Read full article at The Capital.

When you think about the greatest stories to ever be told in finance, you might be thinking about investors like Warren Buffet or traders like Michael Burry of the “The Big Short” fame. Lessons can be learned from their strategy and analysis of the market to understand how they capitalized on their gains. Perhaps they told of great stories from the past, but things always change. There is an even greater story to tell, but it is not from the traditional finance sector. It comes from the Meme Coin market in cryptocurrency.

A token holder (who has not been identified as of this writing) has turned an $8,000 investment in Shiba Inu (SHIB)tokens to $5.7 Billion (price fluctuates regularly, so the value may have either increased or decreased). It sounds ridiculous, but it is true. This could have remained unknown to the general public, but the blockchain reveals all the information. The SHIB holder’s value was verified on the blockchain by a wallet address. The investment was made back in August 2020 when 1 SHIB token was worth $0.000000000189, for a purchase of 70+ Trillion SHIB. As of the closing month of October 2021, 1 SHIB was worth $0.00006724 (Source Coinmarketcap).

Who Is The SHIB Billionaire?

The unknown SHIB holder is now a billionaire in 2021, from an $8,000 investment in about a year’s time. Why this story is great is because of the small amount of capital used for investment and becoming a billionaire in a short amount of time. If this were a big cap in the stock market, it probably would have taken millions of dollars to make a billion-dollar gain. It was made possible in the cryptocurrency space, where market volatility driven by speculation can favor the bold.

Assuming they have knowledge of how crypto markets work and just anticipated hype would create a growing community to push SHIB prices upward, then they played their cards correctly. They would not have been a SHIB billionaire if they had folded early and collected profit when they were a SHIB millionaire. They could be just waiting things out in the expectation of even higher prices.

So why hasn’t the SHIB billionaire collected any profits?

It could be possible they forgot they had SHIB and may still not be aware of it. Worst case is that they forgot their wallet password or lost their private key and have no other way to access the tokens. If that were the case, then it is a tragic ending to what should have been a great story. Otherwise, the point here is that people eventually take profits, and that is normal behavior.

In crypto, if you lose your wallet information (e.g., password or private key), you cannot recover it. This is by design due to the decentralized nature of what is called the blockchain, the base layer of most cryptocurrencies. The blockchain is a cryptographically secured database of immutable data. It doesn’t have a backdoor system that can easily recover a user’s funds or a spare key to open a lost wallet. With crypto, a user is in total control of their funds, so they have to be more responsible for it since there are no third parties involved in its management or custody.

Can Anyone Else Become A Billionaire?

This is a deep rabbit hole to dive into (read SHIB tokenomics to understand more). Those who invested early are the ones who will have the best chances in the future (> 1 billion SHIB tokens) of becoming a billionaire. That will also depend on the total market cap of SHIB, so if it continues to go higher, the chances are also high. It seems anything is possible in the crypto market, but if we look at the data, it seems unlikely if you do the math. There is just not enough money to payout to all big bag holders unless there are funds to back it up. There are actually a few other SHIB billionaires, but the one who got the most attention is the one who held the most tokens.

SHIB would have to reach a market cap that would be greater than Bitcoin and Ethereum combined. That would mean SHIB would have to be the number one cryptocurrency in the market, and that would make it bigger than major banks and Fortune 500 companies as well. At the moment (October 2021), the total market cap of cryptocurrency is at $2.6 Trillion. SHIB would need to reach a market cap much higher than that, which could push its price value per token to $1. According to some calculations, the market cap of SHIB would need to be $400 Trillion with a circulating supply of 394 Trillion tokens to reach a price of $1. It doesn’t seem likely to happen unless all of the world’s money was put into crypto.

Unlike Bitcoin (BTC), which has a finite supply of 21 million coins, SHIB has a very high token supply of 1 quadrillion (1,000,000,000,000,000 tokens). Due to its scarcity and demand, the price of 1 BTC is a premium. SHIB is cheap since it has a more abundant supply. That is why you can buy millions of tokens for low prices. It is like a penny stock in traditional markets, but the volatility can swing prices either to the upside or downside. SHIB does have a coin burn mechanism which helps to control the supply, so over the long run, the supply decreases.

Unfortunately, when a SHIB holder sells their tokens, it brings the market cap down. This can further delay other billion token holders from collecting money, and they will have to wait for new people to come into the system. While financial experts would call this a Ponzi scheme, to Meme Coin supporters that are all a part of the belief system of building a community and encouraging new users to get SHIB. What some holders (not the mere speculators) look forward to is further utility in the token (e.g. ShibaSwap, new onramps like Robinhood app, NFT marketplaces, etc.).

Synopsis

Meme Coins, despite the satire and buzz around it, can be risky. They are the classic case of pump and dumps, and It does not have the same fundamentals as other cryptocurrencies. They are the cheaper alternative to the big cap coins (e.g. Bitcoin). The prices could be surging, but the next minute it could be dumping. This tends to happen randomly, so don’t always expect prices to go up. What keeps SHIB going is its strong community, who believes in its value. The risk here is that investors could lose 100% of their initial investment at any time. Knowing these risks would help make the best decisions.

The SHIB billionaire got in at the right time. It could have also gone the other way and $8,000 down the drain. $8,000 to invest is actually not a small amount for many people. In crypto, the saying is to not invest more than you are willing to lose. Perhaps the SHIB billionaire already had plenty of money, and $8,000 was something they were willing to lose. You have to know that nothing is certain in crypto. In reality, it boils down to opportunity and timing, so there is no guarantee that everyone can have the same experience.

First Published in The Capital — 11/2/2021

Photo Cover Credit: John Guccione (www.advergroup.com)

Disclaimer: This is not financial advice. The information provided is for educational and reference purposes only. Do your own research always to verify facts.

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Can SHIBA INU Make You A Billionaire? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

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