Dog-inspired cryptocurrencies have grown in number and popularity. Dogecoin (DOGE 0.48%), launched in 2013, paved the way by becoming the first meme token. And despite its falling price the past three months, it has been a winning investment over the years.
Created to compete with Dogecoin by adding smart-contract functionality, Shiba Inu (SHIB 1.35%) is another meme coin that has drawn investor interest from those who might have missed the boat on DOGE. Even after crashing 76% since reaching an all-time high in late October, Shiba Inu is still a top-20 most valuable cryptocurrency, with a $12 billion market cap.
But I think it's in your best interest to stay away from this token. Let's take a look at three reasons why you should sell Shiba Inu in 2022.
Shiba Inu doesn't have a competitive advantage
Shiba Inu is an ERC-20 token, meaning that it's built on top of Ethereum's (ETH 0.35%) blockchain. While this makes it interoperable with the Ethereum network as well as with decentralized applications (dApps) running on it, Shiba Inu is constrained by the limitations of the bigger blockchain. It's also not difficult to create a new ERC-20 token, which eliminates barriers to entry.
And for a programmable blockchain that utilizes smart contracts like Shiba Inu, it's all about attracting interested developers to the ecosystem. According to venture-investment firm Electric Capital, there are more than 4,000 monthly active developers working on Ethereum, trying to grow the utility of the network. Plus, issues around speed and scalability are being addressed, limiting any opportunity Shiba Inu might have had to differentiate itself.
Besides Ethereum, there are other exciting smart-contract cryptocurrencies, like Cardano and Solana, that have brighter futures than Shiba Inu, a platform that clearly lacks uniqueness.
Lagging far behind when it comes to use cases
I'm a believer in the promise of cryptocurrencies disrupting the traditional structure of how we interact with and transact in the digital world. But for a coin to have any legitimacy over the long term, there needs to be real-world utility. Although Shiba Inu is working to increase usefulness, it hasn't made much headway.
The project's founders have created a decentralized exchange, called ShibaSwap. And the phased introduction of DoggyDAO, a marketplace for non-fungible tokens (NFTs), is underway. There's even a gaming application, known as Oshiverse, in the works, catapulting Shiba Inu into the ultra-popular metaverse discussion.
However, as things stand today, these are nothing more than promises of some future event and adoption. Plus, Shiba Inu is already far behind other dApps on the market, like UniSwap, OpenSea, and Axie Infinity, in terms of the use cases it's trying to implement.
And when it comes to Shiba Inu's use as a medium of exchange, it's essentially nonexistent. According to online business directory Cryptwerk, there are only 609 merchants worldwide that accept payment in SHIB. The utility just isn't there, and it probably never will be.
Shiba Inu's popularity is waning
Shiba Inu's popularity, like Dogecoin's, is driven by social media hype. This is not a legitimate investment thesis. It's impossible to know when or if Tesla Chief Executive Officer Elon Musk will tweet about SHIB. And if that's the only thing driving the price of the token, it's probably a good idea to stay far away.
Furthermore, ownership of Shiba Inu is extremely concentrated. According to data from Coin Market Cap, the top 10 SHIB holders own 65% of the supply outstanding, compared to just 5% for Bitcoin. That's a ridiculous amount of influence concentrated in the hands of a small number of owners. If this group decides that holding SHIB is no longer a worthwhile investment, they could quickly dump their tokens, resulting in a monumental price drop.
Based on a nonexistent competitive edge, lack of real-world use, and waning interest from crypto enthusiasts, I think it's best to sell Shiba Inu.