On Wednesday, shiba inu, or SHIB, reached a new high of $0.0000594.
Despite its low price, the “meme token” has gained widespread attention. According to CoinMarketCap, Shiba inu is now the 11th most valuable cryptocurrency. As of 9:42 a.m. EST on Wednesday, it had risen over 111% in seven days.
Shiba inu, called the “dogecoin killer” by its followers, ranks 10th.
Despite the low cost, experts advise investors to do their homework first.
It’s important to understand what you’re investing in and the risks involved before you invest in cryptocurrencies, says Douglas Boneparth, certified financial planner and president of Bone Fide Wealth.
It is a popular altcoin, a cryptocurrency other than bitcoin. Experts claim cryptocurrencies are much more volatile and speculative than bitcoin.
What is SHIB?
Ryoshi, a pseudonymous founder, invented Shiba inu in August 2020. The token named after Shiba Inu dogs.
Rather than having its own blockchain, Shiba inu is an Ethereum-based ERC-20 token.
Ryoshi chose Ethereum because it is “secure and well-established,” according to the shiba inu white paper, or “woof paper” as its community calls it.
Due to the ease of starting a project on the Ethereum blockchain, undeveloped cryptocurrencies can be released into circulation at a low cost.
Shiba inu supply is 1 quadrillion. Nearly half of the supply is held in a liquidity pool on decentralized market Uniswap, according to Ryoshi. The rest was transported to Buterin.
Ryoshi gave tokens to Buterin, hoping he’d keep them, according to the white paper. Buterin didn’t. He destroyed most of them and donated a large sum to the India Covid Relief Fund and other charities.
Are there risks?
Alternative currencies like SHIB centered on community rather than utility, according to Boneparth, who has been investing in bitcoin since 2014. In its white paper, Ryoshi calls shiba inu a “experiment in decentralized spontaneous community building.”
Experts warn that any cryptocurrency investment could result in a total loss. Regardless of which cryptocurrency you choose, they advise only investing what you can afford to lose.
But, unlike bitcoin, altcoins have a different structure, supply, and utility.
For example, Bitcoin debuted in 2009 as a peer-to-peer financial system. Its blockchain was carefully design with an ecosystem. Bitcoin also has a finite quantity, which creates inherent scarcity. Holders see it as a store of value and hope it becomes a popular decentralized digital currency.
Most altcoins don’t have these.
Supporters argue that its ecosystem, which includes smart contracts, nonfungible tokens, and liquidity mining, goes beyond community.
“Many altcoins can be exceedingly dangerous and may not have any intrinsic investment value,” says Brett Harrison, head of cryptocurrency exchange FTX US.
Preferring practicality over excitement, Harrison seeks out crypto assets with specific utility.
Some crypto assets may be suitable for retail investors because they can act as a store of value, facilitate payment transfers, or power a protocol used to build blockchain-based applications.