Introduction
Shiba Inu started out as a joke coin created for the community but has quickly turned into a multi-billion dollar project. This might fall under the speculative category; however, this channel is focused on providing the facts and ideas without biases or rumors. We aim to keep our opinions out of this video and let you decide based on true factual and whole information that we can fit in this blog. Welcome to Whiteboard Crypto, the number one YouTube channel for crypto education. Here, we explain topics of the cryptocurrency world using analogies, stories, and examples so that you can easily understand them. In this blog, we are going to explain what the Shiba Inu token is, why it’s been growing at an incredible pace, and what it will take to reach the price of one penny.
Coins vs. Tokens
First off, let’s make sure you understand the difference between a coin and a token. I’m going to assume that you already know what a blockchain is. You should know that there are many different blockchains out there. Ethereum is one, Binance Smart Chain is another, Polygon has a blockchain, and even Dogecoin has its own blockchain. Each blockchain has its own coin, which is where we get the Ethereum coin, the BNB coin, and the Matic coin, and so on.
On some of these blockchains, you can create tokens that are not coins because they don’t help run the blockchain but act like a coin, so they’re called a token. Tokens utilize the power, the security, and the upkeep of the main blockchain so that they don’t have to focus on their own blockchain. They act just like the main coin except they aren’t. Shiba Inu is a token on the Ethereum network, meaning it’s not on its own blockchain; it runs on Ethereum. This means there’s no such thing as a Shiba Inu coin; it’s technically a Shiba Inu token.
Shiba Inu and Dogecoin: The “Killer” Claim
Shiba Inu is often referred to as the “Dogecoin Killer.” If you don’t already know, Dogecoin is a meme coin that started a long time ago to poke fun at Bitcoin and show that anyone could copy the code with some changes. Dogecoin began to pick up speed in the past few years and has really grown in popularity over the last year. Since Dogecoin is its own blockchain and is kind of a copy of Bitcoin, it doesn’t have the cool upgrades that Ethereum has, such as smart contracts.
Smart contracts allow people to do many more things on the blockchain network than just send money back and forth. For example, smart contracts allow users to create new tokens, which you can’t do on the Bitcoin or the Dogecoin blockchain. They also allow users to create applications like decentralized exchanges, where you can swap your tokens.
Shiba Inu can utilize smart contracts, allowing you to do things that you can’t do on Dogecoin, like lending it out or letting other people trade with it while you collect their fees. This is why they claim to be the “Dogecoin Killer” – you can just do a lot more with it.
The Origin of Shiba Inu
So, how did Shiba Inu get started? In August of 2020, a synonymous developer called Ryoshi started the project as an experiment in community governance, meaning a test of how a community could decide on changes. An anonymous friend helped Ryoshi set up the smart contract token and also invested 10 Ethereum in an Ethereum and SHIB pair on Uniswap. This meant that people could give Uniswap some Ethereum and actually buy SHIB.
Around mid-March of 2021, Elon Musk made a tweet about getting a Shiba Inu dog, which somehow caused the price to increase by 300 percent. An interesting move by the Shiba Inu developers was to give half of literally every SHIB token out there to Vitalik Buterin, who created Ethereum. They knew his wallet address and just sent him a ton of SHIB tokens. Many say this was for advertising purposes, so the developers could say, “Hey, look, Vitalik owns some of our tokens,” implying that he believes in it. In reality, you can send him any of your tokens, and it doesn’t necessarily mean that they bought it. Eventually, Vitalik took some of these Shiba Inu tokens, sold them, and donated the money he got to charity. The rest of the tokens he didn’t sell—around 90% of what he was given—he burned. Burning a token means sending them to a wallet that nobody else has access to, so those tokens are gone forever. Vitalik burned around 6.7 billion dollars of Shiba Inu tokens.
Shiba Swap and Token Utility
One of the unique things you can do since SHIB is an Ethereum token is offer holders rewards for doing certain things with it. For example, Shiba Swap gives out rewards for people who provide liquidity to specific Shiba Inu pairs. They call providing liquidity “digging.” Whenever you provide your tokens for traders to use, Uniswap gives you something back to prove that you actually have ownership of that liquidity pool. What they give you is called liquidity pool tokens.
Shiba Swap rewards users who take their liquidity pool tokens and lock them up. This way, we know that the liquidity will be there for a while. Technically, you can withdraw your locked tokens at any time, so it’s unclear why they don’t reward all liquidity providers. When you stake or lock up your liquidity provider tokens, they call this “burying.” When you bury your LP tokens, you start to earn “bones.” Bones are another Ethereum token that is a governance token for Shiba Swap. This means if you hold one bone, you get one vote on changes that happen to the project. Most people earn them and then immediately sell them, but some people buy and hold them.
You can also bury and stake these bones, but that’s too deep for this blog. They are inflationary in the beginning, which means any economic students know what that means for the price: it’s gonna go down.
Liquidity and Market Cap Considerations
If you create a project and the price of your coin greatly increases, but you still hold some of that project’s coin, you might be tempted to cash out. However, if the liquidity is low when you trade your tokens on Uniswap, you’ll crash the price unless you can get other people to provide liquidity. Then, when you dump a bunch of tokens at once, the price doesn’t crash as much. This way, you can sell more of your tokens at a higher price.
This topic definitely applies to coins and tokens other than Shiba Inu. Keep this in mind if you’re interested in providing liquidity to SHIB.
Price Predictions and Market Cap
Let’s talk about those videos that speculate on whether SHIB could go to one cent or even a dollar. I’m not here to say that this will not happen, but I am here to clarify what it would take for that to happen. Market cap is a term used to compare cryptocurrency assets and is generally used to describe the average price of each coin. You get this number by multiplying the current price of the asset by the number of circulating assets. Right now, the Shiba Inu token is worth around $0.0000005, and the market cap is 21 billion.
If the price goes to one penny, the total market cap would be four trillion dollars, which is over the total amount of all money in every cryptocurrency ever, including Bitcoin. If it goes to one dollar, the market cap would be 400 trillion dollars, which is more than every house in the entire United States put together.
Again, I’m not saying this is impossible, but I want to give you the clear facts and let you decide.
All-Time Highs and Investment Considerations
Shiba Inu has been hitting all-time highs quite a bit lately. Did you know when a coin or token hits a new all-time high, it means that everyone holding the coin is in profit? It means you assume everyone out there is willing to hold on to their profitable asset, even those who probably need money today to pay their bills. Hitting all-time highs consistently is difficult, so make sure that if you invest, it’s for a good reason. Many friends have invested only because they think the price will go up. It seems too many people are trying to make money without creating value, which usually results in a big crash. I’m not saying this will happen, just restating what happens in history.
Psychological Aspects and Market Tricks
Finally, many developers will create a ton of tokens so that the price is very small, even if there’s a lot of money in it. Shiba Inu has 21 billion dollars in it, and the price is still fractions of a fraction of a penny. Don’t be fooled by these tricks. The percentage change to go from one penny to two pennies is just as much as to go from a hundred dollars to two hundred dollars. Even though your brain thinks that it’s more difficult due to bigger numbers, it’s very unlikely that Shiba Inu would ever hit a dollar. If it hits one penny, it would make news as it would have a higher market cap than Tesla, which just hit 1 trillion dollars and is creating massive value for hundreds of thousands of people.
Conclusion
Hopefully, now you have a better understanding of what the Shiba Inu token is and how it works.
