Cryptocurrencies have taken the world by storm, and the latest addition to the list is Shiba Inu, also known as SHIB. This cryptocurrency has gained immense popularity in a short span of time, thanks to its ability to capitalize on memecoin mania.
In this beginner's guide, we'll take a closer look at what Shiba Inu is, how it works, and what makes it stand out from other cryptocurrencies. So, let's dive in and explore the world of SHIB.
What is Shiba Inu (SHIB)?
Originating from the same Japanese dog breed that inspired Dogecoin, Shiba Inu has carved out its distinct identity in the crypto universe. Its development is guided by principles outlined in a unique "woof paper," a playful take on the traditional white paper that outlines a cryptocurrency's project plan and roadmap.
The SHIB coin has a strong backing from its devoted community, known as the ShibArmy. This backing has helped SHIB gain immense growth, with its price jumping over 27,000,000% from January to October 2021. Despite being considered a "pump and dump" cryptocurrency for a while, the SHIB token has evolved into a vibrant ecosystem that resonates with its community due to the popularity of the Shiba Inu dog breed.
The SHIB coin was created in 2020 by an anonymous individual or group called Ryoshi. The coin saw a significant value increase in 2021, solidifying its position as a rival to Dogecoin.
The Shiba Inu ecosystem is unique for its total supply of one quadrillion SHIB tokens, the highest number of coins ever created in the crypto space. Half of this supply was locked in the decentralized exchange Uniswap at launch. The other half was transferred to Vitalik Buterin, sparking considerable controversy — since the team had claimed these tokens were burned, yet Buterin was able to access them and sell them. This eventually led to a large donation to combat COVID-19 in India and the burn of 410.24 trillion SHIB, roughly 40% of the total supply, permanently removing them from circulation.
Despite its meme status, the SHIB coin serves a purpose beyond mere entertainment. It is part of a broader experiment in decentralized community building, aiming to empower the average person.
How does Shiba Inu work?
Shiba Inu operates as a decentralized cryptocurrency, leveraging the power and security of the Ethereum network. It is an ERC-20 token, which means it can interact with various decentralized finance (DeFi) projects that share the same blockchain.
The Shiba Inu ecosystem comprises several tokens, including SHIB, LEASH, and BONE, each playing a unique role in the ecosystem's operation. LEASH is the second token in the ecosystem with a much smaller supply, initially functioning as a rebase token linked to the price of Dogecoin. The third token, BONE, is a governance token that allows the ShibArmy to vote on future proposals, with the number of BONE tokens held determining the weight of their vote.
ShibaSwap, the decentralized exchange (DEX) within the Shiba Inu ecosystem, is a crucial component of SHIB's operation. It allows users to trade cryptocurrencies without the constraints of a centralized platform. On ShibaSwap, users can provide liquidity, stake, and swap any of the three Shiba Inu tokens.
How to mine Shiba Inu coins?
For newcomers to the crypto world, it's essential to understand that Shiba Inu coins cannot be mined in the traditional sense like Bitcoin or Ethereum. This is primarily due to its nature as an ERC-20 token, a type of cryptocurrency that operates on the Ethereum blockchain. Unlike proof-of-work cryptocurrencies like Bitcoin, which require mining to validate transactions and create new blocks, ERC-20 tokens like SHIB are pre-mined and have a fixed supply.
Instead of mining, individuals can acquire SHIB coins through trading on decentralized and centralized exchanges or by participating in the Shiba Inu ecosystem. One primary way to earn SHIB tokens is through ShibaSwap, the decentralized exchange within the Shiba Inu ecosystem. Here, users can stake (BURY) their SHIB tokens, essentially locking them up for a certain period to earn rewards. This process is akin to earning interest on a traditional bank deposit.
Additionally, users can provide liquidity (DIG) on ShibaSwap by depositing their tokens into a liquidity pool. In return, they receive a proportion of the transaction fees generated by the exchange.
While the concept of mining does not apply to SHIB coins, the Shiba Inu ecosystem offers multiple opportunities for users to grow their SHIB holdings and actively participate in the project's development.
Disclaimer: This article was produced with the assistance of OpenAI’s ChatGPT 3.5/4 and reviewed and edited by our editorial team.
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