What Is Shiba Inu (SHIB) in Cryptocurrency, and How Does It Work?

What Is Shiba Inu (SHIB)? Shiba Inu is an Ethereum-based altcoin (a cryptocurrency other than Bitcoin) that features the Shiba Inu—a Japanese breed of hunting dog—as its mascot. Shiba Inu is widely considered to be an alternative to Dogecoin; in fact, proponents of Shiba Inu tout it as "the Dogecoin killer." Shiba Inu and Dogecoin are meme coins, which are cryptocurrencies associated with some theme—like the Shiba Inu in the case of Shiba Inu and Dogecoin—but are often launched as a parody or inside joke rather than as a digital product that actually has utility. While Dogecoin was launched in December 2013, Shiba Inu was created in August 2020 by an anonymous individual or group called Ryoshi.1 KEY TAKEAWAYS Shiba Inu is an Ethereum-based altcoin that features the Shiba Inu hunting dog as its mascot. It is widely considered an alternative to Dogecoin and is touted as "the Dogecoin killer" by its supporters, a community calling itself the SHIBArmy. Shiba Inu was created in August 2020 by an individual or group called Ryoshi. Shiba Inu's price peaked more than tenfold on Oct. 29, 2021, giving it a market capitalization of $41 billion at the time. Even with a steep drop in market cap to $5.97 billion (as of Dec. 8, 2023), Shiba Inu still ranks in the top ten among all meme cryptocurrencies by this measure, second to Dogecoin.23 The History of Shiba Inu (SHIB) The guiding tenets of the Shiba Inu ecosystem are spelled out in a "woof paper" (presumably a play on the term "white paper"), available at the ShibaToken.com website. According to the paper, Shiba Inu was developed to answer a simple question: "What would happen if a cryptocurrency project was 100% run by its community?" Its founder, Ryoshi, attributes its origins to an "experiment in decentralized spontaneous community building." According to Ryoshi, the power of collective decentralization can build something stronger than a centralized team ever could create.4 The SHIBArmy's base of nearly 500,000 Reddit members embraces its founding principles, which are:5 The project started from zero, with zero, in the spirit of creating something out of nothing It was not founded from an existing community or preassembled team A professed love of Shiba Inu dogs6 Because Shiba Inu is an Ethereum-based ERC-20 token, it was created on and hosted by the Ethereum blockchain instead of its own blockchain. Ryoshi states in the paper that he chose to build the Shiba Inu ecosystem on Ethereum because it was already secure and well-established, and it allowed the project to stay decentralized.7 Blockchain Updates In January 2023, the Shiba Inu community leadership introduced Shibarium, a layer two blockchain designed to run on top of Ethereum. It is supposed to reduce congestion, introduce staking into its ecosystem, lower gas fees, and provide a framework for decentralized applications and Web 3 expansion.8 The Shiba Inu Ecosystem The Shiba Inu ecosystem consists of the following three tokens, with one to be added "soon" (as of Dec. 8, 2023): Shiba Inu (SHIB): This is the project's foundational currency. Starting with a supply of about 1 quadrillion (equal to 1,000 trillion), Ryoshi locked 50% in Uniswap (for liquidity purposes) and then sent the other 50% to Ethereum co-founder Vitalik Buterin for safekeeping. In May 2021, Buterin donated more than 50 trillion Shiba Inu coins worth over $1 billion to a COVID-19 relief fund in India when the nation was reeling from the Delta variant of the coronavirus. Shortly thereafter, Buterin also "burned"—or permanently removed from circulation—40% of Shiba Inu's total supply by moving it to a "dead wallet."9 Leash (LEASH): The second token in the Shiba Inu ecosystem, Leash represents the other end of the ecosystem's spectrum, with a total supply of only 107,646 tokens compared with the trillions of Shiba Inu tokens. Leash is used for rewarding ecosystem supporters with perks.10 Bone (BONE): Bone fits in between the other two tokens in terms of circulation supply, with a total supply of 250,000,000 tokens. Originally designed to be a governance token, it is going to be used in Shibarium to reward validators, who bury (stake) their Bones, and delegators, who give their voting rights to validators.11 Treat (TREAT): Unknown purpose as of Dec. 8, 2023.12 There are other Shiba Inu-related platforms and ideas that interact with the ecosystem: ShibaSwap: The goal of DeFi platform ShibaSwap is to provide a safe place to trade cryptocurrencies while remaining decentralized. SHIB and LEASH are best purchased and sold through ShibaSwap.13 Shiba Inu Incubator: The incubator aims to shift the focus beyond popular art forms such as painting, photography, and digital rendering and discover ways to honor creativity and ingenuity.14 Shiboshis: Shiboshis are 10,000 Shiba Inu-generated non-fungible tokens (NFTs) written on the Ethereum blockchain, with different traits that make each Shiboshi unique and collectible.15 SHIB's Canine Terminology In keeping with the dog theme, the aforementioned Shiba Inu woof paper uses canine terms to describe how returns can be generated from one's Shiba Inu tokens. On ShibaSwap, these tokens can be used to "dig" (provide liquidity), "bury" (stake tokens), and even "fetch" (exchange one token for another). Tokens used in these strategies generate "Woof" returns in the form of Bone tokens that are distributed to token pools known as "Puppy Pools," according to the woof paper.16 For cryptocurrency enthusiasts, part of the allure of meme coins is that they reject conventional protocols, and this unconventional approach may extend to the use of canine terms to describe return strategies. But they certainly seem to be a world away from staid investment terms such as return on investment and liquidity. How to Get SHIB You can purchase SHIB on several exchanges using their wallets, such as Binance, Coinbase, KuCoin, and Kraken, to name a few. You can also set up a MetaMask wallet and connect it to Shiba Swap, the exchange recommended (and created) by the Shiba Inu community. Concerns About Shiba Inu Investing in cryptocurrencies is risky enough because of their massive volatility and lack of regulation. Investing in the altcoin/meme coin space presents an additional challenge because of a lack of differentiation and the fact that most of their value is based on trading by their followers. Here are some investing considerations for a potential investor in Shiba Inu. Low Per-Token Price Even after some impressive gains, Shiba Inu (SHIB) costs a fraction of a cent, so one can buy millions of SHIB tokens with a few hundred dollars. At its peak price of $0.00008845, $100 would have fetched over 1.1 million SHIB tokens.17 The amount of coins you can purchase can cause significant losses if SHIB's price ever tumbles, but the chance of tremendous gains also exists. Limited Utility and Use Case Though its adherents may point out that Shiba Inu-based NFTs are now available, and its Ethereum base and new Layer 2 blockchain should increase transaction speeds and scalability, as of Dec. 7, 2023, Shiba Inu has very limited utility and does not have a compelling use case as of the end of 2023 other than allowing non-fungible tokens.18 Volatility Shibu Inu's price experiences wide fluctuations, but the cryptocurrency is much less expensive than others on the market, so they are actually quite small. For example, from Jan. 1, 2023, to Dec. 7, 2023, SHIBs highest and lowest prices had a difference of $0.0000099. This appears very low, but losses multiply with the amount purchased or held—bsince you can buy a tremendous amount of SHIB, at scale, losses could be huge. If you had purchased 10 million SHIB at its 2023 high ($0.00001562496), you would have paid $156.25. On Dec. 8, 2023, you'd still have been waiting for gains, as SHIB's price was $0.00001006 at one point, a value of $100.60 for your 10 million SHIB.17 Imagine if you had purchased a one billion SHIB ($15,624.96 at the highest price) hoping for gains. Your SHIB would have been worth $10,060.00 on Dec. 8, 2023—a loss of $5,564.96. Some trades have become the stuff of investing legend, such as George Soros' wager against the British pound in 1991 or the short subprime mortgages trade by John Paulson from 2007 to 2009. In terms of sheer percentage gains, a purported trade in Shiba Inu by an unknown trader puts even those legendary trades in the shade. The trader bought about 70 trillion SHIB tokens for approximately $8,000 in August 2020. One year later, that stake accounted for about 13% of SHIB's total circulation of 550 trillion and gained a staggering value of $5.7 billion.1917 How Much Is 1 Shiba Coin Worth? One SHIB was worth about $0.000010017 on Dec. 8, 2023. As of that date, the coin had never reached a value of more than $0.00008845.17 Is Shiba Inu a Good Investment? Whether or not SHIB is a good investment depends on your investing goals, risk tolerance, strategy, personal preferences, and outlook. Which Crypto Will Boom In 2024? It is difficult to tell which cryptocurrency, if any, will experience a boom. The space constantly undergoes changes and reacts, almost explosively, to the news. The Bottom Line Shiba Inu is a cryptocurrency which, at its creation in 2021, had no use or value. By the end of 2023, it was being traded in large volumes to take advantage of microscopic price movements and used as a payment method. Shiba Inu is continuously being developed and improved by a dedicated community to have utility and use cases, so there is a distinct possibility that it will remain one of the more popular cryptocurrencies on the market. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency. Compete Risk Free with $100,000 in Virtual Cash Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! Submit trades in a virtual environment before you start risking your own money. Practice trading strategies so that when you're ready to enter the real market, you've had the practice you need. Try our Stock Simulator today >>