Dogecoin (DOGE) & Shiba Inu (SHIB): What’s Up With These Two Memecoins? | Localcoin

If crypto were a high school, Dogecoin (DOGE) and Shiba Inu (SHIB) would be the class clowns competing for top dog status. Just like their ‘why so serious’ crypto cousins, both run on blockchain technology and are used as a direct peer-to-peer digital currency. Unlike traditional crypto, however, they were both created in jest rather than serious utility projects. Dogecoin was the OG meme lord riffing off the viral "Doge" internet sensation. Six years later, Shiba Inu entered the chat sporting the same iconic dog insignia and ready to throw paws as the “Doge Killer”. Despite their complete lack of conventional tokenomics, both have fetched mindblowing viral stardom, minting overnight millionaires and wrecking others. So what’s so special about these two memecoins? Here’s what to know about Dogecoin and Shiba Inu.

Dogecoin vs Shiba Inu at a Glance

But First, What is Tokenomics & Why is it Relevant?

Tokenomics is the economics of digital currency. It covers the fundamentals from how it's made, how many there are, how it’s used, and what gives it value. Understanding tokenomics is an important skill because it helps you better predict how a cryptocurrency might perform long-term. 

Now, when it comes to memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB), the tokenomics playbook kind of gets tossed out the window. Their success depends almost entirely on social media hype and community engagement. 

The unique draw lies in their origin story and high-impact branding. While serious cryptocurrencies like Bitcoin and Ethereum focus on cutting-edge technology and real-world disruption, DOGE and SHIB thrive on humour, internet pop culture, and Elon Musk tweets.

Who Created Dogecoin & Why?

Dogecoin was created in 2013 by tech heavyweights Billy Markus and Jackson Palmer. Billy was a software engineer at IBM while Jackson hailed from the marketing team at Adobe. Both were sick of the self-important dude-bro energy permeating the crypto space and were itching to lighten the mood.

Jackson jokingly tweeted about investing in a fictitious cryptocurrency named after a viral internet meme featuring a Shiba Inu dog. This meme had become a cultural sensation known for its horrendous grammar but insanely adorable content. The tweet got laughs, which triggered a lightbulb moment - why not make the joke a reality? 

With Markus’ tech-savvy and Jackson’s marketing chops, a crypto star was born (minus Lady Gaga’s iconic power ballade). The project used Bitcoin’s original code, made a few tweaks to speed things up, and slapped the Doge meme image on the face of the coin. 

The intention was never to compete with Bitcoin, but to poke fun at the smug crypto evangalists. Dogecoin specifically positioned itself as a friendly face in the crowd, accessible to everyone and designed to spread cheer. It quickly became a popular cryptocurrency used for tipping online creators and raising funds for charitable causes. 

How Does Dogecoin (DOGE) Work? 

Dogecoin works a lot like Bitcoin because it’s derived from Bitcoin’s original code. It uses a publicly distributed ledger called a blockchain and is primarily used for simple financial transactions like payments and direct peer-to-peer transfers. 

Each block is like a “page” of transactions on this ledger and every transaction is a line on that page. Blocks are added to the chain, which is stored and maintained across a network of computers. Everyone can see the ledger’s transaction history but no one can change anything. Each block is linked to the last, hence the name ‘blockchain’.

Validating Transactions

Dogecoin uses a process called Proof of Work (PoW) to verify transactions and secure the network. It’s a type of cryptographic system in which a miner has to prove to all the other miners that significant computer processing power was used to verify and add transactions to the blockchain.

To do this, Dogecoin miners solve complex math puzzles using their computers. The first to solve the puzzle gets to add the block to the chain and then earns a reward of newly minted DOGE for their trouble. 

Securing the Network

Because PoW uses so much computing power, trying to cheat the system or mess with the ledger would be so hard it’s almost impossible. The public, decentralized nature of the blockchain ensures that no funny business can happen without someone spotting it. If someone tries to modify or falsify a transaction, the other miners won’t agree to validate it.

An attack would require so much energy and expensive equipment that the cost and effort would make the whole thing more trouble than it’s worth. Plus, getting caught would wash all that effort and money down the drain. A hack would likely cause users to lose trust in the network and dump their holdings, effectively causing the price to plummet.

The Supply Mechanism

New DOGE is minted and added to the supply when miners are rewarded for their work. However, it does not have a maximum supply cap like the teacher’s pet cryptocurrencies such as Bitcoin and Ethereum. Dogecoin pays out a fixed reward of 10,000 DOGE for each block added to the chain. This means that new Dogecoins are continuously introduced into the system. The absence of a fixed supply cap makes Dogecoin inflationary, which means it is likely to lose value over time. This encourages spending rather than holding it as a store of value​.

What is it Used For?

Dogecoin is commonly used to tip Twitter and Reddit users to encourage content creation and promote engagement. You can buy a Tesla with it (thanks, Elon!) and a growing number of eCommerce businesses also accept DOGE as payment. It has also been used for good causes like building clean water wells in Kenya and raising money for the Jamaican bobsled team (if you haven’t seen the movie Cool Runnings, do it now, it’s iconic).

Who Created Shiba Inu & Why?

Shiba Inu (SHIB) is basically the new kid who appeared out of nowhere but suddenly everyone knows their name. It was created in August 2020 by an anonymous person or clique known as "Ryoshi". But SHIB didn’t come with a cool back story like Cady Hering in Mean Girls. Instead, this coin is more like the DJ Marshmellow of cryptocurrencies - famous without a face. 

Since Ryoshi’s identity is shrouded in mystery, their academic and professional street cred are part of the enigma. What we do know is that Ryoshi is a beast in blockchain technology with a deep understanding of crypto pop culture.
Ryoshi’s goal was to flex on Dogecoin. It was less about "Here's another fun coin" and more "Here's a coin that actually does stuff." SHIB hit the ground running on the Ethereum blockchain, allowing you to engage with nifty tools like smart contracts and decentralized finance (DeFi). 

It has since blossomed into a thriving ecosystem with various features and functions, such as ShibSwap where you can trade and stake your SHIB. The wizard behind the curtain intentionally and successfully built a decentralized community where everyone has a say and can participate in the governance and growth of the project. 

The passionate and thriving “ShibArmy” has amassed an almost cult-like following dedicated to the coin’s success. They’re responsible for several viral marketing campaigns that launched SHIB into global stardom.   

How Does Shiba Inu (SHIB) Work? 

Shiba Inu (SHIB) is an ERC-20 token, meaning it lives on the Ethereum blockchain, whereas Dogecoin (DOGE) exists on its own purpose-built blockchain. This was a strategic move to compete with DOGE by giving SHIB holders access to the Ethereum ecosystem. This solidified the new pup’s reputation as the self-proclaimed ‘DOGE Killer’. 

As an ERC-20 token, SHIB’s total supply has been pre-mined. Ryoshi took a page out of Dogecoin’s playbook but added a twist with a whopping supply of one quadrillion coins. Transactions are validated and secured using Ethereum’s existing infrastructure and its Proof of Stake consensus mechanism. 

To create scarcity and inflate the price, part of the SHIB supply has been intentionally burned. In a strategic move, the creators sent half the supply to Ethereum co-founder Vitalik Buterin, who burned most of it. This effectively removed a huge chunk from circulation and put considerable upward pressure on the price.

What is it Used For?

Like most cryptocurrencies, SHIB is primarily used for speculative trading. People buy and hold in hopes that its value will increase so they can sell at a profit. However, it is increasingly integrated into DeFi applications, particularly through its own decentralized exchange called ShibaSwap.

While not as widely accepted by retailers, SHIB is used within the community for payments and tips, especially in online forums. It has been used to fundraise for the real-life Shiba Inu Rescue Association. Otherwise, people typically invest simply to be a part of a massive inside joke.

The Shiba Inu Ecosystem at a Glance

What started as the anti-dogecoin intended primarily for value exchange within a community, has grown to include more diverse and sophisticated functions. Here’s a brief rundown of the key components that comprise the Shiba Inu ecosystem:

Ready to Hop on the Bandwagon? 

Dogecoin and Shiba Inu continue to capture our attention with their curious blend of meme magic and real-world utility. From tipping and charitable donations with DOGE to participating in decentralized finance with SHIB, these memecoins could make big moves in 2024.  If you're looking to get in on the joke, start by purchasing these tokens at a Localcoin ATM.

Much like your familiar bank ATM, Localcoin terminals provide a straightforward and user-friendly interface. Transactions are fast and easy with clear instructions and instant processing. Find a Localcoin ATM near you before Elon tweets and pumps the price. 

Oh, and don’t invest more than you’re willing to lose!