Bitcoin ( BTC 2.79%) and Shiba Inu ( SHIB 6.08%) tend to appeal to different groups of investors. Bitcoin, which leads the cryptocurrency market with a capitalization of $2.43 trillion, is considered a "blue chip" asset prized for its limited supply and is frequently likened to gold.
Shiba Inu, with a market capitalization of $7.2 billion, is a meme-based cryptocurrency that started as a spoof of Dogecoin ( DOGE 10.33%)—itself a playful take on Bitcoin. Over the last year, this dog-themed token lost around 30% of its value, while Bitcoin’s price climbed by 95%.
Image source: Getty Images.
For the majority of investors, purchasing Bitcoin may be a more logical choice than opting for Shiba Inu. However, let’s take a closer look to determine if there’s a reasonable argument for preferring Shiba Inu over Bitcoin.
The differences between Bitcoin and Shiba Inu
Bitcoin continues to use the energy-demanding proof-of-work (PoW) protocol for mining. Its mining process becomes more challenging every four years due to scheduled "halvings" that reduce block rewards, and 19.9 million out of its 21 million maximum tokens have already been mined. This built-in scarcity draws comparisons to gold and other tangible assets.
The Securities and Exchange Commission (SEC), recognizing Bitcoin’s similarities to traditional commodities, authorized the first spot price exchange-traded funds (ETFs) for Bitcoin in January. Many businesses, institutional investors, and even some nations have been accumulating Bitcoin as a safeguard against inflation.
Shiba Inu is an ERC-20 token created on Ethereum ( ETH 8.36%), which operates using the more energy-efficient proof-of-stake (PoS) system. Unlike PoW, PoS blockchains do not involve mining but do support smart contracts, enabling the creation of decentralized applications (dApps), non-fungible tokens (NFTs), and other digital assets. PoS tokens can also be "staked," meaning they are locked up to generate rewards similar to interest.
Since Shiba Inu was launched on Ethereum and still relies on its Layer-1 (L1) network, it cannot independently host its own applications. The entire supply of 1 quadrillion tokens was issued at launch, and periodic token burns (which permanently remove tokens from circulation) have brought the circulating supply down to about 589.5 trillion. At present, it seems unlikely that any crypto companies will seek SEC approval for Shiba Inu ETFs.
What are the bull and bear cases for Shiba Inu?
Shiba Inu’s prospects are closely tied to Shibarium, its Layer-2 (L2) solution introduced in 2023. By aggregating transactions and processing them off the main chain, Shibarium can offer faster transaction speeds and lower fees compared to Ethereum’s L1. It also fully supports Ethereum-compatible smart contracts and the development of dApps and tokens. To attract more developers, the Shiba Inu team has introduced new tools, subsidized gas fees, and an updated staking system with enhanced security. Despite these efforts, the network suffered a major security incident in September.
Optimists believe Shiba Inu’s price could stabilize and increase as Shibarium draws in more developers and users. However, it faces tough competition from other Ethereum-based L2 solutions like Arbitrum (CRYPTO: ARB) and Polygon (CRYPTO: MATIC), as well as from faster and more affordable L1 PoS blockchains such as Solana (CRYPTO: SOL).
Without unique advantages, Shiba Inu may find it difficult to attract additional investors. Even if lower interest rates spark a renewed "crypto summer" in the coming year, Shiba Inu could once again be overlooked as investors gravitate toward established tokens like Bitcoin and Ether.
Is there a contrarian case for buying Shiba Inu over Bitcoin?
Some may argue that Shiba Inu offers greater upside than Bitcoin due to its status as an underdog. However, in the cryptocurrency space, many lesser-known tokens fail to gain traction because they lack the scarcity or robust developer communities needed for growth. As a result, Shiba Inu may continue to lag behind Bitcoin for the foreseeable future. While Bitcoin has clear growth drivers ahead, Shiba Inu risks being overshadowed by more promising PoS tokens such as Ether and Solana.
