on the crypto
The mysterious Ryoshi introduced Shiba Inu in August 2020. As the mascot suggests, this canine-themed cryptocurrency was designed to rival Dogecoin and has made incredible progress so far. Over the past year, Shiba Inu has skyrocketed by 70,500,000% in value, a pace that would have made you a billionaire if you had invested 1.200 last November.
Unsurprisingly, this cryptocurrency is generating quite a bit of hype and many investors are probably asking the same question: Is Shiba Inu a smart buy right now? Let's find out.
bull run
People often use the terms coin and token interchangeably when talking about cryptocurrency, but they actually refer to different things. In general, cryptocurrencies are powered by blockchain technology, the decentralized database that tracks transactions, account balances, supply limits and more. Cryptocurrencies that exist on their own blockchains are called coins, while those that use pre-existing blockchain infrastructures are called tokens. Shiba Inu falls into the latter category.
Specifically, it is an ERC-20 token, a type of smart contract that exists on the Ethereum blockchain. In fact, it recently became the fifth most talked about contract on the net, showing its growing popularity. And because Shiba Inu is built on the Ethereum blockchain, it is compatible with a robust ecosystem of decentralized finance (DeFi) services. This means it could potentially be incorporated into interest-bearing products that allow consumers to save or lend tokens. USA Bitcoin Pro to start cryptocurrency trading.
Where can he go?
Despite this potential, the Shiba Inu's functionality remains quite limited. It hasn't been widely integrated into DeFi services, and unlike Bitcoin or Ethereum, it's not a widely accepted form of payment. Of course, these things may change, but right now Shiba Inu has very few (if any) compelling use cases. From that point of view, its $ 30 billion market value is hard to justify.
There is also another problem. According to Coinbase, the average investor only owns Shiba Inu for 11 days. This troubling statistic implies that most people see it as a lottery ticket, not an asset they will appreciate in long-term value. And it is difficult to argue. Shiba Inu is far from the only ERC-20 token, and many of its rivals have far more utility.
For example, Chainlink is a decentralized Oracle network that provides real-world data (i.e. off-chain data) to smart contracts on any blockchain. This has numerous potential applications, but here's an example: Real estate can be tokenized via smart contracts, but the value of the property depends on real-world variables. To keep the smart contract up-to-date, Chainlink can provide valuation data to the blockchain, making the real estate transaction possible as a digital asset.
Better places to put your money
So is Shiba Inu a smart purchase? I do not believe. His extraordinary earnings have been fueled by the hype and the purchase at this point is essentially a gamble. The price could definitely go up, but it could also crash into thin air. And unless the token gains greater utility, such as being incorporated into multiple DeFi services or becoming a widely accepted form of payment, I think the bubble will eventually burst.
