Why are two “jokes” Dogecoin and Shiba Inu in the top 10 largest virtual currencies in the world?

Why are two “jokes” Dogecoin and Shiba Inu in the top 10 largest virtual currencies in the world?

Created as a joke, two virtual coins inspired by the Shiba-Inu dog have now been added to the group of the 10 largest virtual currencies in the world by market capitalization …

Dogecoin, born in 2013, currently ranks 9th with a market cap of more than $ 35 billion, according to data from Coinmarketcap.com.

Earlier this week, the 2020-born Shiba Inu Coin sometimes rose to 9th place with a market cap of over $ 38 billion. On November 4th, Shiba Inu dropped to 11th place with a market capitalization of around $ 32.7 billion.

Each Dogecoin currently costs $ 0.2686 and each Shiba Inu costs $ 0.00006058.

Both cryptocurrencies, the price of which has skyrocketed recently, are constantly swapping positions in the capitalization rating. The Shiba Inu support community says the virtual currency is a “Dogecoin destroyer”. At the moment, Dogecoin appears to have the upper hand, with a gain of more than 13% in the last 1 week, while Shiba Inu has fallen more than 30% over the same period.

Whether the two communities that support these two virtual currencies want to admit it or not, Dogecoin and Shiba Inu have one thing in common – Caitlin Cook, an expert on virtual currencies from Onramp Invest, in an exchange with the CNBC news agency.

Rely on the power of the community to raise prices

Ms. Cook said both Dogecoin and Shiba Inu are being “bloated” by the support community. “The Dogecoin community and the Shiba Inu community are both very vocal and very engaging,” she said.

“Altcoins (virtual currencies born after Bitcoin) like Shiba Inu are largely community-based, which means their success depends more on the success and growth of the community than on the community. How useful this virtual currency is,” said Bone Fide Wealth President Douglas Boneparth told CNBC.

In the Shiba Inu whitepaper, the creator of this virtual currency even describes Shiba Inu as an “experiment in decentralized spontaneous community building”.

According to Ms. Cook, the rapid rise in the price of Shiba Inu and Dogecoin comes mainly from the community’s support in “inflating” them. “It’s the strength of the community that has repeatedly fueled the bullish momentum of these cryptocurrencies,” she said.

In the communities that support Shiba Inu and Dogecoin, there are celebrities like Elon Musk, CEO of SpaceX and Tesla. Musk often posts tweets on Twitter about various cryptocurrencies. In this way, Mr Musk is said to have a significant influence on the price of virtual currencies.

Shiba Inu’s price has risen several times this year after Mr Musk repeatedly posted pictures of his Shiba Inu puppy on Twitter. However, on October 24, Musk made it clear that he does not own a Shiba Inu, but only holds Bitcoin, Ether and Dogecoin.

But in general, the recent rally of the two cryptocurrencies is “largely based on the strength of the community, and any other virtual currency has a chance to do the same if someone has a major influence on it”. “Said Koch.

However, since such cryptocurrencies are prone to drastic price movements, as commented by some famous people, investing in them becomes a risky business.

Both Dogecoin and Shinu Iba are “highly speculative assets,” noted Cook. “For most people, they are not long-term investments, and most people probably have no long-term reason to hold onto these cryptocurrencies for the long term.”

That’s because buying Dogecoin and Shiba Inu is seen as a bet on a community rather than a bet on a technology, Cook explained. “It’s not a viable product,” she said.

Investment channel is not for the “faint of heart”

Experts warn that any investment in cryptocurrencies can result in investors losing everything. Experts often recommend that crypto investors only spend as much money as they can afford to lose, no matter which virtual currency they choose. In addition, you may need to be particularly careful with altcoins, as they differ greatly from Bitcoin in terms of structure, offering, and functions.

Bitcoin was founded in 2009 with the original goal of becoming a peer-to-peer financial system. Bitcoin’s blockchain is carefully crafted with a carefully designed ecosystem. Bitcoin also has a limited supply, which creates an intrinsic scarcity. Because of this, Bitcoin is viewed by the owners as a store of value and they also expect Bitcoin to become a leading decentralized digital currency in the future.

Most altcoins do not have these properties. Although altcoins have the advantage of community strength, this advantage is also a weakness, as such cryptocurrencies rely too much on this strength. Many altcoins are still missing in technological development and the supply is unlimited.

Because of the volatility and risk, “I’ve always said that cryptocurrencies are not the right investment for a lot of people,” said Cook. “Altcoins with higher volatility are not a viable option for the faint of heart.”

Of course, at the moment nobody can predict what will happen to Dogecoin and Shiba Inu. “Who knows? Maybe one day a grandmother will give her grandson a couple of Shiba Inu for his birthday,” said Bonaparth. “The future of these two cryptocurrencies depends on whether they are widely accepted and adopted in the current financial system.”

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VnEconomy

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