The supply of minable coins in the crypto ecosystem, is reduced to the native coins of the “Proof of Work” networks and, being outside this category, it is not possible to mine Shiba Inu.
Today, in addition to explaining why SHIBA cannot be mined, I will explain what this “meme-coin” is all about, a token born in the Ethereum network that has generated a great commotion in the market.
Why is it not possible to mine Shiba?
Cryptocurrencies subject to mining are those native to a Proof of Work network. In this type of blockchains, which reach their consensus by means of the aforementioned mechanism, they use a particular system for the creation of their native currency, which is born with the network.
The most popular example of this type of cryptocurrency is undoubtedly BTC. Within the computer code that gave birth to the Bitcoin network, it was established that bitcoin would be the native cryptocurrency and that it would be created or, rather, “mined” by means of the Proof of Work consensus.
Shiba Inu, on the other hand, is not a cryptocurrency, but a token. The difference between tokens and cryptocurrencies is that the former have been created by a smart contract that assigns them their characteristics.
Anyway, before we dive into the concepts and history behind Shiba, let’s take a brief look at what it means to mine a cryptocurrency.
Cryptocurrency mining
A quick way to identify a blockchain, or classify it, is by the consensus method it uses. This method not only determines how the network validates transactions, but also how its native cryptocurrency is created. The two main types of consensus I am referring to are the following:
It is in the second group, in which mining is the method for creating new coins. After validating the transactions in the transaction network, the miners are in charge of creating the new blocks and, at the same time, creating new coins. This process, which may sound complex, can be simplified so that we can understand it without any problems. Let’s move forward.
How is a new cryptocurrency mined?
Let’s take the Bitcoin blockchain as an example. The miners of the network are in charge of validating transactions. Basically, this means that they check that the transactions are in accordance with the blockchain protocol. By performing this task, the miner tries to mine a block, to continue contributing to the operation and security of the network, obtaining in return a reward. Now, let’s get to know their task in detail:
- The miners take the transactions made by users, validate them and sort them into a block.
- With the block, using their computer equipment, they try to solve a highly complex mathematical problem by throwing a series of numbers at random.
- The miner who solves the problem, signs the block and adds it to the Bitcoin blockchain.
- Mining occurs in the first transaction of the new block. In it, the miner creates a transaction to himself of an amount of BTC, currently 6.25, and in this way new bitcoins are created.
So, we can conclude that mining is the process by which miners, within a Proof of Work network, validate transactions, create new blocks and issue new units of the native cryptocurrency of the network by means of the computational power of their mining equipment in charge of solving mathematical problems.
When we talk about Shiba, as I have already mentioned, we are not talking about a native currency of a “Proof of Work” network. The birth of Shiba is given by the creation of a smart contract, which determined all its characteristics. This means that Shiba is a token of the Ethereum network and we will learn more about it below.
What is Shiba INU?
The first thing I can say about Shiba, is that it is a token created under the ERC-20 standard on the Ethereum network. Born in the month of August 2020, Shiba was born as a meme-coin. Self-cataloged as a “Dogecoin killer”, it quickly positioned itself among the most important coins in this segment.
In 2021, at the height of the crypto-boom, it managed to enter the “top ten”, in terms of market capitalization, of the market. Shiba’s popularity, partly dragged by the great growth of Dogecoin, promoted by Elon Musk’s suggestive tweets, brought it to the front page of the media, even those not dedicated to blockchain technology.
To provide some context in numbers, Shiba’s market capitalization exceeded 40 billion dollars in 2021. Today, dragged down by the general market decline, its $7 billion capitalization leads it to remain the 12th cryptocurrency, ranked based on this parameter.
It is now our turn to know some precise details of its turbulent history.
Vitalik Buterin and Shiba
En el momento de su creación, el equipo detrás de Shiba tomó una decisión particular. La mitad del suministro total de Shiba se envió directamente a una cartera perteneciente a Vitalik Buterin, cocreador de Ethereum.
According to Vitalik himself, this is a common strategy, used by several projects. After sending the coins to their wallet, they publish on the networks that Vitalik himself supports them, having his token in one of their wallets and in this way they try to gain “momentum”.
The interesting thing is that these coins usually do not achieve great traction, but in the case of Shiba the opposite happened. Thus, Vitalik found that his holdings of Shiba reached one billion dollars.
In what was an extremely risky move, Vitalik himself decided to sell these tokens. After doing so, he donated the proceeds directly to the fight against COVID in India, at that time the most affected country in the world.
As you can anticipate, the selling pressure was extremely high, leading Shiba to lose a large part of its price. Such event, left us with one of the best memes of the year, in which a Shiba fork asked in a Telegram group “who the hell is that Vitalik”. Shiba, a meme-token, fulfilling his role.
Shiba, from meme-coin to serious project?
This type of tokens are literally born as a “meme”. Just as you are reading it, there are coins that emulate those images modified and shared on social networks for humorous purposes. For this reason, the strongholds in which the “cypherpunk” spirit prevails, this type of initiatives are mercilessly defenestrated.
The reality led us to see a brutal boom in this type of tokens, finding two of them within the 20 most important coins for a period that already exceeds 12 months.
However, after this “not very serious” start, the Shiba team is trying to make the project more serious. That is why, Shiba counts today with:
- A DEX, in which we can deposit Shiba in exchange for other tokens.
- A project incubator
Honestly, few expected this kind of progress from such a project. However, the platforms exist and they work. In any case, it is necessary to accept that beyond the great efforts of the team behind it, the general view of the market has not yet removed the moniker of “meme-coin” without utility to Shiba.
Final words
The crypto ecosystem presents opportunities for everyone. There are those who defend the ideals that saw the light of day thanks to Bitcoin, those who believe that Ethereum and its Smart Contracts are the path to an IT revolution, and those who are here just to make money.
In the latter group, those who stand behind projects like Shiba seem to be found. Far from judging the objectives of each crypto-user, the most important thing is to know the risks to which we expose ourselves and take the necessary preventive measures to sleep peacefully.
