Dogecoin (CCC:DOGE-USD), the ninth largest crypto token with a $35 billion market value is neck and neck with its rival cryptocurrency, Shiba Inu (CCC:SHIB-USD). Dogecoin crypto is clearly falling behind in several ways.
Shiba Inu is now the tenth largest crypto, according to Coinmarketcap.com, and has a market value of $34 billion. Moreover, DOGE crypto may need to take on more “use functions.” That way it can be competitive with Shiba Inu.
This may account for the reason why Shiba Inu has started to overtake Dogecoin in terms of market cap. After all, so much of the value of a cryptocurrency relates to its perceived value, not just its actual transaction volume.
Where Dogecoin Stands Vs. Shiba Inu
For example, up until now, Dogecoin has been seen as having just one main use — as a means by which its holders can buy and sell goods and services.
By contrast, Shiba crypto now has several use functions. According to Planet Crypto it now has five additional use functions other than just as a cryptocurrency:
“The Shiba ecosystem now incorporates ShibaSwap, Shiboshi NFTs, and SHIB burning. In the future, the development team hopes to release a new Layer-2 protocol to reduce transaction fees, alongside an NFT game, codenamed the Oshiverse.”
By contrast, Dogecoin has been backed by several large investors, including Elon Musk, as I have written about in several articles. But their main goal so far was to facilitate the use of Dogecoin as a means of payment.
As Planet Crypto points out, even Tesla (NASDAQ:TSLA) might someday accept payment in Dogecoin, according to Elon Musk.
The Unit Bias Effect
There could also be a subtle advantage that Shiba Inu has over Dogecoin based on its “unit bias” effect. For example, $100 can buy over 1 million SHIB crypto tokens (i.e., $100/$0.00006796 = 1,471,454 SHIB tokens).
But $100 can only bring in 361 DOGE crypto tokens (i.e., $100/0.2769 = 361.14 DOGE).
This can lead to a sort of false wealth effect for SHIB crypto holders who think by owning 1.47 million tokens of anything can make them richer. That is, they can get richer faster, theoretically if the price moves up to one dollar or even one cent.
Of course, this does not affect institutional investors that much, but it certainly plays into the mind of smaller retail investors. Coindesk says this affects novice investors who can end up having a feeling that they are richer than they otherwise really are.
So, in a sense, Dogecoin also has its hands tied here in its rivalry against Shiba Inu.
But Dogecoin Is Still More Popular
However, Dogecoin is still more popular, in a general name recognition sense, with both the public and the commercial marketplace.
For example, Burger King has just started a reward promotion, partnering with Robinhood (NASDAQ:HOOD) online brokerage firm to give away free cryptocurrency. The crypto will be paid out primarily in Dogecoin, according to CoinTelegraph online magazine, to those who spend $5 or more from Nov. 1 through Nov. 21.
But Dogecoin is not in smart contracts, NFTs (non-fungible tokens), Dapps (decentralized apps) and DeFi (decentralized finance). That is what will sustain its market value over the long term as a decentralized digital app.
In fact, even Bitcoin (CCC:BTC-USD) is going to upgrade its protocols. It will facilitate smart contracts, NFTs and DeFi contracts. I wrote about this recently, with its upcoming Taproot upgrade.
What To Do With DOGE Crypto
I think investors should consider moving out of Dogecoin crypto until the backers decide to “modernize” its use functions. Its disadvantages vs. Shiba Inu also do not help its upward potential.
Until Dogecoin takes on more utility its popularity and market value are likely to wane over the next year, especially since the crypto world is so competitive.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
