Shiba Inu started off as a joke coin that was created for the community but has quickly turned into a multi-billion dollar project that falls probably under a speculation bubble. Although, they have a lot of hype going around in the community I decided to lay down all the facts in this article to let everyone make an unbiased judgment on the Shiba token.
In this article, we will talk about what is Shiba Inu token, why people bought Shiba Inu at such high prices & what will it take to reach the price of $0.01. Before we begin though, let’s make sure that you understand the difference between a Coin & a Token.
A standard disclaimer for all readers before we start our discussion on the topic is that the article is not financial advice. Kindly do your own research before investing in cryptocurrencies.
Coin vs Token
Just in case you don’t know what a blockchain is, you’ll first need to visit some of our old articles to get the basics cleared. You’ll need to understand what is blockchain before we discuss any of this ahead. There are many blockchains out there, Ethereum is one, Binance Smart Chain is another one, Polygon has a blockchain & even Dogecoin has its own blockchain.
Each blockchain has its own coin which serves as the utility/governance token for that network. That’s where Ethereum, BNB, Matic Coin originate from. Apart from these native coins, on some of these blockchains, you can create your own tokens that are not coins since they don’t help run the blockchain but they act like coins & so they are called a token. They utilize the power, security, and upkeep of the main blockchain so that they don’t have to focus on their own blockchain.
These tokens act just like the main coin except they aren’t. Shiba Inu is a token on the Ethereum network meaning it is not a coin but runs on the Ethereum network & there is no such thing as the Shiba Inu blockchain. I have seen a lot of newcomers often misinterpret the difference between a coin & a token. Hence I wanted to clear it out.
Shiba is a token on the ethereum network, meanwhile, Dogecoin is an actual blockchain on its own. Shiba token was originally created as the Dogecoin killer. Dogecoin is a meme coin that started long ago to make fun of Bitcoin & to show that anyone could copy the Bitcoin code with minor changes to make another new coin. Doge started to pick some pace over past couple of years and during 2021 itself, it made all time highs which pulled in a lot of speculators.
Since Dogecoin was created as a copy of the original Bitcoin code, it has some downsides too. You can’t create smart contracts on the Dogecoin network like the Ethereum network. Smart Contracts allow people to do many more things on a blockchain network than send money back and forth. For example, Smart Contracts can allow people to create new tokens which can’t be done on the Bitcoin or Dogecoin blockchain. Users can’t build Decentralized Applications or Swap Tokens on these networks.
If you want to learn more about Decentralized Finance & Smart Contracts, & how these work, check out the search icon on top of our website. Type in your keywords and you’ll find many interesting articles.
The Shiba Inu token can utilize Smart Contracts. These are some of the things which you can’t do on the Dogecoin network. You can lend your Shiba tokens out & let other people trade your coins to earn fees. The Shiba Inu project started in August 2020 when a developer named Riyoshi started a project on a community governance model.
Another anonymous developer helped Riyoshi set up the smart contract of the token & also invested 10 ethereum on the Shib/Eth pair on Uniswap. This meant that people could give some Ethereum on Uniswap & get Shiba Inu coin.
Around mid-March, 2021 Elon Musk made a tweet about getting a Shiba Inu dog which somehow caused the price to increase by 300%. What the Shiba Inu developers did was something very shocking. They gave half of every Shib Token out there to Vitalik Buterin who created Ethereum. They knew his wallet address & literally sent him a ton of Shib tokens. Many people say that this was for advertising purposes so that the Shiba Inu team could go around & say that Vitalik was engaged in their project when in reality anyone can send Vitalik some free tokens they want.
Eventually, Vitalik took some of the Shiba Inu tokens, sold them & donated the money to Charities & the rest of the tokens which he didn’t sell around 90% of what he got were burned. Burning a token means sending them to an irrecoverable wallet address. Vitalik burned around $6.7 billion dollars of Shiba Inu token.
Rewards for Shib Holders
Shiba Swap actually provides rewards to people for providing liquidity to certain Shiba Inu pairs. They call it Digging. If I compare that to Uniswap, whenever you provide liquidity on Uniswap for certain token pair, it gives you a LP token as a proof of ownership in the liquidity pool.
Just like that when you stake/lock-up your tokens on Shibaswap, they call it burying & when you bury your LP tokens in ShibaSwap, you earn Bones. Bones are simply another Ethereum token that is a governance token for Shibaswap. This means is you own 1 Bone, you get 1 vote on Changes that happen to the project.
Most people earn bone tokens and immediately sell them but some people buy & hold them. You can actually stake these bone tokens too but the reality is that they are inflationary in the beginning. Any economic students know what that means for the price. It will go down.
If you create a project & the price of your project’s coin greatly went up, you might think wow cash out. But the problem is, if the liquidity is low, you trade your tokens on Uniswap & the price will crash unless you can get other people to provide liquidity. When you dump a bunch of tokens in a well maintained liquidity pool, the price won’t dump that much. This way you can sell more tokens at a higher price. You get the idea.
Can it go to 1 Cent or 1 Dollar?
That will not happen. What would it take to reach even 1 cent? First of all the market cap needs to be $4 trillion US dollars for Shiba Inu coin. That’s even more than today’s market cap of all cryptocurrencies including Bitcoin. That is what it would take to reach $0.01.
To reach $1, it would take $400 trillion US dollars which is way more than the entire household wealth combined in US.
You get it. It won’t happen.