Here’s What Needs to Happen for Shiba Inu to Remain a Top 20 Cryptocurrency

For well over a century, the stock market has stood on a pedestal as one of the world’s greatest wealth creators. Although it may not head higher every year, the average annual return of stocks has handily outperformed other asset classes, such as bonds and commodities. But in recent years, cryptocurrencies have absolutely run circles around the broader market. While the benchmark S&P 500 slightly more than doubled between its March 2020 low and the end of 2021, the aggregate value of all digital currencies grew more than 14-fold over the same stretch. Though the “Big Two” in crypto — Bitcoin and Ethereum — receive a lot of credit for this nominal value increase, it’s meme coin Shiba Inu (CRYPTO:SHIB) that’s been the jaw-dropper in the crypto space over the past 13 months. According to data from CoinMarketCap.com, a single SHIB token could have been purchased at midnight on Jan. 1, 2021 for a microscopic $0.000000000073. Even after a greater than 75% pullback from its October all-time high, those same SHIB tokens were trading hands at $0.0000204 one week ago. Eliminating six zeroes after its decimal point has translated into a 13-month gain of almost 28,000,000%! This means an investment of just a few dollars could have made a Shiba Inu investor a millionaire. Aside from delivering a historic gain in 2021, Shiba Inu also rapidly climbed the ranks of the world’s largest cryptocurrencies by market cap. When it peaked in late October, Shiba Inu had climbed as high as No. 9, with a market value well in excess of $40 billion. As of last weekend, it was the 15th-biggest cryptocurrency by market value ($11.2 billion).

Here’s the recipe that can keep Shiba Inu among the 20 largest cryptocurrencies

Though social media hype and momentum have played a big role in pushing Shiba Inu to where it is today, a number of things will need to happen if SHIB is to remain a top-20 cryptocurrency for an extended period of time.

Shibarium has to lower transaction fees significantly

Arguably the single biggest catalyst that’ll determine if Shiba Inu sticks around in the crypto top 20 or continues to fall down the leaderboard is the expected rollout of layer-2 blockchain project Shibarium. Shiba Inu is an ERC-20 token built on the Ethereum blockchain. While Ethereum has proven to be a trusted network, its popularity comes with downsides. For instance, transaction-based congestion on Ethereum leads to processing times of six minutes, or possibly longer. Worse yet, the transaction fees on Ethereum are significantly higher those of every other popular cryptocurrency, including Bitcoin. In other words, Shiba Inu’s existing attachments to Ethereum have made it an uncompetitive payment coin. Shibarium is specifically designed to lower transaction fees, or possibly even remove them. For a digital currency that’s currently built on the idea of merchant utility, having low transaction fees is imperative to facilitating simple transactions.

Merchant acceptance must improve demonstrably

To build on the previous point, Shiba Inu’s developers are going to have to do a better job of attracting merchants to accept its coin as a form of payment. As of last weekend, online business directory Cryptwerk listed just 605 global merchants as accepting SHIB. Keep in mind that 42 of these “merchants” were nothing more than spot exchanges, which aren’t retailers. Last year, Shiba Inu did land two brand-name retailers that announced they would accept SHIB: Movie theater chain AMC Entertainment and tech-focused e-commerce platform Newegg Commerce. But many more big wins will be needed to put Shiba Inu on the map at the retail level. Lower transaction fees with Shibarium should make SHIB a more attractive payment option. With the aggregate number of Shiba Inu holders recently surpassing 1.1 million, retailers may be more inclined to accept SHIB over time. This retail demand is one factor that’ll be needed to support what’s currently a mammoth market cap for a relatively unproven payment coin. The third factor that’ll be leaned on to keep Shiba Inu among the 20 largest cryptocurrencies is the development of the Oshiverse — the gaming universe powered by non-fungible tokens (NFTs). An NFT is a digital certificate of ownership for assets stored on blockchain. Easily the hottest trend in the cryptocurrency space at the moment is the metaverse. The metaverse is the next iteration of the internet that’ll allow users to interact in 3D virtual environments. The key with decentralized gaming built on blockchain is that users are going to be able to control, develop, and monetize their own creations. That’s a big shift from traditional console-and-PC-based gaming where developers retain ownership of user creations. Giving users the ability to earn money as they play is a potentially powerful tool to attract new players and increase demand for a game’s native currency. NFT-based gaming for Shiba Inu is expected to kick off in the first quarter of 2023. Shibarium needs to be in place first to ensure that all transactions, including NFT buying and selling, can be done with relatively low transaction costs. But in order for Shiba Inu to remain one of the largest cryptocurrencies by market value, the Oshiverse is going to have to be as popular as it’s being advertised. Personally, I have significant doubts about Shiba Inu maintaining its status as one of the world’s biggest digital currencies. But anything is possible in the crypto space if the execution is flawless.