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Better Buy: Shiba Inu or Solana?

By Keith Noonan and Keith Speights – Dec 18, 2021 at 9:30AM

Key Points

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In a showdown between a controversial meme token and a fast-growing application network's currency, which comes out on top?

Shiba Inu (SHIB -3.25%) and Solana (SOL -4.61%) stand out as two of the investment world's biggest winners in 2021. Solana's SOL token has surged more than 10,000% year to date, while the SHIB token's performance across the stretch has come in with a mind-boggling gain of almost  42,000,000%.

But which one is more likely to deliver big wins in 2022 and beyond? Read on to see where two Motley Fool contributors come down on the question.

A dollar breaking up into blocks.

Image source: Getty Images.

The little dog token that could

Keith Noonan (Shiba Inu): While Shiba Inu's gains have far outstripped Solana's impressive returns during 2021, looking at their respective market capitalizations tells a different story. The SHIB token has a market value of about $17 billion, while the SOL token has a market cap of roughly $55 billion.

The risk that SHIB's valuation could be hurt by the emergence of new meme tokens is certainly there, but Solana's application-focused network faces competition as well, and SHIB's smaller market cap could help it post more explosive gains if the crypto market emerges from recent volatility and settles back into another strong bullish phase. Shiba Inu is down more than 60% from its all-time high, while Solana is down about 40% from its peak. 

Increasing adoption and an improving long-term outlook for Solana's blockchain application-building features have surely helped its SOL token post gains this year, but there's a good chance that action from speculative investors has played an even bigger role in the cryptocurrency's incredible performance. It's worth keeping in mind that the vast majority of people trading and holding SOL tokens have probably never interacted with the underlying blockchain network's app building and execution services -- and likely never will. 

The fundamental value case for Shiba Inu may be less persuasive because the token is limited to being a currency or speculative investment vehicle, and it isn't backed by an application services network in the same way that Solana's SOL token is. But at least in the near future, both token prices will largely be driven by speculation, which could play a bigger role in driving SHIB's token price higher than SOL's. 

Too many advantages to ignore

Keith Speights (Solana): No, Solana doesn't have a cute dog as its mascot. But that's arguably the only way that it doesn't top Shiba Inu. There are simply too many advantages for Solana to ignore when comparing these two cryptocurrencies.

Probably the most important thing to know about Solana is that it's the fastest-growing blockchain ecosystem on the planet. There are currently 879 projects built on the Solana blockchain. They include collections of unique digital assets known as "non-fungible tokens", trading exchanges, games, and more.

Solana is super-fast, with the capability to process as many as 65,000 transactions per second. It's also very cheap, with transaction costs well below $0.01 for developers and users. Unsurprisingly, Solana ranks as the fifth-largest cryptocurrency in the world based on market value.

Granted, Solana recently experienced a highly publicized distributed denial-of-service (DDoS) attack that caused concerns. Although the blockchain remained online, its network speed dropped significantly. However, the issue hasn't caused developers to abandon it. Instead, on-chain development activity surged after the DDoS attack. Solana appears to have what it takes to survive and thrive over the long run.

So, which is the better buy?

For most investors looking to build exposure to the cryptocurrency and blockchain services spaces, Solana probably is the better option. Investors willing to take on huge risk in pursuit of short-term gains might still be able to score wins with the SHIB token, but Solana's application-building functionality suggests a superior risk-reward dynamic over the long haul. 

Keith Noonan has no position in any of the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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