Is Shiba Inu (SHIB) Safe?

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Contributor, Benzinga
November 1, 2021

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If you have been following social media or financial news, you have likely heard about Shiba Inu’s meteoric price rise, smashing all-time records. The Shiba Inu (SHIB) token was launched on the Ethereum platform and set its sights on outpacing another meme-based cryptocurrency, Dogecoin. As a result of the recent upward movement, the token’s price rose over 800% during the month of October, making it the 10th-largest cryptocurrency by market capitalization entering Q4 2021. 

SHIB has proven to be an extremely volatile asset, increasing by more than 80,000,000% over a year. A major factor for the price rise was due to celebrity attention and social-media hype rather than the coin offering innovative technology that others do not. Nevertheless, Shiba Inu is expanding the utility of the SHIB token, adding a decentralized exchange (DEX), ShibaSwap and a non-fungible token (NFT) utility via the ShibaNFT marketplace, making it the first meme token featuring an NFT utility.

How Is Shiba Inu Secured?

The SHIB token is an ERC-20-based token that has been built on the Ethereum blockchain and uses the network’s smart contract technology. SHIB chose Ethereum as the platform to run its smart contracts because it is a secure and established blockchain that uses a proof-of-work (PoW) consensus mechanism. Currently, Ethereum is undergoing a transition from the PoW mechanism to a more energy-efficient proof-of-stake (PoS) mechanism, which should benefit Shiba Inu. 

Shiba Inu is part of a rapidly expanding community known as the Shib Army. The Shib Army has over a million members. The community makes all decisions concerning Shiba Inu, and it is determined to execute a successful decentralization project without direct leadership, funding and central authority. The project’s primary goal is to preserve a critical principle of cryptocurrency: decentralization. By making the token decentralized, institutions cannot monopolize control.

Shiba Inu has a total supply of a whopping 1 quadrillion coins, and its founders claim not to possess any SHIB coins. Furthermore, nearly half of the supply resides within a liquidity pool on the DEX Uniswap. The remainder of the tokens were sent to Ethereum co-founder Vitalik Buterin and, after that, destroyed.

Risks of Investing in Shiba Inu

Although it may seem fun to get on the Shiba Inu bandwagon and purchase SHIB tokens, the project may not be appropriate for your retirement portfolio. SHIB is an altcoin that is primarily community based, which means that its longevity depends more on the success and growth of its community than its utility. Saving for retirement is difficult enough for most people, even under the best of circumstances, so you cannot afford to purchase investments that involve such high levels of risk. No matter what cryptocurrency you choose, experts generally recommend that you only invest what you can afford to lose.

An alternative to investing in a booming cryptocurrency based on hype is to search for crypto assets with a specific utility. Shiba Inu supporters contend that the ecosystem, which provides smart contract capabilities, NFTs and decentralized finance (DeFi), has utility beyond just the community. 

SHIB token holders should also be mindful that the top 100 addresses own more than 82% of the 1 quadrillion Shiba Inu coins in circulation. Even though Ethereum creator Vitalik Buterin destroyed 90% of his SHIB tokens, having so many tokens in the hands of a few investors compromises the decentralized nature of Shiba Inu.

It is even more troubling that these remaining SHIB whales could severely damage the token price if they sell. The 50 trillion SHIB tokens, which Buterin did not burn, were donated to the COVID-Crypto Relief Fund for India. The tokens will eventually need to be put up for sale to maximize the utilization of the donation. The remaining holders will feel the impact if and when these large holders withdraw. Given the lack of correlation between SHIB’s prospects and its price, wild swings in price are likely, and the price may go to zero when public attention moves on from SHIB.

Is Shiba Inu Safe?

Ryoshi, a member of an anonymous developer team known as Shiba Inu, founded the company in August of 2020. On the basis that SHIB’s development is community driven, Ryoshi has positioned SHIB as the successor to another meme-based token, Dogecoin. Despite the team’s anonymity, it has made great strides with the launch of ShibaSwap, its DEX, in July 2021. The ShibaSwap platform allows investors to stake their SHIB and earn interest in BONE tokens and 0.03% of ETH swap transaction fees. The ability to generate returns through staking is not new to the crypto space, but it will likely motivate SHIB holders to retain their tokens for a more prolonged time.

DEXs present a significant risk in that, unlike centralized exchanges, they have no means of recovering funds that are lost, stolen or misplaced. Since there is no Know Your Customer (KYC) process or way to cancel a transaction in the case of a compromised account or loss of the private key, owners may not be able to recover data or regain assets. In the event of missing funds, no support team or help hotline exists. The blockchain’s model of processing and storing all transactions in smart contracts without any owners or overseers is incompatible with refunds, and users are generally unable to retrieve their assets.

Where to Invest In Shiba Inu

A number of cryptocurrency platforms offer SHIB, including Coinbase Global Inc. (NASDAQ: COIN), Crypto.com and WeBull; eToro, which bills itself as the world’s social trading platform, has recently added SHIB to its platform.

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Shiba Inu Hacks

The Poly Network suffered its largest DeFi hack in August 2021, with hundreds of millions of dollars in cryptocurrency funds stolen. The attacker gained Ethereum and Binance smart chain tokens, including $2 million in SHIB tokens. SHIB’s price rose before the hack, and the event did not harm the cryptocurrency’s price. The hackers gained control of over 250 billion SHIB tokens through a single transaction on the Ethereum blockchain. A history of transactions revealed detailed information regarding the hacked tokens, and the Poly Network flagged the wallet addresses of the hacked tokens.

Due to the hack, SHIB opted not to use multichain for the remainder of the year because it is easier to defend SHIB against attacks when the attack surface is smaller.

Best Hardware Wallet for Shiba Inu

It’s a good practice to store your SHIB tokens in a secure wallet. Cold wallets, or offline wallets, are available as well as online wallets (hot wallets). Ledger and Trezor, 2 of the most secure cold wallets, are not connected to the internet, which means they don’t pose a hacking risk.

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Best Hardware Wallet: Trezor

An affordable hardware wallet supporting a variety of cryptocurrencies, Trezor is a tried and tested solution. Its interface is straightforward to use and, if you lose your wallet, your offline backup allows you to access your assets. This hardware wallet provides additional security measures such as PIN codes and pass phrases, making it as hack-proof as possible.

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Shiba Inu has enhanced its utility by entering the ever-expanding NFT space with ShibaNFT. Users can purchase their own unique Shiba Inu dogs as an original NFT, which can be bred and sold on open markets. This increase in utility should result in higher demand and positive price action for token holders.

Cryptocurrency Market Outlook

The total market cap of Bitcoin (BTC) stands at just under $2.6 trillion in late October 2021 and is expected to end the month with the highest monthly close in its history. Ethereum (ETH) is trading close to its all-time high price and is expected to rise even further. Analysts predict that the bull market will likely continue through the end of Q4. You can see the current crypto prices below:

Is Shiba Inu a Safe Investment?

Prior to deciding whether to invest in a project, it is prudent to conduct extensive research. SHIB tokens are currently priced at approximately $0.00006, making them a relatively low-cost investment, and experts consider projects with higher market caps to be more secure investments. In Shiba Inu's case, however, the token has remained extremely volatile even at its multibillion dollar market cap. It would also help to keep in mind that cryptocurrency price predictions can only be speculative since digital assets are inherently volatile. However, SHIB may be a good investment if the Shib Army community continues to flourish.

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