Better crypto to own in 2022: Dogecoin or Shiba Inu?

Is either of these adorable-dog-based cryptos heading to the moon in 2022?

| More on:
A shiba inu dog lying on the sand at a beach.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The 2021 year was arguably a breakthrough for alternative "meme" cryptocurrencies like Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE). They were seen as a joke by some, but early investors in these cryptos have made fortunes.

After a year that saw Shiba Inu return 63,000,000% and Dogecoin go up 4,600%, can investors still strike it rich in 2022? Here is what you need to know before buying either of these cryptos.

Understanding Shiba Inu

Shiba Inu is a relatively new altcoin, meaning a crypto other than Bitcoin (CRYPTO: BTC), developed in August 2020 on the Ethereum (CRYPTO: ETH) blockchain. It currently carries a $19.4 billion market cap and is the 10th-most-popular crypto on the Coinbase exchange.

An anonymous group called Ryoshi started Shiba Inu as an experiment in decentralised spontaneous community building. In other words, could Shiba Inu survive with "no centralised team, no funding, and no direct leadership?" according to the coin's white paper.

Shiba Inu's gains seem to answer that question, and with a price per coin of fractions of a cent, investors can accumulate large amounts for relatively little money.

Understanding Dogecoin

Dogecoin, often referred to as the original "meme coin", is an altcoin created in 2013 as a literal joke by its founders. They created Dogecoin to poke fun at the wild speculation around cryptocurrencies back then.

However, Dogecoin is no longer a joke; it's the ninth-most-popular cryptocurrency on Coinbase and carries a $23.4 billion market cap, making it larger than some of the market's most popular growth stocks. It also has a relatively small per-coin price of about $0.18.

Like Shiba Inu, Dogecoin uses an easily recognisable logo of a Shiba Inu dog, which has helped feed the coin's popularity on the internet. Although Shiba Inu is built on the Ethereum blockchain, Dogecoin runs on its own network, the Dogecoin blockchain.

Value built on going viral

It's important to know what drives the value of a cryptocurrency and how altcoins like Shiba Inu and Dogecoin differ from Bitcoin. Whereas the US dollar is issued and regulated by the US government and central bank, cryptos are not. This detachment from the traditional monetary system (hence the term decentralised) appeals to many crypto investors.

But there are significant differences between Bitcoin and altcoins like Dogecoin and Shiba Inu. Bitcoin's scarcity and growing acceptance have played a key role in driving its increase in value over the years. There is a maximum supply of 21 million Bitcoins; there can never be any more.

Bitcoin has also gotten notable traction in gaining acceptance in the broader economy. Some merchants accept Bitcoin as payment, some athletes take their salaries in Bitcoin, and some corporations are even accumulating it to hold on their balance sheets as an asset.

In contrast, Shiba Inu and Dogecoin have no notable economic use at this point. Meanwhile, both altcoins have a much larger supply in circulation than Bitcoin. Dogecoin now has 132 billion DOGE circulating, while Shiba Inu has 549 trillion SHIB. These huge supplies are increasing, which is partly why their per-coin prices are so low. To date, the only way that these coins have gained value is by going viral on the internet; these temporary surges in demand have caused prices to be very volatile.

Managing risk is key

Investments that fluctuate primarily because of hype are speculative, and investing a lot in them is reckless. What goes up, can just as easily come back down, so assets that have appreciated as much as Shiba Inu and Dogecoin have, can significantly drop without much warning.

Shiba Inu is a newer coin and probably has more buzz going for it now, as Dogecoin's peak seems to have come when Tesla chief executive officer Elon Musk was tweeting about it a few months back.

Investors must manage their risk by never investing more than they can afford to lose. With wild swings in speculative cryptocurrencies, it doesn't take vast sums to make big profits. If you are fortunate enough to strike some significant gains, don't be afraid to take profits.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Unsure man analysing data on laptop.
International Stock News

Billionaire investor Warren Buffett sold Apple shares for a fourth straight quarter. Should investors be worried?

Although Buffett has been selling Apple stock, it has continued to rise in value this year.

Read more »

Young couple having pizza on lunch break at workplace.
Consumer Staples & Discretionary Shares

Is Warren Buffett buying Domino's shares while they're down?

Could this be a vote of approval?

Read more »

Close up portrait of happy businesswoman standing in front or leading her multi-ethnic corporate team.
International Stock News

These are the 6 top-performing stocks in the Nasdaq-100 with 2024 almost over

Which stocks are leading the Nasdaq-100 higher in 2024? This diverse bunch of leaders is taking the market by storm.

Read more »

Scared looking people on a rollercoaster ride representing the volatile Mineral Resources share price in 2022
International Stock News

Are interest rates to blame for the shaky Nasdaq Index last night?

US markets were volatile overnight.

Read more »

A young entrepreneur boy catching money at his desk, indicating growth in the ASX share price or dividends
International Stock News

Why this high-flying investor is selling Tesla shares and buying this US tech stock instead

Ark Invest funds have been selling the electric vehicle maker's stock over the last few weeks and reinvesting the proceeds…

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
International Stock News

Is Nvidia stock heading to $175?

The bulls are lining up ahead of Nvidia's earnings report next week.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
International Stock News

Bitcoin keeps soaring. Could it hit $95,000 this week?

Could the current crypto rally have enough juice to push the coin above that once-inconceivable level?

Read more »

A boy in a green shirt holds up his hands in front of a screen full of question marks.
International Stock News

2 reasons to buy Nvidia shares before November 20 (and 1 reason to wait)

This top AI stock has soared nearly 200% this year!

Read more »