Is Shiba Inu (SHIB) a Good Investment?

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Contributor, Benzinga
Updated: August 4, 2022

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Cryptocurrencies that share an incredibly cute Shiba Inu mascot have taken center stage in the realm of meme coins. Dogecoin (DOGE) was the pioneer of doggy cryptos, released as a joke in 2013 when both Bitcoin and the Shiba Inu “doge” meme were all the rage.

To the astonishment of the creators, Doge became quite popular soon after its release. However, many of its users eventually lost interest in the project until it was reintroduced into the popular consciousness by Elon Musk and users on a cryptocurrency forum on Reddit called SatoshiStreetBets.  

Shiba Inu (SHIB) launched in August 2020 with the mission of overtaking Dogecoin. Shiba was dubbed the “Doge Killer”. On October 27th, Shiba Inu flipped Dogecoin's market cap to become the alpha pup. However, since then Dogecoin has reclaimed the spot as the most valuable meme coin. SHIB is still one of the largest cryptocurrencies in the world, beating out a myriad of serious coins. The Shiba Inu team launched a decentralized exchange (DEX) called ShibaSwap where users can stake their Shiba tokens to earn interest. More recently, the team has announced its plans to enter the layer-2 space with its own network focused on scalability.

What is Shiba Inu Token?

Shiba Inu was founded by an anonymous person with the pseudonym Ryoshi. Shiba is an ERC-20 token on the Ethereum network, which allows the developers to build the ShibaSwap DEX and integrate other tokens and NFTs into the platform’s ecosystem. The maximum supply of Shiba was set to 1 quadrillion tokens, which is much higher than most cryptocurrencies.  The enormous token size caused Shiba’s price to be much lower than most assets with similar market capitalizations.

Half of the minted Shiba were locked into Uniswap to reward liquidity providers in Shiba pools on the DEX. The other half were sent directly to Vitalik Buterin, the visionary developer who founded Ethereum. Ryoshi’s intention was to burn the tokens, hoping that Buterin wouldn’t sell them, which would make the Shiba token basically worthless. By May 10, 2021, Buterin’s 500 trillion Shiba was worth billions of dollars, way more than any other token in his wallet. 

Buterin realized that he could make an enormous impact in the world with the money and decided to donate 20% of his Shiba (100 trillion Shiba worth over $1 billion - 10% of its total supply), split between two charities. One of the charities wasn’t named, and the other is the India COVID-Crypto Relief fund. This gift was one of the largest single donations ever made with cryptocurrency and brought legitimacy to Shiba and the cryptocurrency market as a whole. 

Shiba Inu vs. Dogecoin

Shiba Inu is built on top of Ethereum, which means it can take advantage of smart contracts to create much more advanced applications, like DEXs and NFTs. The token released their ShibaSwap DEX back over the summer, and they have recently released "Shiboshis" which is a collection of 10,000 NFTs. Dogecoin’s code is based on Bitcoin’s and lacks compatibility with smart contracts. Due to this, Doge can only be used as an internet currency and as an (unstable) store of value.

ShibaSwap adds new ways to use Shiba tokens, providing more value to its users. ShibaSwap launched with incentivizes for new users to buy Shiba tokens and stake them in liquidity pools, helping adoption of the DEX. However, this tactic is nothing new on the Ethereum network. Many decentralized applications (dApps) already provide staking pools, and when the liquidity mining incentives run out, there will be some sell pressure.

Shiba Inu and Doge are currently competing to be the goodest boy. Right now, Dogecoin is in the lead. Will the Doge army be able to come back? At the time of writing, Dogecoin’s market capitalization is about $8.8 billion, as compared to Shiba Inu's $6.5 billion market cap.

What is ShibaSwap?

The long-awaited ShibaSwap platform launched in July 2021, offering a multitude of features. The Dig feature allows users to provide liquidity (deposit tokens) to the DEX in exchange for BONES. Staking in any of these pools may earn a large amount of interest over time, but 66% of the returns will be locked for 6 months. This rule will keep stakers on ShibaSwap from selling off a large portion of their newly acquired tokens immediately and should help to keep their prices up.

The Bury tool allows users to stake SHIB, LEASH and BONE to earn passive income on your tokens. It is not entirely clear where the Bury interest comes from – most likely new issuance, which may cause inflation.

On the ShibaSwap launch day, Discord Admin Shiba Cat, stopped by Benzinga's "Moon or Bust" to dive deep on the DEX. Watch below.

Is Shiba Inu Safe?

Shiba Inu is not a safe investment by any traditional standards. Shiba Inu could be a fantastic investment but only if the meme can stay alive and see an eventual resurgence. SHIB is a classic high-risk high-reward investment. While massive gains are possible if ShibaSwap rises in popularity, Shiba doesn’t add anything novel to the decentralized finance (DeFi) ecosystem. This may change after it releases its Layer 2 network but until then it's little more than a doggie-branded meme coin. It can still have more use cases than Dogecoin because it's on the Ethereum network, but that doesn’t mean it will perform any better.

There are also distinct security risks in depositing cryptocurrencies into anonymous projects like ShibaSwap because the code may allow the developers to scam investors out of their cryptos. Scams that cost users millions of dollars are becoming more and more common in the wild west that is DeFi. This possibility can be ruled out by experienced code auditors if they can access the code, but ShibaSwap hasn’t been audited yet. 

Where to Invest in Shiba Inu

Because of its recent rise in popularity, Shiba was listed on multiple trading platforms including Crypto.com and eToro. You can also buy Ethereum on another exchange like Coinbase, Gemini or Kraken and swap it for Shiba on Uniswap. It is especially easy to buy Shiba on Crypto.com with their app (on iOS and Android). All you need to do to purchase it is set up an account and verify your identity. In the United States, verifying your identity requires your address, Social Security number and driver's license. Once you have your account set up and verified, you can invest in Shiba with USDT (a stablecoin pegged to the USD that can be purchased on crypto.com as well). 

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Crypto Price Movements

Cryptocurrency prices were on a tear in 2021, but the market crash this year has killed a lot of this progress. Although this may be a bearish signal in the short-term, investing in the right cryptocurrencies over the long-term may still prove to be very profitable. Many blockchain enthusiasts and long-term investors are still bullish on digital assets from a macro perspective, albeit most cryptocurrencies are trading well below their all-time highs seen last year.

So, is Shiba Inu a Good Investment?

Shiba Inu could be a good investment if a few conditions are met, namely if the meme can regain its popularity. It is by no means a sure or safe investment, especially in fearful and bearish markets. Investing in Shiba is extremely risky, but with enough luck and liquidity, it could skyrocket again. However, for the time being, cash is king. For more risk-averse investors, PennyWorks is an excellent way to earn sustainable returns on US dollars. You can earn up yo 8% APY with PennyWorks without any prior crypto experience.

The India COVID-Crypto Relief Fund has already moved 20 trillion Shiba out of its main wallet, though it is difficult to know exactly how much of the total donation has been sold. We don’t even know which charity the other 50 trillion Shiba donation went to. Most of the other half of Shiba’s supply that was locked into Uniswap hasn’t been minted yet, which will make selling the Shiba affect the price of the token even more.

Q
Is Shiba Inu a Good Investment?
A

Shiba Inu is not likely to be a good investment in the long term when compared to most other assets.

Q
Can Shiba Inu hit 1 cent?
A

Shiba Inu has too high of a circulating supply to ever hit 1 cent.

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