Another dog-inspired cryptocurrency called the shiba inu, or SHIB, hit an all-time high of $ 0.00008845 Thursday.
Although its price is below 1 cent, the "meme token" It has attracted a lot of attention. Shiba inu now ranks number 8 among the top cryptocurrencies by market value, according to CoinMarketCap. It is more than 173% for the last seven says, starting at 10:00 am EST on Thursday.
Shiba inu, nicknamed the "dogecoin killer" by its supporters, it has currently surpassed dogecoin, which ranks number 10.
Although shiba inu is cheap to buy and it can be tempting to get involved, experts say investors should do their research first.
"Before investing in any cryptocurrency, it is important to understand what you are investing in and the associated risks, not just overdo it," Douglas Boneparth, certified financial planner and president of Bone Fide Wealth, tells CNBC Make It.
Shiba inu is typically considered a altcoin, which refers to the multitude of cryptocurrencies in addition to bitcoin. Cryptocurrency can be a very volatile and speculative investment in general, but experts say that altcoins can be even more.
This is what you need to know.
What is SHIB?
Shiba inu was created in August 2020 by a pseudonymous founder named Ryoshi. As its name suggests, the token is inspired by shiba inu dogs.
Shiba inu is an Ethereum-based ERC-20 token, which means that it is created and hosted on the Ethereum blockchain, rather than its own blockchain.
Ryoshi decided to launch shiba inu on Ethereum because "it is already secure and well established," according to the shiba inu. White paper, or, as your community calls it, "weft paper."
What are the risks?
"Altcoins like SHIB are primarily community-based, which means that their success largely depends on the success and growth of their community rather than their usefulness," says Boneparth, who has invested in bitcoin since 2014. In fact , Ryoshi calls shiba inu an "experiment". in decentralized spontaneous community building "in his white paper.
Experts warn that any investment in cryptocurrencies can result in the loss of your entire investment. They generally recommend that you only invest what you can afford to lose, regardless of which cryptocurrency you choose.
But altcoins may require extra caution due to its differences from something like bitcoin, including its structure, supply, and utility.
Bitcoin, for example, was launched in 2009 with the intention of being useful as a peer-to-peer financial system. His blockchain was carefully created, with a well thought out ecosystem. Bitcoin is also in limited supply, allowing for scarcity built in by design. This is why its holders see it as a store of value, who also expect it to become a prominent decentralized digital currency.
Most altcoins they lack these characteristics.
Shiba Inu supporters argue that its ecosystem, which includes smart contract capabilities; NFT or non-fungible tokens; and opportunities for liquidity miningTo name a few, they offer utility beyond the community.
However, "many altcoins can be extremely risky and may not have any inherent investment value, and retail investors should not trade these assets without research and due diligence," says Brett Harrison, president of crypto exchange FTX US.
Rather than investing in an emerging cryptocurrency based on hype, Harrison seeks out crypto assets with a specific utility.
"There are a number of crypto assets that may be suitable for retail users, whose investment prospects may be linked to their ability to provide a store of value, facilitate an efficient mechanism for payment transfers, or drive a protocol used to build blockchain. - application-based, "he says.
This story has been updated to reflect the price of shiba inu.
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