Shiba Inu is the latest memecoin that's been growing in popularity, but this has led to many people wondering how it works and if there's anything special about it. Watch this video to learn everything there is to know about the SHIB token.
Shiba Inu started out as a joke coin created for the community, but has quickly turned into a multi-billion dollar project that would probably fall under the speculative category. However, this channel is focused on providing the facts and ideas without bias or rumor, so as much as possible we will keep our opinions out of it and let you decide based on as much true, factual, and whole information that we can fit in this video.
Welcome to whiteboard crypto, the #1 Youtube channel for crypto education and here we explain topics of the cryptocurrency world using analogies, stories, and examples so you can easily understand them. In this video, we are going to explain what Shiba Inu is, why it’s been growing at an incredible pace, and what it will take to reach the price of 1 penny.
Shiba Inu Coin vs Token
First off, let’s make sure you understand the difference between a coin and a token. I’m going to assume you know what a blockchain is, and you should know there are many different blockchains out there. Ethereum is one, Binance Smart Chain is another, Polygon has a blockchain, even Dogecoin has a blockchain! Each blockchain has its own coin, and that’s where we get the Ethereum coin, the BNB coin, the Matic coin and so on. However, on some of these blockchains you can create tokens that aren’t coins, because they don’t help run the blockchain, but they act like a coin, and they are called a token. They utilize the power, security, and upkeep of the main blockchain so they don’t have to focus on their own blockchain, and act just like the main coin, but they aren’t. Shiba Inu is a token on the Ethereum network, meaning it’s not it’s own blockchain, it runs on Ethereum. This means there’s no such thing as a Shiba Inu Coin… it’s technically a Shiba Inu Token. I have seen a lot of confusion about that from newcomers and wanted to clear it up. SHIB is a token on the ethereum network, meanwhile Dogecoin is an actual blockchain all to its own.
Now that we are through that distinction, let’s get into why Shiba is called the Dogecoin Killer.
What is Dogecoin?
Dogecoin is a meme coin that started a long time ago to poke fun at Bitcoin and show that anyone could copy it with some changes. It picked up speed in the past few years, and during the last year alone it has really grown in popularity. Since Dogecoin is it’s own blockchain, and is kinda a copy of Bitcoin, it doesn't really have the cool upgrades that Ethereum has, called Smart Contracts. Smart contracts allow people to do many more things on the blockchain network than just send money back and forth. For example, smart contracts allow users to create new tokens… you can do that on Bitcoin or Dogecoin. Smart contracts also allow users to create apps, like decentralized exchanges, where you can swap your tokens. We are already getting off topic, so if you want to learn more about DeFi, Smart contracts, and how decentralized applications work, check out our other videos, I promise once you watch a few, the algorithm will feed you more.
Anyways, since Shiba Inu Token can utilize smart contracts, you can do things with it that you can’t on Dogecoin, like lend it out, or let other people trade with it while you collect fees. This is why they claim to be the Dogecoin killer.
How did they get started? Well, in August of 2020, a pseudonymous developer called Ryoshi started the project as an experiment in community governance, meaning a test of how a community could decide on changes. An anonymous friend helped Ryoshi set up the smart contract token and also invested 10 ethereum in an ethereum and SHIB pair on uniswap. This meant that people could give Uniswap some Ethereum, and buy SHIB. Check out our videos on liquidity pools and automated market makers if you’re super curious how this actually works.
Around mid March of 2021, Elon Musk made a tweet about getting a Shiba Inu dog which caused the price to increase by 300%.
Something interesting that Shiba Inu developers did was give ½ of literally every Shib token out there to Vitalik Buterin, who created Ethereum. They knew his wallet address, and literally just sent him a ton of SHIB tokens, many say this is for advertising purposes to go “hey look, Vitalik owns some of our tokens and that means he believes in it!”. Eventually, Vitalik took some of these SHIB tokens, sold them, and donated the money to charity. The rest, around 90% of what he was given, he burned. Burning a token is a phrase used when a person sends their tokens to a wallet that nobody has access to, meaning they are gone forever. Vitalik burned around $6.7 billion of SHIB tokens.
One of the unique things we can do since SHIB is an ethereum token is offer holders rewards for doing certain things with it. For example, Shibaswap actually gives out rewards for people who provide liquidity to specific Shiba Inu pairs. The call providing liquidity “DIGGING”. When you provide your tokens for traders to use, Uniswap has to give you something back to prove that you have ownership of that liquidity pool. They call these Liquidity Pool Tokens. Shibaswap actually rewards users who take their Liquidity Pool tokens and lock them up, this way we know the liquidity will be there for a while.
Technically, you can withdraw your locked tokens at any time, so I’m not sure why they don’t reward ALL liquidity providers, maybe you can answer in the comments below. When you stake or lock up your liquidity provider tokens, they call this “BURYING”. When you Bury your LP tokens, you start to earn Bones. Bones are just another Ethereum token that is the governance token for Shibaswap. This means if you hold 1 bone, you get 1 vote on changes that happen to the project. Most people earn them and sell them, but some people buy and hold them. You can bury and stake these bones too, but that’s just too deep for this video. See what I did there? The reality is that they are inflationary in the beginning so any economics student knows what that means for the price: it’s going down. This isn’t financial advice, though.
I’ll let you in on a tiny secret about providing liquidity. If you create a project and the price of your coin greatly increases in price and you still hold some of that project’s coin… you might be thinking “wow we could cash out”. The problem is that if the liquidity is low, when you trade your tokens with Uniswap, you’ll crash the price. Unless you get other people to provide liquidity, then when you dump a bunch of your tokens, the price doesn’t crash as much, this way you can sell more tokens at a higher price. I might make an entire video about this, so hit the subscribe button if you haven’t already. Anyways, keep that in mind if you’re interested in providing liquidity to SHIB.
There are a few other things I want to talk about in this article.
Market Cap Explained
Let’s talk about those videos that say “what if SHIB goes to 1 cent” or even more daringly “what if SHIB goes to $1?”. I’m not here to say that it won’t happen, but I am here to clarify what it would take for that to happen. First of all, MarketCap is a term used to compare cryptocurrency assets, and is generally used to describe the average price of each coin. Right now, Shiba Inu token is worth around .00005000, and the market cap is 21 billion. If the price goes to 1 penny, that means the total market cap would be 4 trillion dollars, which is over the total of ALL money in cryptocurrency, including Bitcoin. If it goes to $1 total, that would mean 400 trillion, which is way more than every house in the United States put together. Again, I’m not saying this is impossible, but I’ll give you the facts and let you decide.
When ATHs happen, everyone is in profit
The next thing I want to talk about is All Time Highs, since SHIB has been hitting ATHs quite a bit lately. Did you know when a coin or token hits a new all time high, it means that everyone holding the coin is in profit? Think about that, it means you’re assuming everyone out there is willing to hold on to their profitable asset, even those that probably NEED money today to pay their bills. Anyways, it’s difficult to hit all time highs as consistently as SHIB has, so make sure if you invest that it’s for a good reason, as I personally know friends who have invested only because they think the price will go up. Too many people are trying to make money without actually creating value, and that usually results in a big crash, but I’m not saying that is what will happen, just restating what happens in history.
Psychology of .01 to .02
The last thing I wanted to share with you that is a little psychological is that many developers will make a TON of tokens out there so that the price is very small, even if a lot of money in it. Shib has 21 billion dollars in it, and it’s still fractions of a fractions of a penny. Don’t be fooled by these tricks, the percentage change to go from .01 to .02 is just as difficult as going from 100 to 200, even though your brain thinks it is more difficult and more space to cover since the numbers are bigger. Shiba Inu will probably never hit $1, and if it hits 1 penny, we can be sure it will be in the news, since it would have a higher market cap than Tesla, which just hit 1 trillion dollars.