Shiba Inu

What is Shiba Inu (SHIB)?

Shiba Inu is a memecoin through and through. The term ‘memecoin’ originates with Dogecoin, which is named after a famous meme of a Shiba Inu dog. SHIB takes it a step further, naming itself after the breed itself.

Although SHIB doesn’t have any firm utility as yet, the adoption of it as a currency has been seen in some areas similar to DOGE. However, it positions itself as a “Dogecoin Killer”, adopting a term given to several third-generation cryptocurrencies as “Ethereum Killers”.

SHIB has made incredible strides and, in fact, ‘flipped’ Dogecoin by overtaking its market capitalization value in October 2021, not long after one major exchange listing and upon speculation of another.

Shiba Inu came to prominence when the founder of Ethereum and perhaps cryptocurrency’s most prominent figure, Vitalik Buterin, was given 50% of its supply—500 trillion SHIB—as a marketing stunt.

This was done in two transactions on the 1st and 2nd of August 2020.

Stating that he didn’t wish to be “a locus of power”, Buterin burned 90% of his SHIB and donated the rest to charity, including over 50 trillion SHIB to a COVID-19 relief fund.

At the time of writing, Buterin’s wallet contains over 3 million SHIB… valued at under $30 in June 2022.

When Was SHIB Launched?

SHIB was created in August 2020, at the same time that Dogecoin was starting to emerge from a relatively stable price point of $0.002 to trend upwards.

Half of its supply was since locked as liquidity to Uniswap, but as already mentioned, the other half was sent to Vitalik Buterin.

SHIB was launched as an ERC-20 token on Ethereum in an attempt to further differentiate from Dogecoin, which is mined using the Scrypt algorithm.

Who are the Founders of Shiba Inu?

Shiba Inu was founded by the pseudonymous “Ryoshi”. Many suggest this is an attempt to emulate the decision made by Bitcoin’s founder, Satoshi Nakomoto, to remain pseudonymous.

In a blog entry, Ryoshi described themself as “just some guy of no consequence tapping at a keyboard.” Ryoshi also claims to own no SHIB tokens and that Shiba Inu is an experiment in decentralized community building.

In the same blog, Ryoshi said that their goal for Shiba Inu is to see if a perpetual decentralized organization could work with no central leadership. Furthermore, Ryoshi wrote that the ecosystem would develop further to include an algorithmic stablecoin to serve as a global exchange of value.

This ambitious goal has seen some fruition, with the Shiba Inu community hard at work fleshing out this ecosystem and trying to find some sort of utility for the SHIB token.

How Does Shiba Inu Work?

As an ERC-20 token on Ethereum, SHIB doesn’t really have to do any pulling since it’s carried by ETH. The Ethereum blockchain is home to the largest network of decentralized applications in the cryptocurrency sector. It allows hundreds, if not thousands, of tokens like SHIB to run on its blockchain.

The SHIB ecosystem itself will have three tokens according to the woofpaper (what the Shiba Inu community calls their whitepaper): SHIB, LEASH, and BONE.

Following the launch of the ShibaSwap decentralized exchange (DEX) in July 2021, holders could stake (or ‘bury’, according to them) SHIB to receive xSHIB. LEASH stakers receive xLEASH, and BONE stakers, quite naturally, receive tBONE tokens.

Notably, Shiba’s use of jargon (bury instead of stake) gamifies the process and makes a lot of DeFi concepts a little easier to process for many users.

Burying any of SHIB, BONE, and LEASH has time-locking intervals. It also has a three-figure annualized return paid in BONE tokens. Uniquely, one-third of the staked amount can be claimed at the time of reward distribution (once a week) while the rest will be vested for six months.

ShibaSwap, as a DEX, also has liquidity pools called DIG. These incentivize users by way of fees and reward tokens to deposit pairs of coins that others can use for trading, a common mechanism by which DEXes replace traditional order books.

Yield farming, called WOOF pools, is also available on ShibaSwap. These allow reward tokens from liquidity pools to also be staked, yielding more BONE tokens.

What Makes Shiba Inu Unique?

Similar to Dogecoin, Shiba Inu’s major differentiating factor is its community. A single day after its July 2021 launch, ShibaSwap saw $1 billion in liquidity, showing the level of investment of its community.

When it launched, SHIB was just one of many memecoins (to quote the gentlest possible term used by the crypto community) attempting to hang on to Dogecoin’s coattails. The likes of Baby Dogecoin, JINDO INU, Alaska Inu, and Alaskan Malamute Token, in particular, share certain similarities with SHIB.

Ryoshi’s stunt of sending half of SHIB’s total supply to Buterin, however, had at least some of the desired effect and put Shiba Inu in the spotlight.

Other coins’ teams tried the same thing, and SHIB has certainly had its share of copycats, including BitShiba, Shiba Fantom, Shibalana, King Shiba, SHIBAVAX, Captain Shibarrow, SHIBA2K22, SpookyShiba, and many others.

However, Shiba Inu continued to reside in the public eye and its success saw plenty of stories being written. One wallet purchased $8,000 worth of SHIB shortly after launching, a hoard that would have been worth over $5.5 billion at SHIB’s all-time high.

These sorts of examples are another big draw of SHIB, with its supply quite intentionally set to the very high figure of 1 quadrillion. This means that investors can own millions, if not billions, and even trillions, of the tokens.

Like that of Dogecoin, Shiba Inu’s community is also involved in philanthropy. They rescue Shiba Inu dogs and fund their shelters.

How is Shiba Inu Secured?

SHIB does not have its own blockchain and therefore relies on Ethereum for its security since it is an ERC-20 token. Ethereum’s Ethash algorithm and vast network of miners provide ample safety to SHIB.

Ethereum’s 2.0 transition will shift ETH to proof-of-stake, leaving behind the more energy-intensive proof-of-work consensus mechanism currently being used.

Notably, the Shiba Inu community has been developing its own Layer 2 solution called Shibarium, with speculation that it would use BONE as its gas token.

What is the Use of Shiba Inu?

SHIB wasn’t created to solve any particular real-world problem, like Bitcoin, Litecoin, Ethereum, XRP, or indeed most of the top blockchain projects at least claim to do.

In fact, Shiba Inu founder Ryoshi claimed in a blog that SHIB was an experiment in decentralized community building. In that sense, many suggest Shiba Inu is already successful.

SHIB has followed a similar path to the OG memecoin Dogecoin since the communities of both coins are hard at work to find a real use for their currencies.

However, the community is its own benefit, and popular demand has seen the acceptance of both memecoins by various retailers. Major American electronics retailer Newegg began accepting SHIB in December 2021 for payments. According to the payment firm Coingate, this led 500 merchants to adopt SHIB.

SHIB is also used on the ShibaSwap DEX for staking.

Who Controls Shiba Inu?

As previously mentioned, Shiba Inu founder Ryoshi claims to own no SHIB tokens and began the project as an experiment in decentralized communities without a centralized leadership function.

As such, no one individual entity is supposed to have control or decision-making power over the token or the ecosystem. Rather, the ecosystem uses a governance token, BONE.

These BONE tokens are both generated by and used in DeFi on the ShibaSwap DEX. Although BONE wasn’t intended to be a governance token, that’s how the community has been using it at the time of writing.

In most projects, a governance token behaves similarly to shares of a traditional corporation, bestowing the holder with the right to vote on the project’s direction.

How Much Shiba Inu Is In Circulation?

As of June 2022, around 549 trillion SHIB were in circulation. There were 1 quadrillion SHIB tokens in existence at launch, but 50% of that was sent to Vitalik Buterin, who burned most of it and donated the rest.

The Shiba Inu website suggests that the act of giving this SHIB to Buterin was burning in itself, and that it was done so for safekeeping. Critics point out that it was purely a publicity stunt, performed in an attempt to gain legitimacy as an asset held by Buterin.

One of the Shiba Inu community’s decisions has been to begin burning SHIB to achieve some level of scarcity. Plenty have been on board with this, and crypto record label, Bigger Entertainment, organized a SHIB burning party over Christmas 2021 that burned 239 million SHIB.

On Christmas Day 2021, 239 million SHIB was worth $9082. Just over 6 months later, on June 13th, 2022, that same amount of SHIB was worth just $1912.

However, the community’s burn rate has been accelerating, with close to 2.5 billion SHIB burned over one week in late May 2022, according to SHIB burning tracker Shibburn.

This followed the launch of ShibaSwap’s burn portal in April 2022, which rewarded users for burning SHIB with burntSHIB tokens. This burntSHIB is used to get RYOSHI tokens, which can also be staked on ShibaSwap.

How Do You Buy Shiba Inu?

You can purchase Shiba Inu on many major exchanges, given its status as a consistent top 20 coin and the massive community behind it. It can also be purchased on the ShibaSwap DEX and other decentralized exchanges on the Ethereum network.

There has been a lot of speculation around SHIB being listed on popular neo-brokers. In October 2021, this led to Shiba Inu’s ‘market capitalization’ overtaking that of Dogecoin.

However, this listing did not pan out despite the efforts of the Shiba Inu community. Given the suspicions that surround some of the most prominent neo-brokers, SHIB holders may be best served on platforms that actually allow the withdrawal of their tokens.

Is It Possible to Buy Shiba Inu Instantly?

The speed of Shiba Inu transactions depends on the speed at which the Ethereum network is processing them, given that SHIB exists as an ERC-20 token on Ethereum. This tends to be no more than a few minutes on average.

However, greater congestion on Ethereum means that transactions can get slower and more expensive in terms of gas fees. As a result, many scaling solutions have been launched that take care of both of these problems.

Referred to as Layer 2 solutions, they make transactions faster as well as cheaper. While many Ethereum-based Layer 2s exist, the Shiba Inu community also has its own, Shibarium, in development.

How Do You Store Shiba Inu?

Like most cryptocurrencies, Shiba Inu is stored in a wallet. Specifically, SHIB tends to be stored in an Ethereum-based wallet, as it exists in the form of an ERC-20 token on Ethereum.

SHIB can be held in an exchange account as well, but private custody tends to come in two forms: a cold wallet or a hot wallet.

Cold wallets are regarded as a safe option because they don’t connect to the internet. A common form of a cold wallet is a piece of paper on which private keys are jotted down. They could also take the form of an offline device or hard drive, but keeping them safe is paramount!

Hot wallets tend to be a little easier to access and harder to lose since they tend to be on a frequently used computer or mobile device. They often take the form of a desktop client or browser extension, making them relatively easy to use.

Metamask, used by well over 10 million people, and the relatively new but highly-rated GameStop Wallet are examples of simple browser extension wallets that allow you to store your own SHIB. 

Shiba Inu Energy Consumption

As an ERC-20 token on Ethereum, Shiba Inu doesn’t have its own blockchain and therefore doesn’t really have any notable energy consumption factor on its own.

However, some critics suggest that Shiba Inu is responsible for a percentage of Ethereum’s energy usage, which, according to the Digiconomist, is considerable - 102 TWh yearly.

While the energy use of Ethereum remains high, the upcoming Ethereum 2.0 merge will see it shift from proof-of-work to proof-of-stake consensus. PoS requires far less energy than PoW, with the top PoS networks drawing only between 70-700 GWh per year.

Is Shiba Inu a Good Investment?

It cannot be denied that SHIB has been a good investment for many in the past, including the wallet that bought $8000 of it in August 2020 and saw its value appreciate into the billions the following year. That said, almost every major cryptocurrency has experienced this phenomenon.

Working both for and against SHIB is its 1 quadrillion token supply. However, investors enjoy seeing that they own huge numbers of a token, as opposed to Bitcoin, where owning even one whole coin is impossible for many.

These long strings of numbers, both in terms of tokens owned and the price per token, make calculation difficult. As such, some SHIB investors multiply their holding of SHIB tokens by an optimistic future price of $0.01 per SHIB or even $1, mostly just for simplicity’s sake.

Thanks to its massive supply, a SHIB price of $0.01 would put its valuation, or market capitalization, at $10 trillion, close to that of gold. A price of $1.00 would give it a market cap of $1 quadrillion.

To put that figure into context, Forbes magazine reported as recently as June 2021 that the entire world’s total net wealth had hit $431 trillion, less than half the $1 quadrillion that some SHIB investors are hoping for.

However, these SHIB investors are a strong and significant community that has achieved a lot in a short time. Movements have their own value, and this sense of community, itself, offers an investment thesis to many.

The discovery of a real use case for SHIB, however, has the potential to see Shiba Inu’s flagship coin soar.

What are the Risks of Owning Shiba Inu?

Given that SHIB’s value comes primarily from its community and support, the possibility of this community dissolving is one of the biggest risks of investing in SHIB.

Since SHIB doesn’t yet have a solid use case, unlike many other major cryptocurrencies, it’s difficult to set a fundamental valuation or a floor price for it. The community being sundered could be catastrophic for its price.

As a ‘meme’ token, SHIB is also often driven both up and down by hype and social media traction. As with Dogecoin, SHIB can fluctuate wildly after being mentioned by crypto influencers like Elon Musk.

Furthermore, and again similar to Dogecoin, SHIB’s decentralization in terms of wallet concentration is somewhat worrisome.

The burn address Vitalik Buterin used to destroy 40% of the SHIB supply is an outlier, but the next biggest wallet holds 6% of the supply (60 trillion SHIB), followed by two wallets with over 3% and another pair with over 2%. Thirteen wallets in total have more than 1% of the total supply.

The main risk with this distribution is the negative effect on price if one of these ‘whales’ were to divest themselves of their SHIB on the open market.

In comparison, only a single Bitcoin address holds more than 1% of the BTC supply, and just three more have over half a percent. This makes Bitcoin very decentralized, and one of these wallets being emptied may not result in a catastrophe for the currency.