The Shiba Inu coin may be fulfilling its self-proclaimed prophecy as “Dogecoin killer.”
On Wednesday, the price of Shiba Inu coin—which trades as SHIB—surged 33% to reach an all-time high of $0.00005478. The record price represents a near doubling of the value of the Shiba Inu coin in the past week. Shiba Inu’s market cap is now $27 billion, making it the 11th most valuable cryptocurrency token in the world, according to CoinGecko.
Shiba Inu now only slightly trails the original dog-related meme coin, Dogecoin, which is the world’s ninth largest coin, worth an estimated $34 billion. But Shiba Inu is quickly gaining ground on its canine token rival. Dogecoin’s price is 25% higher than one month ago compared with a 777% rise in the past 30 days for Shiba Inu.
An investor who bought $100 worth of Shiba Inu coins one year ago would own over $64 million worth of the coins today.
SHIB has long been dismissed as a second-tier joke coin, but crypto traders may be starting to take it more seriously now that its market value is nearing that of Southwest Airlines and its community is launching a raft of new crypto-related projects.
But the transition from meme coin to a legitimate token is complicated, even with the backing of a growing group of devoted followers.
A fortunate rise
The Shiba Inu coin was launched in August 2020 with a “woof paper,” a play on the term white paper, explaining that its founder, who goes by the name Ryoshi, created the coin to foster an entirely community-run and decentralized ecosystem.
When SHIB launched, Ryoshi gave half of the 1 quadrillion Shiba Inu tokens to Vitalik Buterin, cofounder of Ethereum.
This summer Buterin explained that he had little interest in holding Shiba Inu when developers gifted him half of its supply. Given his prominence in the crypto world, Buterin said, developers often send him vast sums of new coins and then claim he supported the coin as a means to draw investment interest.
He said SHIB’s creators deposited the coins into his cold wallet, which some crypto traders keep offline to prevent hacks, as opposed his hot wallet, which he uses for online trading.
Dumping the Shiba Inu coins into Buterin’s cold wallet made it complicated for him to dispose of the coins, since he keeps the password on two pieces of paper on separate continents.
“I’m not sure if they knew this; maybe they just got lucky,” Buterin said on a podcast in June.
Buterin eventually offloaded his Shiba Inu holdings in May. He says he burned 80% of the tokens, forever eliminating $6.8 billion worth of SHIB from circulation by sending the coins to a dead address that no one can access. He donated the rest to the India Covid Crypto Relief Fund, which aimed to help address the COVID-19 crisis in India.
But even without Buterin’s interest, and after a later dismissal from Tesla CEO and anointed leader of dog-related coins Elon Musk, Shiba Inu’s price has continued to climb.
A project leader for Shiba Inu coin, who goes by Shytoshi Kusama, attributes the rise of the coin to the power of its community, which now numbers in the millions across platforms like Twitter, Telegram, Reddit, and YouTube.
“We’ve developed a deep trust with the community by not being a scam token,” says Kusama. “They want to see how far we can go.”
The Shiba Inu community also appears so committed to the Shiba Inu cause that many holders are willing to destroy portions of their own holdings to boost the overall value of the coin. Shibburn.com, a website that tracks the total supply of Shiba Inu, says that SHIB holders have burned over 41% of the initial supply of Shiba Inu in an effort to boost the overall price of the coin, with new burns coming on an hourly basis.
David Hsiao, CEO of crypto magazine Block Journal, says that the community Shiba Inu has built is impressive, and enough to at least sustain the coin’s prominence in the short term.
“Meme coins certainly aren’t a joke anymore,” says Hsiao. “Currencies really are only defined by the willingness of people to use them…[And] these meme coins have millions of owners.”
A path to legitimacy
But Shiba Inu’s staying power may require more than fervent followers; it needs to prove that its community can create products that people actually use.
Kusama says that Shiba Inu’s community has worked on a number of legitimate products, like a new play-to-earn video game and “Shiboshi” NFTs that sold out within minutes of being released in mid-October.
One project is called ShibaSwap, a decentralized cryptocurrency exchange made by Shiba Inu developers. On Oct. 6, ShibaSwap’s traders exchanged more than $435 million worth of tokens in a single day. Du Jun, cofounder of crypto exchange Huobi, recently told CoinDesk that the ShibaSwap demonstrates Shiba Inu’s growth from a meme coin into a “sophisticated” crypto project. Kusama argues that Shiba Inu’s most important project is Shibarium, a new blockchain that may be able to lower transaction fees for exchanges, games, or other products built on the software.
But on the technology alone, Shiba Inu may not stack up against its non-meme competitors.
“Based purely on fundamentals…I don’t think there’s anything too outstanding about Shiba Inu’s technology,” says Hsiao. “There are far more exciting things out there such as [decentralized finance] and [non-fungible tokens] lately.”
An alternate path toward more legitimacy may be pressuring institutional players to accept it.
On change.org, a petition asking popular trading app Robinhood to list Shiba Inu has gathered over 333,000 signatures. Shiba Inu’s recent rise is also largely attributable to rumors that it would be listed on the app.
On Tuesday, Robinhood announced that its transaction revenue related to crypto fell by 78% in the third quarter, compared with the second. CEO Vlad Tenev signaled that Robinhood is intent on expanding more into crypto but will be cautious in adding new coins like Shiba Inu.
“We’re going to be very careful [about adding new coins],” Tenev said on an investor call. “We’re hopeful to get some clarity soon on coins.”
But even as Shiba Inu has demonstrated more staying power than many expected, its continued rise is not guaranteed.
“Although the market seems to have embraced SHIB in recent days, cryptocurrency trends are as volatile as it gets,” says Hsiao.
Subscribe to Fortune Daily to get essential business stories delivered straight to your inbox each morning.