This meme coin has a passionate fan base that helped it become one of the largest cryptocurrencies in the world.
Cryptocurrencies are often divisive, but Shiba Inu is in a class of its own. Critics have called it a pump-and-dump scheme and said that it's practically useless. On the other hand, it has a massive number of followers who love to hype it on social media, and it was one of the most successful investments of 2021.
Is there still room for Shiba Inu to grow? Anything's possible with cryptocurrency, but you should be very cautious if you're thinking of buying this one.
What is Shiba Inu coin?
Shiba Inu is a cryptocurrency meme token launched by an anonymous founder called Ryoshi. Like Dogecoin (DOGE -0.33%), it's based on the Doge meme, which features a Shiba Inu dog. It even calls itself the "Dogecoin killer."
The white paper (referred to as a "woofpaper") for Shiba Inu describes it as a community-based cryptocurrency project. This essentially means that the decentralized Shiba Inu community, known as the "ShibArmy," is in charge of the cryptocurrency and its development.
This isn't exactly unique in the world of crypto. There are other cryptocurrencies run by decentralized communities, so even though Shiba Inu's white paper frames it as a revolutionary idea, it's no different than what other projects have already been doing.
While Shiba Inu was first known as an alternative to Dogecoin, it has a key difference. Shiba Inu is built on the Ethereum (ETH -1.8%) blockchain, so it can run smart contracts. Through smart contracts, Shiba Inu can work with decentralized applications. Dogecoin doesn't have this capability, making it much more limited in terms of what it can do.
A brief history of Shiba Inu
Shiba Inu was created in August 2020 with an initial total supply of 1 quadrillion tokens. The first big moment in Shiba Inu's history came in May 2021 when its founder sent half the supply to Ethereum co-founder Vitalik Buterin. This was widely considered a publicity stunt to piggyback on the success of a more popular cryptocurrency. Ryoshi's cryptic explanation was that "there is no greatness without a vulnerable point."
Buterin ended up donating 10% of the tokens and burning (destroying) the other 90%. Because of that, Shiba Inu currently has a circulating supply of about 549 trillion tokens.
Shiba Inu launched its own decentralized exchange, ShibaSwap, in July 2021. In November, it partnered with David Folk (previously vice president of technology at Activision) to develop a cryptocurrency gaming project.
In terms of value, Shiba Inu started 2021 with a price of $0.000000000119. It hit a peak that year of $0.00008845. Comparing such small numbers is tricky, but an easier way to look at it is that the price had risen more than 74,000,000% in October 2021. It then suffered a major downturn, with the value dropping by more than 75%.
How Shiba Inu is used
Shiba Inu originally was designed as a digital currency. It has since launched a decentralized crypto exchange in an attempt to build the Shiba Inu ecosystem. Here's a closer look at current uses for Shiba Inu.
Digital currency
Shiba Inu can be used for peer-to-peer digital payments or as a payment method with businesses that accept it. However, it doesn't offer any competitive advantages over other cryptocurrencies in this regard, and it's not widely accepted as a payment method.
At the start of 2022, more than 600 businesses accepted Shiba Inu. For comparison's sake, more than 7,500 businesses accepted market leader Bitcoin (BTC -1.84%) at that same time.
Decentralized cryptocurrency exchange
In July 2021, the Shiba Inu team launched a decentralized crypto exchange (DEX), ShibaSwap. DEXs are crypto exchanges that don't have a central governing body. They're part of something known as decentralized finance (DeFi)Â -- traditional financial services that don't require banks or other financial institutions.
ShibaSwap and other DEXs allow traders to swap one cryptocurrency for another directly from their blockchain wallets without registering for an account or providing any personal information. Since ShibaSwap is built on the Ethereum blockchain, it offers trading between ERC-20 tokens, meaning tokens built on that specific blockchain.
Users can also stake (deposit) their crypto to the exchange's liquidity pools so the exchange can use it. In return, users receive crypto rewards on their staked tokens.
There are two tokens designed specifically to work with ShibaSwap:
Bone ShibaSwap (CRYPTO:BONE) is ShibaSwap's governance token. Holders can propose and vote on changes to ShibaSwap. BONE is also used for crypto staking since holders can stake it to earn more.
Doge Killer (CRYPTO:LEASH) is a token that was originally made to track Dogecoin's price at a 1:1,000 ratio. It no longer does that and is now used as a store of value for ShibaSwap investors.
