Breaking down the basics
Since its launch in 2020, Shiba Inu (SHIB) has experienced an impressive surge of 600,000%, propelling it to become the 16th most valuable cryptocurrency in December 2023.
Riding the wave of meme coin mania, SHIB has gained attention for its rapid rise and expanding range of use cases. Unlike other meme coins, SHiba Inu boasts a key differential factor. It incorporates smart contract functionality, which provides it with unique advantages over its counterparts like Dogecoin.
This strategic configuration positions SHIB for long-term success, enabling users to engage in activities such as minting non-fungible tokens (NFTs), establishing decentralized autonomous organizations (DAOs), and leveraging the meme coin in various decentralized finance (DeFi) applications. Moreover, the partial launch of the SHIB Metaverse by year-end promises to add another layer to its already ambitious ecosystem.
Critical pitfalls: A huge supply overload
However, caution is essential when considering Shiba Inu’s recent performance metrics and structural design.
Despite significant advancements, the SHIB ecosystem faces a glaring pitfall – an overwhelming token supply. Currently, a staggering 589 trillion SHIB tokens are in circulation, raising concerns regarding basic economic principles.
While the hope lies in artificially reducing the token supply to create more value, only a fraction of tokens have been burned this year, accounting for less than 0.001%. Given this pace, the creation of real value seems highly unlikely.
In a market where prices are typically driven by demand, SHIB’s deliberate emphasis on abundance instead of scarcity contradicts the successful model employed by assets like Bitcoin (BTC). With its unconstrained supply, SHIB fails to capitalize on this economic principle, leading to potential long-term complications.
The reality check
Investors should exercise caution and acknowledge that Shiba Inu remains a meme coin with limited long-term potential.
While the total cryptocurrency market cap has surged by an astounding 90% this year, SHIB’s gains pale in comparison, achieving a lackluster 20% increase.
In contrast to more established counterparts, SHIB lacks the crucial fundamentals required for long-term viability. Despite its ambitious structural design, it fails to translate into tangible utility or value. As investors increasingly recognize this absence of essential elements, the challenges faced by SHIB become glaringly apparent. Therefore, it would be prudent for investors to redirect their attention towards more established options instead.