What is Shiba Inu (SHIB): How it works and why it’s popular

Key takeaways

• Shiba Inu started as a memecoin and has grown into a multibillion-dollar ecosystem, showing the power of community-driven initiatives.
• Shibarium, a layer-2 blockchain built on Ethereum, powers Shiba Inu. It enables decentralized applications (DApps) and smart contracts while relying on Ethereum’s security for transaction settlement.
• The Shiba Inu ecosystem offers a range of use cases through projects including ShibaSwap and Shib: The Metaverse, from payments and non-fungible token (NFT) minting to metaverse participation.
• While Shiba Inu’s popularity has surged, investing in it remains speculative. If you’re interested, research thoroughly and be prepared for the volatility that comes with memecoins.

Shiba Inu is a fascinating case study. What started as a joke has grown into a multibillion-dollar ecosystem with a passionate user base and an increasing number of applications. Whether you’re an experienced crypto investor or just getting started, Shiba Inu (SHIB) offers a glimpse into the power of community-driven initiatives.

With its loyal fanbase, cute dog logo and some unexpected twists, Shiba Inu has made a name for itself. Let’s dive into what Shiba Inu really is, how it works and how you can invest in it.

What is Shiba Inu?

Shiba Inu is a memecoin featuring the Shiba Inu dog, a Japanese hunting breed, as its mascot. Memecoins are cryptocurrencies that have a humorous or meme-based origin. Initially built on the Ethereum blockchain, it later shifted to the Shibarium layer-2 blockchain. While often compared to Dogecoin, SHIB began as a parody, addressing issues like trust and decentralization rather than having a specific use case.

Still, Shiba Inu has gained some real-world utility, including being used for online purchases through platforms like Shopping.io. Its rise was fueled by its low price, viral marketing and the growing popularity of meme-based cryptocurrencies. A strong community and active social media presence also played a part in attracting more investors.

Did you know? Shibas are versatile hunting dogs that can handle both small and large game. Their small size makes them ideal for flushing birds and other small game from cover. Known for their resilience, Shibas have thrived for thousands of years in the rugged mountains of Japan.

History of Shiba Inu

SHIB was created in August 2020 by a mysterious figure or group called Ryoshi, looking to build on Dogecoin’s popularity. Initially, Shiba Inu ran on the Ethereum blockchain, focusing on community-driven decentralization. On Aug. 16, 2023, Shiba Inu launched Shibarium, a layer-2 solution built on top of Ethereum, to improve the ecosystem’s scalability and efficiency by offering faster and cheaper transactions. 

As a layer-2 solution, Shibarium remains connected to Ethereum but operates independently to handle most transactions offchain, periodically settling them on Ethereum for security at a lower cost. It extends Ethereum’s capabilities, addressing scalability issues and reducing costs for the Shiba Inu ecosystem. Plus, the fanbase, known as the “ShibArmy,” has consistently grown, with leadership provided by an anonymous figure known as Shytoshi Kusama. 

Shiba Inu’s popularity has soared, with more than 500,000 active users and projects, including the ShibaSwap decentralized exchange (DEX), Shib: The Metaverse and Shiboshis NFTs.

Shiba Inu tokenomics

SHIB launched with a total supply of one quadrillion tokens. Half were locked in Uniswap at launch to ensure liquidity. In May 2021, Shiba Inu creators sent the rest to Ethereum co-founder Vitalik Buterin, who burned 90% of them to increase their value and then donated the remaining 10%.

• Token name: Shiba Inu
• Symbol: SHIB
• Initial supply: 1,000 trillion
• Circulating supply (as of January 2024): 589 trillion (including 8 trillion staked)

How does the Shiba Inu ecosystem work?

Starting as a memecoin, Shiba Inu has evolved and now offers a complete ecosystem with various use cases. It operates on the Shibarium blockchain, a layer-2 blockchain based on Ethereum. The Shiba Inu ecosystem makes use of smart contract technology to allow decentralized services and applications. 

Did you know? Elon Musk has been positive about Shiba Inu. One of his posts on X about getting a Shiba dog helped boost the price by almost 300%.

Tokens used in Shiba Inu ecosystem

SHIB, Doge Killer (LEASH) and Bone ShibaSwap (BONE) are the three tokens that power the ecosystem.

• SHIB: SHIB is the main cryptocurrency in the ecosystem, functioning as a store of value and a medium of exchange. 
• LEASH: Originally designed to track Dogecoin prices, LEASH provides special benefits to committed community members, including liquidity rewards, NFT minting possibilities and access to metaverse sales.
• BONE: BONE is the ecosystem’s governance token, allowing holders to cast votes via the decentralized autonomous organization (DAO). The more BONE tokens you possess, the more weight your vote carries.

Shibarium

Launched in August 2023, Shibarium is a layer-2 blockchain designed to interact seamlessly with the layer-1 Ethereum blockchain, providing a more scalable and cost-effective transaction platform. It is designed to address some of Ethereum’s fundamental issues, including expensive gas fees and slow transaction times. Shibarium enabled the development of Shiba Inu-themed DApps and played a big role in expanding the Shiba Inu ecosystem.

• ShibaSwap: Shiba Inu’s decentralized exchange, ShibaSwap, migrated from the Ethereum blockchain to Shibarium. You can trade and swap tokens on ShibaSwap.
• Shiboshis: Shiboshis are a collection of 10,000 Shiba Inu-themed NFTs, each having unique features and tradable on ShibaSwap.
• Sheboshis: Sheboshis are 20,000 Shiba Inu-generated NFTs, an experimental test enabled by the DN404 standard. DN-404 is an advanced NFT standard for Ethereum designed to address the shortcomings of ERC-404. Sheboshis’ story follows Shiboshis, their male counterparts.
• Shib: The Metaverse: This is the immersive virtual world of Shiba Inu, where you can buy land, get prizes, start projects and play Shiba Inu games like Shiba Eternity.

Did you know? Shiba Inu, Floki Inu, Doge Dash and Dogelon Mars are all dog-themed cryptocurrencies inspired by Dogecoin. Shiba Inu is the only one that has gained significant traction and challenged Dogecoin’s position.

Community involvement in Shiba Inu

Community plays a central role in the Shiba Inu ecosystem. This global, decentralized group, known as the ShibArmy, is behind the project’s growth and direction. ShibArmy members use the BONE token to vote on proposals, and community members participate in governance via the ShibaSwap exchange. 

The Shiba Inu ecosystem rewards active users with liquidity awards and exclusive access to NFT minting and metaverse sales. The community contains dedicated and enthusiastic members who work with a sense of shared purpose.

Shiba Inu use cases

The Shiba Inu ecosystem offers several use cases: 

• Payments: You can use SHIB to make payments on platforms that accept it. Major retailers, including GameStop, Whole Foods, Lowe’s, Nordstrom and AMC Theatres, accept SHIB.
• Trading or swapping tokens: ShibaSwap DEX lets you trade or swap tokens within the Shiba Inu ecosystem.
• Earning rewards: By staking your SHIB or providing liquidity on ShibaSwap, you can earn rewards that include BONE tokens.
• Governance voting: If you hold BONE, you can vote on key decisions in the Shiba Inu ecosystem through its DAO.
• NFT minting: SHIB holders can mint and trade unique Shiba Inu-themed NFTs on ShibaSwap.
• Metaverse participation: In Shib: The Metaverse you can buy virtual land, build projects and earn rewards in an immersive digital world.
• Charity: The Shiba Inu community contributes to global causes and makes a positive impact. You can also donate SHIB to a cause you support.

Market performance and popularity

The success of Shiba Inu has been spectacular. What began as a fringe project rose to prominence as one of the most-discussed cryptocurrencies. In October 2021, Shiba Inu was among the top cryptocurrencies by 24-hour trading volume, with activity almost matching that of Ethereum.

In September 2021, Shiba Inu’s listing on Coinbase gave it a major boost and credibility. The price skyrocketed that year from $0.000000000073 to around $0.000034, representing a gain of about 46,000,000%. Buterin’s contribution of SHIB to the India Covid Relief Fund set up by Polygon founder Sandeep Nailwal also boosted the token’s publicity.

On Aug. 13, 2024, with a market cap of $7.93 billion, SHIB was 13th on the list of cryptocurrencies, ahead of Chainlink (LINK), Bitcoin Cash (BCH), Polkadot (DOT), Dai (DAI), Litecoin (LTC) and Near Protocol (NEAR).

Still, Shiba Inu behaves erratically. Its price fluctuates sharply, and you should be aware of the associated risks. The performance of the larger cryptocurrency market, social media trends and market sentiment all impact the cryptocurrency’s value.

Criticism of Shiba Inu

Despite its widespread popularity, Shiba Inu has drawn criticism. The following are some typical negative talking points associated with Shiba Inu: 

• Market volatility: You must be mindful that SHIB’s value may shift unexpectedly, resulting in losses.
• Memecoin label: Some detractors say that hype, not underlying merit, drives Shiba Inu’s success. The term “memecoin” implies that social media trends and speculative trading have a greater impact on the price of the asset than actual utility.
• Security issues: Like other well-known cryptocurrencies, Shiba Inu has been the victim of fraud. Phishing schemes and counterfeit SHIB tokens have defrauded gullible investors. It’s important to use caution.

Should you invest in Shiba Inu?

Before Shibarium was launched, Shiba Inu lacked a clear value proposition beyond its strong community. Many potential investors hesitated to buy SHIB, and a large community may not necessarily lead to higher returns. Launching its own blockchain was a logical step that allowed community members to engage in activities like gaming, buying NFTs and participating in decentralized finance (DeFi), making Shiba Inu a better value proposition.

Despite the development of its ecosystem, Shiba Inu still trails projects like Polkadot and Solana, which add value to crypto as a whole. Investment in Shiba Inu relies on speculation and optimism, which you should consider.  

As with any other crypto investment, you must be cautious, comprehend the risks and conduct adequate research before investing in SHIB. The realm of cryptocurrencies is both unpredictable and thrilling.

How to invest in Shiba Inu?

To invest in SHIB, follow this process:

1. Choose a trustworthy cryptocurrency exchange that supports SHIB, such as Binance or Coinbase.  
2. Create an account and complete the required Know Your Customer checks.
3. Add funds to your account with a debit card, credit card, bank transfer, PayPal or any other method the crypto exchange allows. 
4. Search for SHIB on the exchange and buy the desired amount of crypto. 
5. Move your SHIB tokens to a personal wallet to keep them secure.

How to buy BONE and LEASH tokens

Follow this process to buy BONE and LEASH tokens:

Step 1: Set up a cryptocurrency wallet. Select an Ethereum-compatible crypto wallet like MetaMask or Trust Wallet. Download the wallet app or browser extension, create a new wallet, and securely store your recovery phrase.

Step 2: Buy ETH. Sign up on a cryptocurrency exchange like Binance and buy ETH.

Step 3: Transfer ETH to your wallet. Open your wallet and copy your ETH address. Now, go back to the exchange, navigate to the withdrawal section, and paste your wallet address. Transfer the ETH you purchased from the exchange to your wallet.

Step 4: Connect your wallet to a DEX. Go to a DEX like Uniswap. Click on “Connect Wallet” and select your wallet provider. Follow the prompts to connect.

Step 5: Swap ETH for BONE or LEASH. In the DEX interface, select ETH in the “From” field and choose BONE or LEASH in the “To” field. Enter the amount of ETH you want to swap for BONE or LEASH. Confirm the swap.

Step 6: Check your wallet. Once the transaction is confirmed, check your wallet to ensure your BONE or LEASH tokens are available.

Keep an eye on market developments to determine when to buy, sell or hold your investment.

Shiba Inu’s future

While it’s tough to predict the future of any cryptocurrency, Shiba Inu doesn’t seem to be slowing down. The development team continues to expand the ecosystem with projects, and with the community driving them, the ShibArmy will likely play a big role in shaping its future.

That said, it’s important to remain cautious. While Shiba Inu has had impressive success, it still faces challenges, including regulatory scrutiny, market volatility and competition from other cryptocurrencies.