHIB didn’t have a flying start. From its launch in August 2020, nothing much happened until Elon Musk Tweeted in March 2021 about getting a Shiba Inu puppy. That became a Wall Street Journal headline in no time!
SHIB technical details
Shiba Inu is an ERC-20 token that runs on the Ethereum network with Dogecoin features. The initial goal was to compete so the developers referred to the token as the Dogecoin killer. As stated in the Woof paper, Ryoshi approached the creation of the Shiba Inu community from a unique perspective claiming the launch of a community-driven token and the power of collective decentralization. The value of the digital currency was $100 at first and you could sell Shiba Inu for $119.88.
Shib tokens were placed immediately into a centralized liquidity pool at Uniwap, and the remainder – half of the entire SHIB tokens – was sent to Vitalik Buterin, the creator of the Ethereum network, on three consecutive occasions. Unwilling to be associated, Buterin donated more than 50 trillion SHIB to the India COVID-Crypto Relief Fund.
Sending half of the supply to the Ethereum co-founder Vitalik Buterin has been perceived as a publicity stunt, with Ryoshi claiming that there was no greatness without a vulnerable point.
SHIB price has fluctuated wildly since then, though by June 2021, Shiba Inu's market capitalization was over $13 billion. In July 2021, Shiba Inu launched its own decentralized exchange, namely ShibaSwap.
What is special about Shiba Inu?
Unlike the static Dogecoin which has its own blockchain, the Shiba Inu coin uses the Ethereum blockchain to run smart contracts. The team behind SHIB wanted to stay on Ethereum considering it to be well-established and secure with the ability to stay decentralized.
The Shiba Inu Woof paper explains that Shiba Inu is a test of decentralized community building or a way to challenge centralized society. The canine-themed cryptocurrency coined another phrase, namely the Shib Army, referring to those that own and support the coin.
Why the Shiba inu dog breed?
The creators consider Shiba Inu dogs as a fantastic dog breed but it is perhaps just the most identifiable meme animal in crypto, thanks to Dogecoin. The breed is known to be fiercely intelligent, independent and brave, along with an equal propensity for loyalty and mischief, noted by the Woof paper as challenging characteristics that make them extraordinary, with owners known to be overwhelmed by the dog's stubborn and bold personality.
The Shiba Inu ecosystem
Let's start by mentioning the ShibaSwap. As stated in the Woof paper, Shiba Inu's three tokens are seeds from which the Shiba Inu ecosystem sprouted, and ShibaSwap is how they've dug in their roots.
The main objective of the DeFi platform ShibaSwap is to provide a secure place to exchange cryptocurrencies while staying decentralized at the same time. ShibaSwap highlights the project's three flagship tokens.
The Shiba Inu ecosystem consists of three tokens:
- Shiba Inu (SHIB): The SHIB token is the foundational currency of the entire Shiba Inu project. The sheer number of SHIB tokens allow investors to hold millions, billions or even trillions in their wallets.
- Leash (LEASH): As the second token in the Shiba Inu ecosystem, it represents the other end of the ecosystem's spectrum with a total supply of 107,646 tokens compared to trillions of Shiba inu tokens. Originally, LEASH was set up to be a rebase token, yet the creators decided to hold off on that, ostensibly for it to first reach its full potential.
- Bone (BONE): The BONE token fits in between the above-mentioned two tokens in the light of circulating supply, amounting to totally 250,000,000 tokens. It is designed to be a governance token with the possibility of allowing the Shib army to vote on upcoming proposals.
According to the Woof paper, customers will use SHIB tokens to dig for (farm), fetch (retrieve tokens) or bury (stake tokens) their BONES. By digging and burying SHIB, users will generate returns which are distributed to the puppy pools. These puppy pools will then distribute rewards proportionally to holders.
The difference between Shiba Inu and Dogecoin
How is the SHIB coin different from DOGE? Unlike DOGE, the SHIB coin is compatible with the Ethereum network, allowing the Shib community to launch crypto apps such as ShibaSwap, a decentralized platform that allows customers to exchange and stake tokens without an intermediary.
There are some plans for the future going in that direction as well. The Shiba community plans to release an NFT platform and DAO-based governance system for the Shiba ecosystem under the name 'Doggy DAO'.
Shiba inu investment considerations
Along with most other cryptocurrencies, Shiba Inu's price trajectory is comparable to other risk assets against market conditions. Optimistically, like many other speculative crypto assets, the stock could grow up a considerable amount in 2022 in a bullish market. However, it is worth noting that the cryptocurrency gained most of its popularity due to the influence of Elon Musk's support. That iself seems to have lost its initial impact in recent times.
The Shiba Inu token, though having a limited supply, does have a huge cap of one quadrillion tokens. Objectively, since SHIB’s price and value has been substantially increasing in its relatively short life span, it should still not be considered as an ideal type of serious investment.
The speculative nature of memecoins is apparent with SHIB, with its market value almost purely entertainment based. Apart from traditional factors such as the flow of cryptocurrency exchanges on the market, SHIB price is heavily reliant on the attention received on social media and the development of ShibaSwap. If you keep this in mind, it doesn't sound as a good investment option at the moment.
Investing into memecoins and altcoins has been challenging so far due to their lack of differentiation and limited utility despite their increasing popularity. It is still considered very risky, having a broad volatile value along with a lack of regulatory protection.
Due to these considerations, it’s highly unlikely that Shiba Inu would ever overtake Bitcoin in market capitalization, but from a speculation point of view, it could outperform most other memecoins.