Owning cryptocurrencies has undoubtedly made some lucky and daring early adopters richer than their wildest dreams. shiba inus (SHIB -0.67%†To take an extreme example, it rose more than 20,000,000% in 2021, which has to be one of, if not the greatest one-year returns in the history of investing. However, in the same vein as many other digital assets, it is the result of major speculation in the first place. Plus, it’s unlikely to happen again.
Despite this monstrous comeback, Shiba Inu is now an incredible 89% down from their peak (as of June 29). And while it may be tempting to buy SHIBs in hopes of a huge price increase, now it’s one of the cryptocurrencies to avoid does not matter what.
No competitive advantage
Launched in August 2020 as a dog-inspired alternative to DogecoinShiba Inu is an ERC-20 token, which means it runs on the Ethereum (CRYPTO:ETH) blockchain. This results in SHIB being compatible with the entire Ethereum ecosystem, but this translates into no serious differentiation for Shiba Inu from the seemingly limitless number of other ERC-20 tokens. Since Shiba Inu lives on top of Ethereum, it has the same technical characteristics as Ethereum. Therefore, it doesn’t really stand out from the crowd for users or developers.
Compare this with the two most valuable cryptocurrencies the low. With its first-mover advantage and worldwide recognition, Bitcoin (CRYPTO: BTC) is slowly being seen as a legitimate store of value. And with the development of the Lightning Network, the potential for Bitcoin adoption as a truly decentralized internet currency is certainly not out of reach.
Then there’s Ethereum, which was created to introduce an important feature Bitcoin didn’t have – smart contracts† Known as the global decentralized computing platform, Ethereum has become a hotbed for the development of decentralized applications that allow two unrelated parties to communicate and transact without a central intermediary.
With the success of Bitcoin and Ethereum, it’s no wonder that these two most important digital assets have a combined value of $516 billion at the time of writing, a far cry from Shiba Inu’s current market cap of $6 billion dollars.
With no real competitive advantage in the crowded field of tens of thousands of cryptocurrencies, the only motivation anyone would have to buy SHIB today is based purely on speculation. It’s like being in the casino and betting your chips on something with an incredibly low chance of success. Many are hoping that SHIB will see a huge price spike like it did in the summer of 2021, when the meme stock craze also lifted some digital assets to new heights. This is not a good financial strategy.
Shiba Inu is presenting a Layer 2 solution known as Shibarium, which hopes to reduce transaction costs and introduce a token burning mechanism. And a Metaverse Shiba Inu was also developed. But like I said before, these don’t have any special features that aren’t already available. In fact, Shiba Inu is lagging behind when it comes to new introductions to the crypto space.
Even worse, Shiba Inu currently has 549 trillion tokens in circulation. The project had to have an abundant supply of tokens, which made it unlikely that the price of a SHIB could rise very high. Not only must the demand for SHIB be greater than the existing supply in the market, but it must also be greater than any newly created SHIB token. A burning strategy has been implemented, but this seems more like financial engineering than adding real value to the network.
If you want to invest in cryptocurrencies, it is best to avoid Shiba Inu. There are other promising digital assets to consider.