Shiba Inu Cryptocurrency: The Facts Behind the Hype

Meme coin Shiba Inu has been in the news because its price has spiked much sharper than prices of other cryptocurrencies. Between March 1 and November 1, 2021, the price of a Shiba Inu coin in US dollars increased 729900 percent. To put that in concrete terms, if you had bought 1 billion Shiba Inu coins for 10 US dollars on March 1, you could have sold them for 73,000 dollars on November 1.

Here, moneyland.ch gets to the bottom of the coin behind these impressive numbers to help you understand what it is and whether it has fundamental value.

1. What is Shiba Inu?

Shiba Inu is a cryptocurrency which runs on the Ethereum blockchain. As such, it uses proof-of-stake technology to automate transactions. Shiba Inu coins use the ERC-20 protocol, the same protocol used by Ethereum’s own ETH coins.

Its creator, who has so far remained anonymous, set the total supply of Shiba Inu at 1 quadrillion. The number of decimals is set at 18.

2. How is Shiba Inu different from other cryptocurrencies?

From a technological standpoint, there is nothing which sets Shiba Inu apart from the thousands of other ERC-20 cryptocurrencies and tokens. 

Shiba Inu does not deliver any unique value or new technology. This sets it apart from bitcoin (which first introduced the concept of decentralized ledgers using blockchains) and Ethereum (the first platform for creating smart contracts and decentralized applications using blockchains), among others.

It does not give holders access to a service like utility tokens do, nor does it give you legal rights like security tokens. It is simply a basic blockchain token which can be held or transferred from one user to another.

The extremely large number of coins initially created (1 quadrillion) sets Shiba Inu apart from many other cryptocurrencies like bitcoin and Ethereum. The massive supply ensures that the value of individual coins remains relatively low. This is typical of meme coins. The low per-coin value encourages actual use of the cryptocurrency on the one hand. On the other hand, the ability to purchase whole coins in large quantities encourages investment by small investors.

3. What value does Shiba Inu provide?

Shiba Inu’s large fan community represents its biggest value. Cryptocurrencies like bitcoin and Ethereum rely on investors who believe in their technological potential. Meme coins like Shiba Inu, on the other hand, rely on fans who enjoy feeling part of a community and have both emotional and financial incentives to market Shiba Inu and encourage others to buy it. Gamification, such as the Shiboshi non-fungible tokens (NFTs) which can be purchased with Shiba Inu and grant their holders access to a private user forum, is a large part of Shiba Inu’s appeal.

Because meme coins provide entertainment value rather than technological value, their prices often deviate substantially from those of technology-driven cryptocurrencies. For example, between March 1 and November 1, 2021, the value of bitcoin – currently the biggest cryptocurrency in terms of market capitalization – grew by “only'' 35 percent. Shiba Inu’s price increased by 729900 percent over the same period.

Meme coins like Shiba Inu can be used to diversify your portfolio to include emotionally-driven cryptocurrencies.

However, it is important to note that it is impossible for Shiba Inu to repeat the massive proportionate rate growth of 2021.

4. What are the risks of investing in Shiba Inu?

Shiba Inu does not deliver any unique technology which solves real-world problems. Shiba Inu coins are simply tokens which can be transferred or exchanged. This means it competes with a large number of similar tokens. Because creating new Ethereum-based cryptocurrencies is quick and simple, the opportunity for future competition is limitless.

There is also the risk that investors who bought very large amounts of Shiba Inu when the price was low will sell out in order to make capital gains. A large-scale sellout by these so-called “whales” could quickly drive the price down.

Liquidity is another problem. While Shiba Inu is traded on several major exchanges, it is not nearly as widely listed as bitcoin or Ethereum, and nowhere near as liquid as major stocks and bonds. A major selloff or fan-base decline, for example, could make converting Shiba Inu into fiat currency very difficult.

For all of these reasons, investing in Shiba Inu bears a large amount of risk. You should be prepared for the possibility of Shiba Inu becoming completely worthless. Never invest money in meme coins if you could not easily afford to lose it.

5. How can I buy and sell Shiba Inu as a Swiss investor?

Currently, no Swiss cryptocurrency service providers offer Shiba Inu (SHIB). If you want to buy and sell Shiba Inu, you will have to use a foreign service provider. Reputable service providers which list Shiba Inu and allow residents of Switzerland to open accounts include Binance, Coinbase, crypto.com, and eToro, among others.

As with all forms of trading, you should pay attention to trading costs. Typically, brokers or exchanges add spreads to buy and sell prices. Brokerage fees and custody fees may also apply. Also pay careful attention to possible fees and limitations for withdrawing money or cryptocurrency.

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