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5 Reasons I Wouldn’t Touch a Shiba Inu with a 10-Foot Pole The Motley Fool | Omd Cialis

Shiba Inu (SCHIB -2.49%) 2021 hit almost every investor’s radar after speculators propelled it to an annual gain of 43,800,000%. It’s one of the greatest returns in financial history — a perfectly timed investment would have turned just $3 into over $1 million.

But the tide has since receded, and Shiba Inu hasn’t evolved to provide real use cases. As a result, it has lost 64% in value so far in 2022. Despite the steep drop, here are five key reasons I still wouldn’t be a buyer.

A sad Shiba Inu puppy sitting in a cage.

Image source: Getty Images.

1. Shiba Inu is not regulated

The first reason to stay away from Shiba Inu – and this applies to most cryptocurrencies – is that it is completely unregulated. Ironically, this is one of the reasons why some investors choose to own it as they feel it keeps them away from the traditional monetary system. But this approach can have significant consequences.

For example, if Shiba Inu tokens are lost or stolen, there is virtually no recourse for the holder. On the other hand, up to $250,000 worth of cash in a US bank account is automatically insured by the Federal Deposit Insurance Company (FDIC); in other words, it is guaranteed by the government in case something should happen.

It is likely that holders of TerraUSDa stablecoin that recently lost nearly all of its $18 billion worth would have appreciated a government-backed initiative to recoup its losses.

2. Regulations are coming

You might think this contradicts the first point, but the second reason to avoid Shiba Inu is that regulation is inevitable. After a series of high-profile collapses in the cryptocurrency markets (like the one mentioned above), the US government is more aggressively pursuing new legislation to protect investors.

Shiba Inu holders (and crypto holders in general) will soon lose their ability to remain anonymous as their brokers and exchanges will be required to report all trading activity by clients to the Internal Revenue Service for tax purposes by 2023. Cryptocurrencies are likely to comply with the law Defining a financial security that could soon impose a heavy compliance burden on brokers and exchanges and will increase trading costs for clients.

Put simply, more regulation is a net positive for consumers, but it would also eliminate many of the reasons people want to own tokens like Shiba Inu. If the subset of the population who currently find Shiba Inu attractive suddenly no longer do so, then this could be the final nail in the coffin for the meme token.

3. Neither consumers nor businesses want to use Shiba Inu tokens

The ultimate goal of most cryptocurrencies is to become a means of payment that outperforms traditional money. In theory, this would provide sustained price gains as people would constantly trade the tokens, giving consumers and businesses an incentive to own them. But not even crypto market leaders yet Bitcoin has gained mass acceptance, and Shiba Inu is light years behind.

Around 7,879 businesses worldwide accept bitcoin as payment, but only 659 accept Shiba Inu, and these are mostly small, obscure merchants. Given the significant return Shiba Inu made in 2021, followed by its subsequent collapse in 2022, how many companies could manage their cash flow trading in such a volatile currency? Probably none.

As a result, the Shiba Inu dealer base is unlikely to grow significantly any time soon.

4. Shiba Inu has a supply problem

Now that it’s been established that Shiba Inu is just a speculative toy, here’s the fourth reason I wouldn’t touch it with a 10-foot pole: It’s not even good at it the. There are currently 589 trillion Shiba Inu tokens in circulation, which is why they trade at $0.000012 each rather than something more typical like $1.

If Shiba Inu traded at $1 per token, it would be worth $589 trillion, making it the most valuable asset in the world. It would be worth 235 times more than the iPhone maker Applewhich is currently the largest company in the world with a market cap of $2.5 trillion.

Shiba Inu’s massive supply is therefore an impediment to it ever reaching a significantly higher price per token. As speculators slowly realized that the token is probably mathematically relegated to life with five zeros in front of its price, they have gradually stopped calling for further meteoric price increases to $1 and beyond.

5. I don’t feel any burning

To solve the above supply problem, the Shiba Inu community is working together to phase out tokens by “burning” them, which organically increases the price per token. It does this by sending tokens to a dead wallet that can never be accessed again. The easiest way to participate is to simply send tokens to the aforementioned wallet, but it’s no fun.

Shiba Inu owners can also listen to a specific music playlist with a portion of the royalties burned, or they can purchase coffee from the Shiba Coffee Company, which burns a portion of the proceeds. Then there’s the new Shiba Inu metaverse, where users who create virtual land with the ether Cryptocurrency can pay a fee in Shiba Inu to rename their properties, and you guessed it, that fee is burned.

But the burn rate has been incredibly slow so far. If holders hope their tokens will reach $1 through the burn mechanism, they may wait more than 10,000 years. And even if it gets there, it won’t change the value of their holdings. Any Shiba Inu investor will simply own fewer tokens at a much higher price, so the net worth of those tokens stays exactly the same.

Therefore, while this feels like a positive fix, it will have little real impact for investors.

Updated: September 17, 2022 — 1:32 am

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