2021 has seen the explosion of the 'meme coin', to the point that these are a legitimate category of cryptocurrency. The two most prominent meme coins, Shiba Inu and Dogecoin, are based around the popular Shiba Inu dog breed. What was a cute, lovable joke has turned into one of the most rapidly growing markets in the industry.
Shiba Inu and Dogecoin have come from relative obscurity to cement themselves in the top 10 cryptocurrencies by market capitalization. Both initially had no real purpose other than being a 'fun' joke. Now, these projects have evolved and are developing a number of features, including decentralized exchanges and staking services.
As these meme coins continue to mature, the question remains: Who will win this dog fight?
The meme coin took on a life of its own though, being adopted and used by a loyal, almost cult-like community once the creators left the project in 2015.
For the first 8 years (or 56 years in dog years) of Dogecoin, the coin was extraordinarily cheap. This lended itself perfectly to tipping, which became its most common use. Instead of having to split other cryptocurrencies worth in the thousands, thankful internet users could easily tip others just a fraction of a cent with Dogecoin.
Though still on the cheaper side, Dogecoin surged in popularity throughout 2021, with the coin nearly breaching 75 cents USD in May.
Dogecoin has been long-supported by its self-proclaimed CEO and crypto enthusiast, Elon Musk. The Tesla and ex-PayPal owner has had a huge impact on the success of Dogecoin, with his constant affirming tweets and love for the actual Shiba Inu dog driving its popularity.
Dogecoin uses a proof-of-work mechanism to execute transactions and 'mint' (create) new coins. This is done using high-tech computers that 'mine' the coin, which is very similar to how Bitcoin is created.
Dogecoin has traditionally had a huge supply due to its low cost and high inflation rate. As of November 2021, the circulating supply was 131 billion Dogecoin. Dogecoin doesn't have a maximum number of coins that can be created.
10,000 Dogecoins can be mined every minute, which results in an annual inflation rate of 5.256 billion coins. This figure is quite high relative to other coins – Ethereum has a max annual inflation rate of 18 million, while Bitcoin's entire coin supply is limited to 21 million coins.
Having such a high inflation rate can be problematic for the long-term stability of a coin's price, and this may influence Dogecoin's potential for becoming a widely-adopted currency.
When it was first developed, Shiba Inu didn't have a clear use-case other than being an alternative to Dogecoin. As of 2021, the development team are expanding its functionality. They are implementing a decentralized exchange where SHIB holders can easily swap their coins for other cryptocurrencies.
The Shiba Inu project is also implementing staking, a process where you can 'lock up' your SHIB coins in exchange for rewards (additional tokens).
People can buy Shiba Inu from most popular cryptocurrency exchanges, including Binance, Coinbase and Crypto.com.
Like Dogecoin, Shiba Inu has historically been extremely cheap — it has never been worth more than one hundredth of a cent (USD).
SHIB also has a huge supply, with 549,095 billion currently in circulation. About 40% of this figure doesn't actually exist though, having been burned in the past. Burning refers to when coins are moved out of circulation by developers or miners.
50% of Shiba Inu's total supply is locked on decentralized exchange UniSwap, with the other 50% having been gifted to Ethereum co-founder Vitalik Buterin.
Dogecoin and Shiba Inu aren't the only two dog-related cryptocurrencies on the market. In fact, Elon Musk's constant lobbying for certain meme coins has spawned a huge run-off of new 'joke' projects, ranging from legitimate to completely ridiculous.
That said, the two big dogs in the meme coin world are Shiba Inu and Dogecoin. So, what are the differences between them?
Both coins are based on the intelligent, popular Japanese hunting dog Shiba Inu. They have minimal real-world functionality, although software developers are looking to change this by improving and building upon the current infrastructure.
Dogecoin has a much more storied history than Shiba Inu, and a much larger fanbase (although the gap is closing). For context, Dogecoin's subreddit has 2.2 million subscribers, compared to SHIBArmy's 385,000.
The two coins use different consensus mechanisms (coding algorithms) to execute transactions and create new coins. Though both started as Proof-of-Work (PoW) tokens like Bitcoin, Shiba Inu is based on Ethereum's network and is in the process of shifting to a Proof-of-Stake (PoS) model. Proof-of-Stake models are becoming increasingly popular due to the negative impact of cryptocurrency mining on the environment. Dogecoin is reportedly looking at moving to a Proof-of-Stake mechanism, however this has not been confirmed.
Unlike Shiba, Dogecoin has its own blockchain, with this technology largely being based on the Bitcoin alternative Litecoin.
Dogecoin has mostly been used as a tool for donating and tipping small amounts of money online. This was Shiba Inu's initial purpose too, but because the cryptocurrency is built on the Ethereum network, there is more scope for development. For example, SHIB managers are creating a decentralized exchange where the community can interact, swap coins and earn interest on their crypto.
Shiba Inu has been dubbed the 'Dogecoin killer', but when you consider that Dogecoin doesn't really do a whole lot more than look cute, it raises the question: Why did Dogecoin need to be killed in the first place?
Shiba Inu brings a few new ideas to the table, and the fact that it is based on the Ethereum network means it can integrate new technologies easier than Dogecoin can.
That said, Dogecoin has a larger community, more historical data and greater public exposure. The technology behind the coin is also backed by Elon Musk and is constantly being upgraded. Dogecoin is accepted by over 1000 different merchants, whereas Shiba can only be used at approximately 100.
Both coins still suffer from being highly speculative, which is often accompanied by extreme volatility. In a pinch, you could probably argue that Dogecoin is the slightly "safer" investment in terms of price fluctuation. The meme coin has consistently been valued at around the 20c USD mark for nearly 5 months. At the time of writing, the relevant market data for Shiba is only a few weeks old, so investors have little precedent to go off of.
Considering all of this, you can make a case for either coin being better. If you like the flexibility of being able to swap and stake your coins, SHIB might be the better choice. However, if you want a coin that sticks to its roots while having a solid foundation of technology, then Dogecoin may be an option to consider.
At the end of the day, asking which meme coin is better is a bit like asking which meme you prefer. Both coins are just that — memes — and those looking for a safe investment should probably search elsewhere.
But, if you do want to jump aboard the hype train, just remember: never invest more than you can afford to lose.
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