Evaluating Shiba Inu as an investment: From how it works to benefits and risks

How Shiba Inu works

Since Shiba Inu is an ERC-20 token, it is secure, compatible with DeFi apps, and depends on Ethereum's infrastructure. Below is an explanation of how it functions:

• SHIB is the native token of the Shiba Inu ecosystem, serving various purposes, including paying fees and receiving rewards. At the same time, it can be used as a crypto to send value across the world within just a few seconds.
• LEASH is the 2nd digital asset of the ecosystem, designed as a derivative product that replicates Dogecoin’s price on the Ethereum blockchain. This token introduces scarcity, which makes the price rebase to 1000/1 at the cost of Dogecoin every day at 6:30 AM UTC.
• BONE token, or BONE ShibaSwap, represents a governance token that enables users to stake and earn rewards as they participate in the governance of the ecosystem by voting.
• ShibaSwap Exchange is a non-custodial platform that allows users to trade SHIB with other ERC-20 tokens from their crypto wallets that are compatible with it.
• Shiba Inu Artist Incubator is a unique element of the project, created to promote participation in the NFT ecosystem, which could further help monetize the meme culture.

Benefits and risks of Shiba Inu

Let’s start with the benefits of investing in Shiba Inu. First, it receives robust support from the Shiba Army – its active and dedicated community - which, over the years, has made efforts to increase awareness of the meme coin and encourage adoption and participation in its ecosystem, fueling the token's popularity. SHIB also offers the potential to yield substantial returns, despite its highly speculative nature, which is particularly true during bull markets. In addition to being a meme coin, the Shiba Inu project has other use cases, one of which is the ShibaSwap DEX, allowing users to trade and earn rewards through yield farming and liquidity pools.

But even with these advantages, Shiba Inu comes with a few drawbacks you should be mindful of. It is prone to high volatility, just like all other cryptocurrency assets, which can result in losses when the market value is low. Furthermore, compared to popular digital assets like Ethereum and Bitcoin, it has fewer real-world uses and technological support, which may have an impact on its long-term value. Despite regular efforts to regulate the crypto market, individual and institutional investors alike hesitate to participate in the meme coin ecosystem due to a lack of regulatory clarity. Lastly, the popularity of Shiba Inu is tied to social media visibility and community involvement. Although these factors are two major catalysts, maintaining them may not last forever, and therefore, the value of the meme coin could decline.

Deciding whether you should buy Shiba Inu

Buying Shiba Inu can be tempting when you consider that it minted many billions in the past. But things are never that simple in the cryptocurrency world, and Shiba Inu carries an even greater risk because of its status as a meme coin. If you're thinking about purchasing this token, you should know what you're getting yourself into because it's definitely not for the weak of heart.

This meme coin survives on the hype generated by its community and lacks robust fundamentals that often underpin a crypto asset. To put it simply, you should first assess your portfolio strategy and risk tolerance, and only then make a move, whether that means allocating a small part of your portfolio to Shiba Inu or seeking a token with lower risk.

The bottom line

Despite having started as a joke, Shiba Inu has garnered significant market attention due to its potential to offer high returns. However, before investing your money in it, consider the risks involved, and remember there is no guarantee that prices will increase or decrease. Even though some analysts believe there is potential for growth, whether or not that materializes will rely on market trends, investor sentiment, and the overall state of the crypto sector.