Doge vs Shiba: A deep dive into meme coins


Crypto's canine-focused meme coins have certainly captured our attention, despite their restricted utility, but it remains to be seen whether you can teach an old dog new tricks.

After bitcoin and Ethereum, Dogecoin is arguably the world's best-known cryptoasset - mostly thanks to the spruiking of eccentric billionaire Elon Musk. Dogecoin started out as a joke but, as it gains respect, it's shaping up as a force to be reckoned within the crypto space.

Dogecoin was originally created in 2013 as a spoof, making fun of the wild speculation in cryptoassets. Yet, while bitcoin is typically held as a store of value, Dogecoin's stability was intended more for transactions, such as tipping content creators on social media.

dogecoin v shiba inu cryptocoins

An open-source digital currency, Dogecoin was developed by software engineers who designed it to be one of the fastest blockchain networks to transact on, thanks to its one-minute block intervals. This makes it well-suited for payments.

Musk has been one of Dogecoin's most vocal supporters. His public comments can cause wild price volatility, in some ways harming the coin's stability and utility, but his words have been backed by actions. Musk has publicly confirmed that he personally owns Dogecoin, one of only a few assets in his crypto portfolio, alongside bitcoin and Ethereum.

Dogecoin is also gaining wider acceptance, with AMC Entertainment adding it as a valid payment method to buy gift cards for cinema tickets. Musk's SpaceX venture accepted the cryptocurrency as payment to launch a lunar mission next year, while he has also speculated whether Tesla should accept Dogecoin as a form of payment.

The rise of Dogecoin, and its journey from joke coin to serious currency, spawned rival coin Shiba Inu in 2020. Named after the dog from the Dogecoin token, Shiba Inu was created by an anonymous individual or group known as Ryoshi, who has dubbed it as the "Dogecoin killer".

From its inception, Shiba Inu has done things differently. Starting with a supply of 1 quadrillion, Ryoshi locked 50% in Uniswap for liquidity purposes. Ethereum co-founder Vitalik Buterin was tasked with holding the remaining 50%. Buterin burned a large portion of them, further driving up their value.

Shiba Inu's founders have also created the ShibaSwap decentralised exchange, which allows investors to stake their Shiba Inu tokens and receive income. This differentiator from Dogecoin gives Shiba Inu another potential longer-term use case.

In other ways, Dogecoin and Shiba Inu have a lot in common. Both have loyal, vocal and committed community members. For example, Dogecoin has around 3.1 million followers on Twitter, while Shiba Inu has more than 2.9 million. This kind of support helps attract new investors, as well as new platforms to list these tokens.

Yet, unlike some rival cryptoassets, Shiba Inu and Dogecoin are still struggling to establish use cases and utility to justify their existence. The main driver for both their growth still comes down to the number of consumers trading these cryptoassets.

Retail investors are driving the gains, sometimes 100% or more in a few days, which attracts other retail investors. Of course, once the price drives higher, investors begin to take profits as it reaches new highs. This, in turn, causes volatility which undermines utility.

The challenges of volatility are exacerbated by the actions of influencers such as Musk, with supporters hanging on his every word. For example, the value of Dogecoin plunged 30% within minutes when Musk failed to mention the cryptocurrency when he made his Saturday Night Live debut in May 2021.

Although Shiba Inu and Dogecoin have grown in popularity, they lack many of the strengths and the long-term benefits that other crypto assets offer. Crypto is a highly volatile asset class, so it's important that investors diversify their holdings, understand what they're investing in and never invest more than they can realistically afford to lose.

Depending on your crypto investment strategy, the limited fundamentals of both Shiba Inu and Dogecoin means they don't offer great long-term prospects. As they have limited use cases, investors tend not to want to hold them for the long term. Instead, they move capital into more significant investments with robust use cases, such as bitcoin and Ethereum.

However, with more retail investors participating in financial markets than ever before, community-driven projects like Dogecoin and Shiba Inu, which began life as meme coins, might have more legs than most think.

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Josh Gilbert is a market analyst at global multi-asset investment platform eToro, where he specialises in portfolio diversification, global equities and crypto assets. Josh studied business and finance at Truro and Penwith College in Cornwall in the UK.