The Rise of Shiba Inu Coin Shows Crypto’s New Dynamics
One coin that has become prominent in the past month seems even more obscure.
4 min
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Much of the cryptocurrency world can feel like an inside joke. One coin that has become prominent in the past month seems even more obscure—like an inside joke about an inside joke.
Shiba Inu coin, created in August 2020 by an anonymous person calling themselves Ryoshi, is billed as an alternative to Dogecoin, which itself was created as a lighthearted option to Bitcoin. Shiba Inu feels as if it was willed into existence, and is now being listed on major crypto exchanges through the power of memes, crowds, persistence—and a cute dog.
A website that hosts the coin’s white paper (or rather Woof Paper) calls it “an experiment in decentralised spontaneous community building.” Shiba Inu is built on top of the Ethereum blockchain, like many other coins. By design, each one is worth a minuscule amount—$0.0000078 on Thursday.
It’s like Dogecoin on reverse steroids (each Dogecoin is worth 30 cents, which seems wildly expensive by comparison). The cheaper the coin, the larger the potential community. The market cap of Shiba coin is now about $3 billion, but it climbed over $10 billion last month. It’s the 32nd most valuable cryptocurrency, according to coinmarket.com.
The Woof Paper includes philosophical claims about decentralization that are common in the crypto world—that money and transactions should have no gatekeepers. And, like Dogecoin, it has taken the Shiba Inu—a dog breed from Japan—as its mascot. One tenet of the coin is that the community loves the dogs. Also, it has embraced the title of “Dogecoin killer”.
The founders even gifted 50 trillion of the coins, worth $1 billion at the time, to Ethereum co-creator Vitalik Buterin, who quickly got rid of it by transferring it to a Covid relief fund for India—at which point, Shiba Inu coin briefly plunged 50%.
If this all feels like a trip into a bizarre new world, it’s also shining a spotlight on an emerging trend in crypto and stock-trading. The Shiba website says the community is 520,000 strong and growing, expanding its reach as its memes and philosophy spread on social media. Meanwhile, the crypto world’s gatekeepers are anxious to bring in new users and volume as Bitcoin trading has been relatively weak in recent weeks. Shiba Inu has been listed on major exchanges like Binance.
On Tuesday, Coinbase Global (ticker: COIN) said it would list the coin on its Coinbase Pro platform—generally a precursor for it to be listed for all retail Coinbase users. In addition, Shiba fans started a petition to try to convince brokerage app Robinhood to list Shiba Inu coin. As of Thursday, it had 156,000 signatures.
A Robinhood spokesperson said the company had no comment on the petition. In a previous Reddit discussion, Robinhood Crypto Chief Operating Officer Christine Brown wrote, “We’re always looking into which coins to add to Robinhood Crypto, but for security and compliance reasons we can’t talk about which ones we’re looking into adding.”
There has already been a glitch in Coinbase’s adoption of Shiba Inu coin. It was supposed to start trading on Thursday, but “technical issues” have delayed the launch. Users can withdraw Shiba but can’t deposit it, according to a Coinbase spokesperson. “We will provide an updated timeline for restoring deposits & enabling trading as soon as possible,” she wrote. She did not respond to a follow-up question on what technical issues were causing the problems.
In recent years, Coinbase has been seen as an important gatekeeper in the crypto universe, and coins have tended to spike in value when they get listed on the platform. On Tuesday, Shiba Inu coin jumped more than 30% after the announcement.
Asked about why Coinbase listed Shiba Inu coin, the spokesperson wrote that “we want to be the Amazon of crypto where people can find and buy the assets they want and as part of this, our aim is to list every legally permissible asset possible.”
In its latest earnings report, Coinbase said that the company was concerned about customers going to other platforms if Coinbase doesn’t offer certain coins. It quickly listed Dogecoin after the earnings call, and has been expediting the listing process, giving coin-creators and users new ways to apply for listings. The company says it’s still holding on to high standards for the new coins, however.
“We are confident that based on the information we have access to, that assets available on our platform are appropriate for retail customers,” the spokesperson wrote.
As their strategies shift and they list more coins, the exchanges are likely to become less important gatekeepers in the crypto world, according to Matt Hougan, chief investment officer of crypto fund provider Bitwise Asset Management.
“The days when Coinbase adding an asset to its platform was an implicit stamp of approval are over,” he wrote in an email to Barron’s. It should now be thought of as a platform that “will trade anything that meets its listing standards.”
In general, that’s a good thing. In the traditional investing world, brokers like Charles Schwab (SCHW) play a similar role—offering access, but not necessarily approval. “You can buy some amazing stocks on Schwab, and you can buy some absolute dogs (no pun intended),” Hougan wrote. “We don’t assume Schwab is evaluating the investment merit of every stock that trades on its platform.”
Given the shift, however, it’s even more important for investors to “do your own homework and know what you’re buying, or you should turn to professional crypto asset managers to evaluate exposures for you.”
Reprinted by permission of Barron’s. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: June 17, 2021
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Investors are taming impulsive money moves by adding a little friction to financial transactions
4 min
To break the day-trading habit that cost him friendships and sleep, crypto fund manager Thomas Meenink first tried meditation and cycling. They proved no substitute for the high he got scrolling through investing forums, he said.
Instead, he took a digital breath. He installed software that imposed a 20-second delay whenever he tried to open CoinStats or Coinbase.
Twenty seconds might not seem like much, but feels excruciating in smartphone time, he said. As a result, he checks his accounts 60% less.
“I have to consciously make an effort to go look at stuff that I actually want to know instead of scrolling through feeds and endless conversations about stuff that is actually not very useful,” he said.
More people are adding friction to curb all types of impulsive behaviour. App-limiting services such as One Sec and Opal were originally designed to help users cut back on social-media scrolling.
Now, they are being put to personal-finance use by individuals and some banking and investing platforms. On One Sec, the number of customers using the app to add a delay to trading or banking apps more than quintupled between 2021 and 2022. Opal says roughly 5% of its 100,000 active users rely on the app to help spend less time on finance apps, and 22% use it to block shopping apps such as Amazon.com Inc.
Economic researchers and psychologists say introducing friction into more apps can help people act in their own best interests. Whether we are trading or scrolling social media, the impulsive, automatic decision-making parts of our brains tend to win out over our more measured critical thinking when we use our smartphones, said Ankit Kalda, a finance professor at Indiana University who has studied the impact of mobile trading apps on investor behaviour.
His 2021 study tracked the behaviour of investors on different platforms over seven years and found that experienced day traders made more frequent, riskier bets and generated worse returns when using a smartphone than when using a desktop trading tool.
Most financial-technology innovation over the past decade focused on reducing the friction of moving money around to enable faster and more seamless transactions. Apps such as Venmo made it easier to pay the babysitter or split a bill with friends, and digital brokerages such as Robinhood streamlined mobile trading of stocks and crypto.
These innovations often lead customers to trade or buy more to the benefit of investing and finance platforms. But now, some customers are finding ways to slow the process. Meanwhile, some companies are experimenting with ways to create speed bumps to protect users from their own worst instincts.
When investing app Stash launched retirement accounts for customers in 2017, its customer-service representatives were flooded with calls from panicked customers who moved quickly to open up IRAs without understanding there would be penalties for early withdrawals. Stash funded the accounts in milliseconds once a customer opted in, said co-founder Ed Robinson.
So to reduce the number of IRAs funded on impulse, the company added a fake loading page with additional education screens to extend the product’s onboarding process to about 20 seconds. The change led to lower call-centre volume and a higher rate of customers deciding to keep the accounts funded.
“It’s still relatively quick,” Mr. Robinson said, but those extra steps “allow your brain to catch up.”
Some big financial decisions such as applying for a mortgage or saving for retirement can benefit from these speed bumps, according to ReD Associates, a consulting firm that specialises in using anthropological research to inform design of financial products and other services. More companies are starting to realise they can actually improve customer experiences by slowing things down, said Mikkel Krenchel, a partner at the firm.
“This idea of looking for sustainable behaviour, as opposed to just maximal behaviour is probably the mind-set that firms will try to adopt,” he said.
Slowing down processing times can help build trust, said Chianoo Adrian, a managing director at Teachers Insurance and Annuity Association of America. When the money manager launched its online retirement checkup tool last year, customers were initially unsettled by how fast the website estimated their projected lifetime incomes.
“We got some feedback during our testing that individuals would say ‘Well, how did you know that already? Are you sure you took in all my responses?’ ” she said. The company found that the delay increased credibility with customers, she added.
For others, a delay might not be enough to break undesirable habits.
More people have been seeking treatment for day-trading addictions in recent years, said Lin Sternlicht, co-founder of Family Addiction Specialist, who has seen an increase in cases since the start of the pandemic.
“By the time individuals seek out professional help they are usually experiencing a crisis, and there is often pressure to seek help from a loved one,” she said.
She recommends people who believe they might have a day-trading problem unsubscribe from notifications and emails from related companies and change the color scheme on the trading apps to grayscale, which has been found to make devices less addictive. In extreme cases, people might want to consider deleting apps entirely.
For Perjan Duro, an app developer in Berlin, a 20-second delay wasn’t enough. A few months after he installed One Sec, he went a step further and deleted the app for his retirement account.
“If you don’t have it on your phone, [that] helps you avoid that bad decision,” he said.
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