What is the Shiba Inu coin?
The SHIB token was created back in August 2020 on the Etherereum blockchain by an anonymous individual or group who go by the name Ryohshi. More specifically, SHIB is actually a fungible ERC-20 token: the technical gold standard for creating tokens on the Etherereum blockchain using smart contracts. This is in contrast to Non-Fungible Tokens which utilize the ERC-721 token standard. As the token is on the Ethereum network, SHIB can actually use smart contracts to make decentralized finance (DeFi) products. The SHIB token is actually an example of a meme-conception as it is a memecoin, it’s based on the memecoin, Dogecoin. It has also been dubbed the Dogecoin killer.
But, the creators of SHIB have some lofty goals for the future. According to its ‘Woofpaper’ (Whitepaper) which was updated on April 29, 2021, the blockchain project aims to create a DeFi ecosystem consisting of:
- A decentralized cryptocurrency exchange (DEX) called ShibaSwap will allow you to trade SHIB for other cryptocurrencies.
- Am NFT marketplace that will allow artists to auction off NFTs directly without the need for middlemen for transactions with smart contracts.
In addition, the creators of SHIB also created the LEASH token, a sister token for SHIB which was originally set to be a rebase token pegged to the price of Dogecoin. But, the coin was subsequently unleashed and will not be pegged to Dogecoin. Unlike SHIB, LEASH has only a tiny supply of 100,000 tokens. The second token incentivized on the swap offers special rewards for those who provide liquidity. Once ShibaSwap is launched, owners of SHIB will be able to stake their SHIB tokens to ‘dig’ for ‘BONE.’ In other words, those who stake their SHIB will receive interest in the form of unreleased BONE tokens.
These BONE tokens are special as they are only available on ShibaSwap and are actually governance tokens that will allow holders to vote for proposals for the SHIB ecosystem in 2022. Another decidedly more wholesome aspect of SHIB is that the SHIB community has launched an initiative to rescue real Shiba Inu dogs. The community utiliz ed the built-in Amazon Smile feature to donate to this cause. This no-cost method allows any Shiba Inu member to help Rescue Shiba Inus by simply using smile.amazon.com when they place orders and put their preferred non-profit organization to Shiba Inu Rescue Association a 501(c)3. A percentage of your purchases go to support automatically at no cost to you.
The Tokenomics of Shiba Inu coin
The coin was launched with a total supply of one quadrillion coins or 1,000 trillion coins or 1,000,000,000,000,000 coins. An interesting feature of SHIB is that every time someone buys SHIB tokens, a percentage of the purchase amount is burned via a transaction fee. This means that the supply of SHIB will drop over time the more it is traded. The developers of SHIB locked 50 per cent of all SHIB tokens to the decentralised cryptocurrency exchange Uniswap. This means that the creators of SHIB do no own any SHIB tokens unless they bought them themselves on Uniswap or other cryptocurrency exchanges . This means they cannot dump tokens on the community.
Vitalik Buterin and the Shiba Inu coin
Fifty percent (50%) of the total supply of Shiba was donated to Ethereum creator Vitalik Buterin, and what Vitalik did with it was interesting. Last Wednesday (May 12, 2021), Buterin donated 50 trillion SHIB tokens (worth around $1.6 billion at the time) to the India Covid-Crypto Relief Fund. A few days later, it was widely reported that Buterin sent about 410 trillion SHIB to a burn address on May 16, 2021, removing about 41 per cent of the total circulating supply of SHIB from the market.
He also included a statement stating that “he decided to burn 90% of the remaining shiba tokens in his wallet”. The remaining 10% will be sent to a (not yet decided) charity with similar values to cryptorelief (preventing large-scale loss of life) but with a more long-term orientation. By all estimates, Buterin is still holding onto about 40 trillion SHIB tokens.
Risks of buying Shiba Inu coin
At the present moment, SHIB has little to no underlying value or use cases. SHIB is also not unique as cryptocurrencies are very easy to create, with thousands being minted every day. The price of it is driven by hype and speculators pumping money into SHIB. According to BscScan a Binance Smart Chain explorer built by team EtherScan that provides APIs that returns information about accounts, token, contracts and a lot of other analytics; a majority of SHIB tokens are being held by a few individuals. Therefore, SHIB is very susceptible to pump and dump schemes. Pump and dump schemes are where people organize together on apps like Discord, Slack or Telegram to illegally promote and ‘pump certain coins’ to drive up demand. This will often result in the coin going up in value temporarily as a result of this promotion. Next, the people who are pumping the coin will ‘dump’ the coin and sell without warning.
Be very wary of such schemes as more often than not, you are being manipulated by the pumpers of the coin who will sell when the coin reaches their predetermined price. Generally, the smaller altcoins are more susceptible to pump and dump schemes due to their smaller market caps and low liquidity which makes it easier to move the price of the coin. SHIB is one such coin due to its tiny market cap of about US$4.6 billion and low liquidity. The price could crash any time if a whale decides to dump his/her’s supply of SHIB onto the market. So if you buy SHIB, there is a very big chance that you could lose almost all your capital.
