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Why is Edward Snowden warning against investing in Shiba Inu?

Why is Edward Snowden warning against investing in Shiba Inu?
Photo Credit: 123RF.com
1 Nov, 2021

Edward Snowden, perhaps the most prominent whistleblower of modern times, has voiced his bearish stance against the Shiba Inu cryptocurrency. Snowden called the SHIB coin “a clone of dog money” on Twitter, pointing at its position as a “meme coin” – and therefore being of diabolical value proposition in general. The warning comes as Shiba Inu continues to enjoy a strong rally over the past one year, seeing its value skyrocket by over 6,00,00,000 percent.

Snowden’s full tweet about SHIB reads, “If you got talked into exchanging your hard-earned savings for some new dog money because a meme said you'd get rich, please carefully consider your odds of outsmarting a market that sold to you its stake in not even dog money, but a ‘clone’ of dog money.” The tweet largely hits out at fellow meme coin and the considerably higher placed Dogecoin – a cryptocoin that has been largely popularised by eccentric entrepreneur and one of the richest people on Earth, Elon Musk.

What others have said

Despite its stark rise in value, many experts have often voiced their concerns around the practicality of Shiba Inu as an actual investment avenue. While not directly talking about just Shiba Inu, a recent note by UK’s market watchdog, Financial Conduct Authority, warned that anyone investing in “these types of products” should be “prepared to lose all their money.” The statement echoes the sentiments expressed by Snowden earlier today, underlining the risk factor behind the apparently newer cryptocurrencies in particular.

Other experts, too, are equally bearish about the sentiments behind investing in such ‘meme coins’. Talking to Quartz, Buvaneshwaran Venugopal, an assistant professor of finance at the University of Central Florida, said, “For meme coins to have value is a bad statement about how people are valuing a coin without actually understanding what it does. I don’t think the average investor in the cryptocurrency market is really worried about what this project is doing, rather they are more worried about speculation.”

Equally bearish is Susannah Streeter, senior investment and markets analyst at UK-based digital asset management firm, Hargreaves Lansdown. Along with the lack of clarity behind their backing, Streeter believes that smaller currencies may attract an inverse volume of frauds. “On top of being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty but also means that investors have little or no protection against fraud. That opens the door for cybercrime as hackers look for new ways to steal cryptocurrencies, particularly when they shoot up in value,” she said to iNews UK.

Famous investor Michael Burry, known largely for the 2008 US mortgage securities crisis (or ‘The Big Short’ in popular culture), has also voiced against SHIB, citing its massive circulation volume of 1,000,000,000,000,000 (one quadrillion) coins as a big reason why its price appreciation will not exceed beyond a certain level. This holds true – if SHIB hits $1 per coin, its valuation would reach one quadrillion dollars, or about 500x the peak valuation of Apple. Given that such a case would be extremely unlikely to say the least, Burry had stated that making such an investment would be “pointless.”

Contrarians for the short term

Interestingly, prices of the Shiba Inu coin have continued to skyrocket – even after a perceived snub of it by the internet’s notorious “dogefather” and cryptocurrency side-hustler, Elon Musk. The SpaceX and Tesla chief, who also has a notorious reputation for sending a number of cryptocurrencies on wild price surges (and crashes too) recently claimed in a Twitter conversation that he perceives Dogecoin as “the people’s crypto”, while stating that he doesn’t own any Shiba Inu coin.

Despite this apparent snub, Shiba Inu has continued on a price surge – presently trading at $0.0000724, or Rs 0.005. The present price is close to its all-time peak of $0.000077, or Rs 0.006, and many experts believe that its massive volume makes it an attractive proposition for retail investors in the cryptocurrency space. This, some believe, gives it room to still grow before inevitably hitting the ceiling – and therefore, still makes sense as a short term investment.