What Is Shiba Inu, How It Works & Why It's Popular
The past 24 months have seen a burst of animal-based meme coins come to the fore of crypto culture. While Dogecoin was the “original”, many of the newer “joke” currencies were inspired by the success of Shiba Inu. So far, no other token has managed to compete with Dogecoin in terms of popularity and market cap the way SHIB has.
Shiba Inu has dubbed itself the “Dogecoin killer” and has soared to become one of the top meme coins based on market cap. Whereas Dogecoin’s blockchain was based on a fork of Bitcoin and Litecoin, Shiba Inu utilizes the Ethereum network. This makes Shiba Inu better positioned to excel in the evolving world of decentralized finance.
But does this make SHIBA a good investment? This article will look into Shiba Inu’s history, how it works and whether it is a viable investment opportunity.
What Is Shiba Inu?
Shiba Inu is a relatively new cryptocurrency, coming to life in 2020 on the back of anonymous developer “Ryoshi”. The coin is like a new-generation Dogecoin – a meme token with smart contract capabilities. Smart contracts are a program or code built on a blockchain that automatically executes when certain conditions are met. SHIB coins have this function due to being built atop Ethereum’s infrastructure, which supports integration with decentralized applications. This allows Shiba Inu to play a major role in decentralized finance, helping investors leverage their assets with earning opportunities like yield farming, liquidity provision and more.
Shiba Inu’s whitepaper (fittingly named the “woofpaper”) outlined the coin’s intention to mirror Dogecoin and become a community-focussed and controlled cryptocurrency. The coin’s development, features and use-cases will therefore grow alongside the community, who have dubbed themselves the “ShibArmy”.
A key feature of Shiba Inu, much like other meme coins, is its high supply, low price and inflationary nature. However, the community developers have recognized the limitations of unlimited circulation and added a cap on the amount of SHIB that can be minted (1 quadrillion SHIB). Regular burns from high-profile investors are also completed to prevent the token from devaluing too much.
How Does Shiba Inu Work?
Shiba Inu is built atop the Ethereum network, and SHIB coins take the form of ERC-20 tokens. Due to this, SHIB tokens can execute smart contracts which let them be used in a variety of decentralized applications.
Shiba Inu originally began life as a Proof-of-Work cryptocurrency – just like Dogecoin. Proof-of-Work protocols usually allow “mining”, where computers solve complex algorithms to validate network transactions. It’s interesting to note that Shiba Inu was never actually mineable though, as the entire supply of 1 quadrillion was minted upon SHIB’s launch.
As Shiba Inu runs on Ethereum’s blockchain, the cryptocurrency plans to transition from a Proof-of-Work consensus mechanism to Proof-of-Stake. This move will come in line with Ethereum 2.0’s upgrade, which is slated for a 2022 release (although the Ethereum developers have experienced significant delays along the way). Like ETH, SHIB can still be staked to validate transactions and earn a reward. For more information, read our detailed guide on where and how to stake Shiba Inu.
What Are The Pros & Cons of Shiba Inu?
Shiba Inu is a new player on the crypto scene, only having a brief two-year history. In that time, SHIB has grown dramatically, fostering an invigorated community, developing multiple decentralized applications and experiencing massive price rises. Like most crypto – particularly meme coins – Shiba Inu’s value is prone to wild swings which can turn off investors.
- Shiba Inu has a large development team comprising its devoted community. It has received celebrity interest from the likes of Elon Musk and Kai Greene. Unlike some competitors, the Shiba Inu ecosystem is constantly evolving, with new features and applications being proposed and integrated frequently.
- SHIB tokens do not have an unlimited supply. While they are inflationary, community token burns are regularly committed to keep the price from becoming too unstable.
- Shiba Inu is an ERC-20 token which gives it smart contract capabilities. The use of Ethereum’s code has allowed Shiba’s network to work alongside NFTs, decentralized exchanges and gaming applications. This has expanded the potential scope for SHIB tokens’ use-case.
- Shiba Inu’s community has partnered with Amazon smile to donate a portion of all purchases made on Amazon to the Shiba Inu Rescue Association.
- SHIB tokens are low value and have a very high supply. This can result in price volatility, especially from whales who purchase large portions of SHIB only to flip them and tank the coin’s value soon after.
- Although Shiba and Doge are seen as competitors, their price movements are often inextricably linked. For example, positive Elon Musk tweets regarding Dogecoin will often see the price of SHIB rise too. However, the opposite is also true, and bad press regarding Dogecoin or meme coins as a whole may have a negative impact on SHIB’s price.
- Shiba Inu has a lot of skeptics who remain unconvinced regarding the token’s use-case and real-world application.
- As Shiba Inu uses the Ethereum blockchain, it is subject to the same drawbacks – low transactions per second, mediocre scalability and high gas fees. It is hoped the upgrade to Ethereum 2.0 will help resolve these issues.
What Is Shiba Inu Used For?
The SHIB token is just one part of the broader Shiba Inu ecosystem, which comprises three coins:
- SHIB – The primary medium of exchange for the Shiba Inu community, and the most common way to interact with decentralized applications on the network.
- BONE – The governance token of the Shiba Inu community, which allows its holders to vote on development proposals. It can be earned by providing liquidity to Shiba Inu’s native DEX.
- LEASH – Used to reward those staking SHIB tokens and validating transactions on the network.
Like most other meme coins, SHIB’s low value and high supply lend itself to making small payments online. This can occur on message boards (like Discord and Reddit) to “tip” someone for a funny or insightful post, or actual donations to charities, particularly those supporting the actual Shiba Inu dog breed. Certain merchants around the world also accept SHIB as a medium of exchange.
Shiba Inu’s smart contract capabilities give its native token a much wider scope of use compared to certain other meme coins. The community has developed a fairly comprehensive and evolving ecosystem that SHIB owners can interact with and gain value.
What Is The ShibaSwap Platform?
ShibaSwap is the primary platform for the entire Shiba Inu network. It is a hub for everything SHIB – staking, voting on governance, providing liquidity, and more. To participate, users need to be holding a portion of SHIB.
Aside from earning and voting protocols, the key purpose of ShibaSwap is as a decentralized exchange. The platform supports swapping between coins, including ETH, AAVE, SHIB, SUSHI, SNX and a number of stablecoins.
At the time of writing, ShibaSwap has a total value locked (TVL) of $73.19M on the platform. This is not a huge figure (by comparison, Curve has a TVL of nearly $19b), but it does suggest a growing level of interest within the crypto community towards Shiba Inu’s ecosystem.
Shiboshis & The NFT Marketplace
Shiboshis are the native NFT collection released exclusively for the Shiba Inu community and its token holders. There were only 10,000 released on launch, and owning one of these NFTs provides holders with a number of perks.
The release was intended to expand the use-case of Shiba Inu’s network and bring new people to the community. Shiboshis are the ticket to access the “Social Club”, which gives its members a private space to communicate, exclusive news on SHIB development (particularly in the NFT Gaming space) and more.
Shiboshis regularly sell on OpenSea for more than USD $1,000.
How To Invest In Shiba Inu?
Shiba Inu’s rise to prominence over the past couple of years has made it fairly easy to invest in. The coin can be purchased on a wide number of platforms, although it is not as widespread as the likes of Bitcoin, Ethereum or even Dogecoin. However potential investors shouldn’t have any issues finding a suitable place to purchase SHIB.
- Centralized exchange. Centralized exchanges (CEX) are regarded as the easiest way for investors to purchase cryptocurrencies like SHIB, especially for beginners. These platforms essentially match bids (buyers) for offers (sellers) and take a fee for organizing the trade. Users can deposit fiat currency into their CEX account and then use that to instantly purchase cryptocurrency. Alternatively, most exchanges come with a native wallet that supports the swapping, sending and receiving of various digital currencies. Most CEXs are government regulated, making them a safer option than some alternatives. Examples of top crypto exchanges include Binance and Coinbase.
- Decentralized exchange. Decentralized exchanges (DEX) are a relatively new phenomenon in the crypto industry, vaulting in popularity at the dawn of the new decade. ShibSwap has its own native DEX, which allows users to connect their third-party wallets (like Metamask) to the platform. From there, users can swap their pre-existing crypto tokens for SHIB (as long as they are supported). Read our list of the best-rated decentralized platforms.
- Brokers. Brokers look and operate quite similarly to centralized exchanges. The key difference is what goes on behind the scenes. When using a broker, all of your trades are matched and supported by the company operating the platform – unlike a CEX which is person-to-person. Brokers often have higher barriers for entry than CEXs, but this is not necessarily true for all. Examples include eToro and Robinhood.
- Peer-to-peer. The final way to invest in Shiba Inu is P2P. This can be accomplished by directly paying cash, or another crypto, to someone else’s wallet in exchange for SHIB. Platforms exist to facilitate and ensure the safety of these transactions, but they are still riskier than most alternatives. Investors must ensure they are trading with a trusted seller before buying SHIB P2P.
Where To Buy Shiba Inu?
Shiba Inu is a popular memecoin that is supported by numerous crypto exchanges and trading platforms. These providers vary in payment methods, supported fiat currency, ease of use, fees, and customer support. The following exchanges are top-rated exchanges for buying Shiba Inu. For a tutorial on how to buy Shiba Inu and a comparison of the best exchanges that support SHIB, read this article.
Shiba Inu Coin Price
Early adopters of Shiba Inu have seen the meme coin’s value sky-rocket. Shiba Inu exploded in 2021, returning investors an eye-watering 74,000,000% gain between January and October. The coin cooled off substantially soon after, falling more than 80%. It has since stabilized between a value of US$0.00002–0.00003 cents.
Is Shiba Inu A Good Investment?
When assessing cryptocurrency, it is vital to pay attention to more than just historic performance and price swings. This is especially true when analyzing Shiba Inu, given it only has two years of data to go off of and is inherently quite volatile.
Like the majority of digital currencies, most price movement is dictated by speculation. This makes it a risky investment. Admittedly, Shiba Inu’s ecosystem has continued to evolve, and the addition of DEXs like ShibSwap and new functions will continue adding value to SHIB. However, it is important to remember that this will not necessarily correlate with an increase in price.
Because the price of SHIB is so low, investors can spend less than $100 dollars and obtain 1 million+ tokens to their portfolio. In that sense, Shiba Inu can be appealing because it doesn’t take a whole lot of money to have a decent investment position. This is a fallacy because it is predicated on the idea that SHIB coins will eventually balloon too – for example, more than one cent. Such a meteoric price rise is not exclusive to low-value investments and should be evaluated independently.
When deciding if Shiba Inu is the right investment for you, it is worth looking into the underlying network (Ethereum), price correlations (Dogecoin, Elon Musk), and associated ecosystem applications (ShibSwap, Shiboshis) and any innovative developments that may be in the works.
Considering Shiba Inu’s value and evolution are derived from its devoted community, potential large-scale investors may wish to engage with members to get a better understanding of the coin’s culture, its developers and their fundamental philosophies.
In all, Shiba Inu has some things going right for it – a great framework of dedicated developers and community members, smart contract capabilities and ambitious goals. However, the coin presently lacks innovation, real-world applications and is mostly fuelled by speculation. It is by no means a safe investment, but thorough research, a diverse portfolio and belief in the project can make Shiba Inu a decent investment opportunity.
Best Ways To Store Shiba Inu
All digital assets (cryptocurrencies and NFTs) are stored in wallets. Shiba Inu investors can store their funds in a number of different wallets, though the most common will be exchange wallets.
Exchange wallets are “hot” wallets (connected to the internet) that are native to a specific platform. For example, SHIB purchased on Binance will be stored on the platform’s supported wallet. From there, investors can easily swap, sell, send or receive SHIB inside the wallet.
Exchange wallets are by far the most convenient way to store cryptocurrency like SHIB. They are easily accessible, and many platforms will have insurance funds in place in case assets are stolen. However, these wallets are typically not recommended as a long-term method of storing cryptocurrencies. The rationale behind this is two-fold. Firstly, exchange wallets are custodial, which means stored assets are actually in the custody of the company behind the exchange, not the investor. This leaves their cryptocurrency susceptible to wide-scale attacks. There are several examples of exchange hacks resulting in permanently lost crypto funds.
Secondly, by holding SHIB on an exchange investors are missing out on potential earning opportunities. This is particularly prevalent for Shiba Inu tokens, as the community behind the network is largely driven by participation in the ShibSwap platform, which requires a third-party wallet.
Non-custodial hot wallets
Non-custodial hot wallets are another popular way of storing SHIB. These third-party wallets come in the form of browser extensions, mobile applications and software downloads. Like exchange wallets, they are connected to the internet. This uptime does mean they are also at risk of being hacked or exploited, although less so than exchange wallets.
As Shiba Inu runs on the Ethereum network, SHIB can be stored in any top Ethereum wallet that supports ERC-20 tokens, including Metamask, Atomic Wallet and many, many more. The wide range of wallets available make non-custodial hot wallets a good choice for storing SHIB.
Cold wallets are probably the least-used wallet type, but also the most recommended. These wallets are not connected to the internet, and thus at the least risk of exploits. This is a little inconvenient, but the security trade-off is worth it for most. Cold wallets typically take the form of a hardware device like a USB dongle. This hardware can be plugged into a computer to access SHIB and other cryptocurrency assets. The most popular cold wallet is the Ledger Nano, which supports a wide variety of digital currencies, including SHIB.
Frequently Asked Questions
It’s impossible to say for sure, but it is unlikely SHIB will be valued at US $0.01 anytime soon. Its huge circulating supply means that for SHIB to be worth a cent, its market cap would be worth substantially more than Ethereum and Bitcoin combined. However, the crypto world is constantly evolving, and any number of developments could cause a massive price rise (or fall) for SHIB.
No, Shiba Inu is not definitively better than Dogecoin. Both tokens have their advantages and disadvantages. Dogecoin has far more public exposure, a larger community and more celebrity pull. Conversely, Shiba has a limited supply, a much greater use-case and potential for development (due to its smart contract capabilities).
No, Shiba Inu’s supply is maxed at 1 quadrillion SHIB.
Shiba Inu recently introduced a new application to their decentralized finance platform known as the ShibaSwap burn portal. The first week since its release saw about US$40,000 worth of SHIB burned.
Shiba Inu was one of the first of the new spate of animal-based meme coins to take the cryptocurrency market by storm in the past 24 months. It has been by far the most successful of these new entrants, consistently ranking in the top 20 cryptocurrencies by market cap.
Investors tend to accrue a lot of SHIB cheaply in the hope it will eventually jump to 1 cent, or higher. This is an unrealistic goal for serious investors, but the enthusiastic and continual development of Shiba Inu’s ecosystem could see long-term rewards for SHIB holders.