Success attracts attention. And that attention isn't always positive.
Shiba Inu (SHIB -2.53%) ranked as the top-performing cryptocurrency in 2021, by far. Its ginormous gain has resulted in negative commentary highlighting the risks and downsides of buying the digital token.
Several of the observations are right on target. For example, the chances of Shiba Inu delivering the same level of returns it achieved in 2021 going forward are slim to none. Also, historical precedents show that cryptocurrencies that skyrocket in a short period of time as Shiba Inu did tend to give up much of those gains. We've already seen that happen with Shiba Inu, to some extent.
But some of the knocks against Shiba Inu are arguably overdone. Here are three critical things that Shiba Inu naysayers are overlooking.
Image source: Getty Images.
1. Real-world utility
The first thing that's typically mentioned in a diatribe against Shiba Inu is its lack of real-world utility. You might see references to only a few hundred merchants accepting the digital coin.
To be sure, real-world utility is important in the valuation of cryptocurrencies. One of the main reasons why Bitcoin and Ethereum (ETH 0.90%) rank as the top two cryptocurrencies based on market cap is that they've gained acceptance in practical ways.
However, while Shiba Inu might not have had much real-world utility in the past, that's no longer the case. On Dec. 10, 2021, payment-network Flexa announced support for Shiba Inu. This means that the digital tokens can be used anywhere that Flexa is accepted -- at more than 40,000 merchants in the U.S. alone.
Granted, the ability to be accepted in a large number of locations doesn't mean that Shiba Inu will actually be used very much as a payment option. But it's incorrect to claim that the token lacks real-world utility after the Flexa announcement.
2. Metaverse opportunity
Another frequent criticism of Shiba Inu is that it doesn't offer any advantages over other cryptocurrencies. It's derided as only a meme coin that soared solely because of online hype.
This charge has some merit. Even with its recent increased real-world utility, Shiba Inu doesn't stack up all that well against several other cryptocurrencies. It's built on the Ethereum blockchain -- just like lots of others. Aside from its vocal supporters known as the SHIBArmy, Shiba Inu hasn't offered anything that you could really point to as a competitive advantage.
But that could change. Shiba Inu plans to develop its own layer-2 blockchain with the Shibarium project. That will pave the way for a wide variety of new projects to be created. Arguably, the most important of those is the development of a metaverse called the Oshiverse.
Maybe the Oshiverse will crash and burn. However, it won't be due to the lack of top-tier developers. William Volk, a respected game developer who has worked with Activision Blizzard, is leading the Shiba Games studio. Playside Studios, an Australian games developer behind multiple mobile and virtual-reality games, has been brought on to help build a multiplayer game for Shiba Inu.
Playside has an eight-month development contract with Shiba Games. The cryptocurrency just might have a real competitive advantage in the not-too-distant future.
3. Feeling the burn
There are two ways that the price of an asset can move higher based on the laws of supply and demand. Demand can increase, or supply can decrease. With more than 549 trillion Shiba Inu coins in circulation, it's easy to assume that the cryptocurrency will never benefit from a limitation in supply. However, that assumption could be dead wrong.
Shiba Inu didn't start out with 549 trillion coins. The initial supply was 1 quadrillion. Since the launch of the cryptocurrency in 2020, over 410 trillion coins have been burned (transferred to dead wallets and taken out of circulation), according to Shibburn, a Twitter account that tracks all Shiba Inu token burns. Most of those burns were done by Ethereum co-founder Vitalik Buterin, who received 500 trillion Shiba Inu tokens as a gift.
The burns continue, though. And don't be surprised if the Shiba Inu developers put in effect an aggressive burn strategy similar to what Ethereum adopted. If so, Shiba Inu's price could rise as its supply decreases, just like the laws of supply and demand dictate.
