Dogecoin (DOGE -1.94%) and Shiba Inu (SHIB -1.23%) were both initially created as parodies of other coins. Dogecoin was launched as a parody of Bitcoin (BTC -0.13%) in 2013, and Shiba Inu was created to poke fun at Dogecoin in 2020.
Dogecoin and Shiba Inu were both dubbed “meme coins” because they were both named after the popular “Doge” meme which featured a Shiba Inu dog. Many investors initially dismissed them as jokes, but they’ve both generated massive gains.
Image source: Getty Images.
A $100 investment in Dogecoin at its starting price of about $0.0004 would be worth about $995,000 today, while the same investment in Shiba Inu at its starting price of $0.000000000056 would have grown to a whopping $46.43 million. Let’s see why Shiba Inu outperformed Dogecoin by such a wide margin — and whether it can stay ahead of its larger rival this year.
The differences between Dogecoin and Shiba Inu
Even though they share the same mascot, Dogecoin and Shiba Inu run on different technologies. Dogecoin was created from the open source code for Litecoin, an altcoin that was forked from Bitcoin’s blockchain in 2011.
Those origins make Dogecoin a proof of work (PoW) token, which needs to be mined like Bitcoin. But unlike Bitcoin, which has an ultimate limit of 21 million tokens, Dogecoin doesn’t have a supply limit.
Dogecoin’s own hashing algorithm, Scrypt, also consumes less power than Bitcoin and facilitates faster and cheaper transactions. Those advantages made it a popular token for making small but frequent payments.
Shiba Inu was built on the Ethereum (ETH -0.82%) blockchain, which transitioned from the energy-intensive PoW method to the more energy-efficient proof of stake (PoS) method in 2022. The new system drives much faster and cheaper transactions than the old one, and it supports smart contracts for creating decentralized apps (dApps) and other crypto assets.
Shiba Inu can’t be actively mined. Its entire supply of nearly one quadrillion tokens was pre-mined on the Ethereum blockchain prior to its launch, and more than 40% of those tokens have already been burned (taken out of circulation). Unlike Dogecoin, Shiba Inu must be “staked” (locked up) on the blockchain for periods of time to earn more rewards.
Shiba Inu’s creators recently launched Shibarium, a Layer-2 blockchain network which supports faster transactions and lower fees, to attract even more developers to its ecosystem. Its blockchain also hosts ShibaDEX, a cross-chain decentralized exchange (DEX) which acts as an official cryptocurrency wallet for its own tokens.
Simply put, Dogecoin is still valued as an asset like Bitcoin, while Shiba Inu is valued by the growth of its developer ecosystem. However, both of these meme coins are still largely controlled by “whales” — very large accounts that can easily move their volatile prices.
Which meme coin has more catalysts?
Dogecoin and Shiba Inu are fundamentally different, but two catalysts could drive both tokens higher this year. First, lower interest rates will likely drive more investors back toward cryptocurrencies and other speculative investments.
Second, the U.S. Securities and Exchange Commission (SEC) approved the first spot price Bitcoin ETFs in January and cleared the way for the first spot price Ether ETFs in May. If those approvals generate demand for other smaller altcoins getting their own exchange-traded funds, Dogecoin and Shiba Inu could start attracting a lot more attention from bigger investors.
On its own, Dogecoin has fewer catalysts. The approvals for new future contracts on Coinbase (COIN -0.79%) in March might drive more trading activity for the token. There’s also been persistent buzz about Dogecoin transitioning to the PoS protocol to support the development of decentralized apps, but such a move would require a lot of time and resources.
Shiba Inu has clearer strengths. It could attract more developers to its ecosystem, and its investors will continue to burn their tokens to reduce their available supply. But looking ahead, Shiba Inu still faces intense competition from bigger PoS-based blockchains like Ethereum, Solana and Cardano.
The better meme coin: Shiba Inu
Dogecoin and Shiba Inu will both remain speculative and volatile investments this year. If I had to choose one over the other, I’d stick with Shiba Inu because it’s cheaper than Dogecoin but has significantly more irons in the fire.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Cardano, Coinbase Global, Ethereum, and Solana. The Motley Fool has a disclosure policy.