Dogs. Who doesn't love dogs? That doesn't mean you should buy dog-themed crypto! Someone asked me the other day what I thought about Shiba Inu Token (SHIB). I said it is a meme of a meme. Buying something like this is pure gambling. Is that OK? Sure, it's okay with me if you gamble. If you want to bet on who wins the football game, that's OK with me. Bet on the Lottery. Seriously, this is OK with me. I am not much of a bettor.
Wait--you mean I'm not betting on Bitcoin and Ethereum and other tokens to be more valuable in the future??? Yes. I am betting on them. But I'm not gambling. Wait, what? So, in my mind, I'm not betting in the sense of being at the roulette table and putting a bunch of money on one number with the hope that the ball lands on the one number I picked. I'm betting that the world continues to learn about cryptocurrency. I'm betting that people realize that this is a better way for transactions. I'm betting that more and more things are digitized in the future. I'm betting that I can invest these assets today, and enjoy the returns on these investments later. I'm betting that these smart computer programers are going to successfully digitize money, and all of us are going to use it. Actually, I'm betting that they already have, and more and more people are going to figure this out, and build better and faster and more convenient things in this ecosystem.
I am old enough to think back to the dot-com boom around 2000. Before then, no one was buying their airline tickets or hotel rooms on Priceline. No one considered they would be reading their newspaper on their phone or tablet. (Touch-screen phones and tablets weren't invented yet, remember.) Amazon only sold books. Who would have thought you would trade stocks on your pocket computer (phone) with a negligible commission charge? Or unlock your phone using your face? These are all common-place things today, that were unheard of in the '90's.
OK, so essentially none of us saw those futures in 2000. I didn't. (I did buy some Priceline at $25 a share, but I didn't hold it all until today's valuation of $2478.). There were also Pets.com busts that happened along the way. I consider that a LOT of the crypto tokens available to purchase today are going to be garbage. But they are not ALL going to be garbage. Bitcoin is not. Ethereum is probably not--and if it changes, and loses its edge as the #2 token, it is not going to be sneaky or subtle or mysterious. I would argue that MOST of the coins in the top 20 by market cap at CoinMarketCap.com are not going to be garbage.
But I think there is a good chance Shiba Inu token is going to be garbage. Let's briefly look at the history of this token. Bitcoin was invented in 2009. Ethereum in 2014. DogeCoin was created from a fork of LiteCoin in 2013. Shiba Inu token was created as an ERC20 token on the Ethereum network in August 2020.
Bitcoin, Ethereum, and DogeCoin are all blockchains. DogeCoin was created as a joke, because a couple of guys that were into cryptocurrency basically wanted to prove they could do it. They took a meme of a shiba inu dog named Doge that was already trending on the internet because of the funny look that the owner photographed, and named the currency after the meme. It was barely worth anything when they created it--fractions of a cent. No supply cap. You could mine it and give it away. You could have millions of Doge and it didn't cost you anything. You could trade Doge, and many other cryptocurrencies on cryptocurrency exchanges. After DogeCoin was listed on exchanges, suddenly you could swap this asset for other assets, and hence, it has a tangible value. (And just to make this whole thing super-meta, that original Doge photo is being turned into an NFT and fractionalized, if you are in to collecting NFTs.)
These exchanges are what led to value. I will say that I have personally had a hard time getting behind the idea of putting any real money into DogeCoin. However, the internet has given it power. This is actually much like bitcoin. Bitcoin has the first mover advantage, the real use case, the fair mining, and the pseudonymous inventor. DogeCoin doesn't have that, but it has a cute dog, and it only costs fractions of a dollar. In fact, today Doge is trading around $0.25. So, you think, hey, I can buy 4 of these for 1 dollar! How cheap! Bitcoin is $54,000! I should buy the cheaper one! And you would not be alone in thinking like this.
So some anonymous person or persons invented a token that is a joke of DogeCoin called Shiba Inu Token. And they made the tokens on the Ethereum network and sent a ton of these tokens to the wallet owned by Vitalik Buterin, Ethereum's founder. And then the anonymous person(s) put some of the coins on UniSwap (a decentralized exchange), and said 'here people, trade my coin I just invented.' Vitalik didn't really want all these coins, so he gave them away. Now, anonymous person (who is called Ryoshi) can advertise this joke coin, and say, 'hey, this coin I just invented only costs fractions of a penny'. And you think "How Cheap! I can buy thousands of these for a dollar!" If it just goes to one cent, or one dollar, or one whatever, I'll be a millionaire!
Sure, you would, but how do you get there from here? You have to look at the Market Cap and the use case. How do you get from the Shiba Inu that costs $0.00002431 today to $0.01?
Well, it has to gain value by 400x. That's a long way from here. And, you have to hold onto it for all that time and roller coaster ride. But maybe it will, and maybe you would. Let's make sure you know what a market cap is. The market capitalization is how much the entire thing (business, crypto currency, gold, whatever) is worth. Multiply the number of things by the price of the things. So, today AAPL is $143 per share x 16.53B shares outstanding= $2.375T. So the market cap of Apple is $2.375 Trillion.
The amount of Shiba Inu tokens out in the world (Circulating Supply) is 394,796,000,000,000 SHIB. The Total Supply is 1,000,000,000,000,000 SHIB. Yes, Quadrillion. 15 zeros. And there are already 394 Billion Shiba Inu tokens available to trade. For a reminder, there are only 21 million Bitcoin, around 19M have been created. And the US Federal Reserve bank has created around 8 trillion dollars, although around 4 trillion of those were in the last 2 years, and around 7 trillion in the last fifteen years. And they tell us the inflation is 2% and going to stay there....
To get to your $0.01 Shiba Inu, your current $0.00002349 (price changed while I was writing this) token needs to go up 400x. The current SHIB market cap is $8B. Do you think that this is going to be $3.2T? I think that's a pretty big ask for a token that is only made to be a joke of a joke. Also, only around a third of all SHIB tokens have been created so far. Bitcoin today is around $54,000, which gives it a market cap of around $1T. That's a lot, to be sure. But this is a technology that has been around since 2009, survived multiple attacks, and is known all over the globe, but isn't even very well understood by most of the people that know about it. Heck, it's not even appropriately understood by the talking heads of people being interviewed to talk bad about it (Peter Schiff).
Also, remember that the anonymous person or persons inventing Shiba token may be manipulating the market all by themselves, buying and trading this coin they control the supply of, and giving it value just because they are trading a small amount of these things. In other words, the inventor decided to buy and sell these for $0.0000016 or whatever, and the there were already billions of coins in existence, and so by purchasing a handful of these tokens at that price, it elevates the market cap of the entire project. Then, this coin started getting traction and moving up the lists, becoming talked about in social media, and it grows and grows. I think this is what happened with DogeCoin as well. Now, these are just coins with jokes about a dog. There are plenty of other coins out there with no real reason to grow in price other than get-rich-quick trade ideas. Some people are going to trade these coins successfully and some are not. Similarly, some people are going to make successful trades in the stock market.
We're still early. Oh, and if you think Shiba Inu can 400x, you have got to think Bitcoin has more multiples left in it as well, right? I think a Bitcoin or Ethereum 10x is a lot more likely than a Shiba Inu. If you think something like Shiba coin has the chance of even a 10x without the anonymous creator flooding the market with his (or her) supply. But maybe you want to gamble on this, or DogeCoin. Maybe you will get in and get out before a rug pull. I prefer to research the coins and the people behind them and understand the risk. I think a Bitcoin 10x, as more and more people and institutions get on this train of sound money with a fixed supply, is substantially more likely than Shiba Inu going to the moon.
There has been a lot of trash talked about Elon Musk and how he manipulated the market. I think he is profoundly misunderstood. I do not know him personally, but my assessment is Elon is a geeky engineer (this is a compliment). He has learned about Bitcoin and believes it is a good idea and bought some (he got Tesla to buy $1.5B). He likes memes and started joking about the doge and DogeCoin on Twitter. And, because he is wealthy, people got carried away with what they think he values. Elon is not out to make money or dump on people with cryptocurrencies. He wants to solve problems. He wants to solve difficult problems, like getting us to drive electric cars, reusing space ships, colonizing Mars, digging transportation tunnels efficiently and hypersonic travel. He really doesn't care about making money on DogeCoin, but he got in on the joke. However, people misunderstood him, just like they don't understand the market cap of these other coins.
Spend some time at CoinMarketCap.com and look at the top projects, and you can see how much wealth is already in these ecosystems. Just because it is at or near the top, does not mean it will remain there. When LiteCoin was one of the only three you could buy on Coinbase, it was near the top of the list. Here's a snapshot of the prices when I first bought in July 2017. You will recognize some of those names as still being active projects today, but not all of them. Likewise, some of the names today *cough*Shiba*cough* will not be on that page in 4 years.
Please buy with a long-term mindset. Gamble if you want, whether in Las Vegas, or with your buddy, or even buying DOGE or SHIB. But don't bet the farm on your gamble. Invest your money for you or your kids in 5 or 10 years from now (or longer!)
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