Cryptocurrencies are a hot new form of currency that you can use to buy and sell goods and send money. But when it looked like the cryptocurrency space could not get riskier, the phenomenon of meme coins came to the fore. Conversations in the space are now dominated by Shiba Inu (CCC:SHIB-USD) and Dogecoin (CCC:DOGE-USD).
Cryptocurrencies in general may be more secure than traditional forms like cash, credit cards, or checking accounts because they don’t rely on banks for protection from theft, but there is also risk involved with cryptocurrencies. The value could go down at any time.
The Dogecoin hype has been on a steady rise, as the coin is up nearly 13,000% over the last 12 months. By comparison, Bitcoin (CCC:BTC-USD) is only up about 9%. These are impressive numbers. However, some believe DOGE will replace Bitcoin as a cryptocurrency leader.
It is interesting to see how the cryptocurrency world has evolved from its early days. Many meme-based coins took off in October. But none quite like Shiba Inu, which exploded more than 1,000% higher.
Is it time to buy Shiba Inu? The cryptocurrency cratered more than 40% in recent weeks. Some investors are licking their chops, thinking this is the best time to become a multimillionaire overnight. However, not only is that improbable, it is looking more and more impossible.
Pure Speculation
Speculation is a huge problem in the cryptocurrency world. There’s a lot of talk concerning Bitcoin and other coins rising. But not enough people have bought them. That leaves speculators trying to figure out what will happen next with no one left for their trades when things go south.
The lack of popularity for this new form of payment can be attributed to the fact that few businesses accept it as a means within which they may make purchases. With only 388 merchants who accept the cryptocurrency, it’s hard for Shiba Inu owners and investors alike to find ways to use their coins anywhere without having them lose all value.
The fluctuating price of Shiba Inu makes it difficult for businesses to manage their earnings. Companies looking for a bit of marketing boost will get on the bandwagon. But most will stay on the sideline, waiting for the token to stabilize.
Speculation is what drives the price of Shiba Inu tokens up and down. But if you’re not looking for a quick buck, then this cryptocurrency isn’t worth your time or money. There’s no incentive to buy other than waiting until someone pays more later on – which could take months.
Shiba Inu Is Deflationary
The unique tokenomics of Dogecoin makes it a popular crypto investment. Unlike other coins with limited supplies, there are no limits to how many DOGEs can be created. It means, unlike Bitcoin, you cannot use it as a hedge against inflation.
Shiba Inu is an Ethereum-based (CCC:ETH-USD) cryptocurrency that could have smart contract capability implemented in the future, meaning transactions are enforced automatically without relying on third parties like government agencies or banks. People are flocking to cryptocurrency as a way of escaping from fiat currency’s ever-decreasing value.
Dogecoin is a popular alternative, which acts like Bitcoin. However, the value proposition is restricted to this one aspect. Additionally, Shiba Inu is actively deflationary through burning coins. That luxury doesn’t exist with Dogecoin. Even though Shiba Inu has a capped supply, it still contains 1 quadrillion tokens.
Ethereum co-founder Vitalik Buterin was given half of SHIB’s total supply earlier this year. He burned 90% of his coins, worth $6.7 billion, taking them out of circulation. Despite this, the total supply of Shiba Inu is gargantuan. To get up to speed with the inflationary currency of the cryptocurrency pack, Dogecoin, Shiba Inu needs to burn more coins than its counterpart.
Curb Your Enthusiasm
Shiba Inu did very well last year. The price hike results from its large community that has bought into the cryptocurrency in droves. Consequently, it caused an astronomical rally for SHIB holders. These investors want their holdings to go as high as possible, so they’ll sell off when there’s an opportunity.
Shiba Inu may not bounce back because there isn’t much real-world utility for this cryptocurrency yet. Until the cryptocurrency generates use cases, the chances of a sustainable rally are close to zero. So, how do you invest in Shiba Inu if you suffer from FOMO, or the fear of missing out?
One of the most popular types of investments is “short term” or high yield. These typically have a lot going for them in that they can make you money quickly, but once something crashes, there will usually be ruins to pick up afterward.
Buying a safe and healthy investment is more likely to make you money over time. This strategy may not be as exciting, but it’s ultimately safer than short-term investments like Shiba Inu.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions 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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. You can check out his analysis on InvestorPlace and TipRanks.
