How the Bitcoin Blockchain inspired Ethereum, Dogecoin and the other Shiba Inu Token
Why do meme tokens seems to work ?
Meme token or the 1st #DogeCoin was a Bitcoin fork inspired from the #ShibaInuMeme made in 2013. It didn’t have the fixed supply of Bitcoin and worked in a deflation based Proof of Work mining with the rewards in billions of $DOGE.
Such dog-themed meme tokens have taken off recently, following Dogecoin’s rapid rise over the last few months.
A common theme is that they are built around similar memes but the tokens tend to have much larger supplies (in the quadrillions of units).
If you look at how currencies are priced around the globe, it’s pretty evident ly based on global political power structures. Most governments around the world usually have their currency based on USD. It’s either pegged or it free floats based on demand and supply. In such a system people in certain places tend to do better than others because they are able to convert the energy resources available in their country into store of value units ie currency, stocks land houses and even gold.
One of the compelling reasons people who understand Bitcoin gives is how often this store of value stops being a medium of exchange for various reasons. Indian Government banning 80% of physical notes in circulation, the European Union making Central Bank of Cyprus write off savings of millions of bank account holders, Zimbabwean or Nigerian government printing unlimited amount of currency and thus devaluing their own currency are all examples of how few people in power deciding on store of value often lead to deteriorating value and even destroying civilisations.
This has happened throughout our history, be it wars fought over gold religion or even how Europeans took over land from the Native Americans or East India Company taking over indian ocean trade from the kings here and eventually ruling them.
Money has developed along this moving from beads and collectibles to gold coins and eventually currencies issued by central banks.
Throughout history, few people closest to the source of wealth always enjoyed better access to stores of value from the times of Kings to Venetian bankers and now Govts and Central banks due to something called Cantillon effect. A Cantillon effect is a change in relative prices resulting from a change in money supply, which was first described by 18th-century economist Richard Cantillon. Making lots of cheap money available via banks does not automatically mean that demand for everything will rise simultaneously.
As the world developed into a network state managed centrally by United States of America and US Dollar become the defacto medium of exchange currency accepted globally, the situation of other stores of value greatly depend on the political clout your local government has globally and the importance of energy producing natural resources available in your country. People stopped fighting over resources and decided to live harmoniously as long as things were mostly priced in USD.
This is the reason why a similar sized apartment in NewYork would cost 10s of Millions of Dollars, few Million Dollars in Dubai and just few 100 Thousand Dollars in Kottayam or Kochi.
As the Internet developed, the world become more connected. People started working for a global economy as opposed to just local economies and there was prosperity all along.
By 2008, people around the world were using same Apple Phone, Google Mail, Facebook and eating McDonalds but all paying in different medium of exchange currencies. Then the Global Financial Crisis happened. A lot of work done to tie global economies in the name of Globalisation came undone. Central Banks in top economies had to step in and protect the global economy from a bunch a degenerate gamblers all over the world but mostly Wall Street. London, Dubai, Hong Kong, Shanghai, Singapore all had the same issues. Blackberry using, StarBucks drinking Suits were out of jobs globally. The Global Economy has been limbing along with moderate growth in most countries but the wealth inequality created by of unfair store of wealth assets around the world changed with much volatility.
It was at the peak of this global unrest that an anonymous hacker named Satoshi Nakamoto released a white paper named Bitcoin.pdf amongst a mailing group of elite cryptographers called the CypherPunk. The idea looked good. It had borrowed from few previously proposed methods of Digital Cash called Proof Of Mining. This method ensured that the bitcoins as the currency that worked on the Bitcoin Network was called, didn't come out all at once. It ensured that the people who gave up their computing power to secure the network got in return some amount of bitcoin. The amount of Bitcoin that will ever exist and how the payout changed as more people joined the network was preset and programmed into the code. The process of securing the network was called mining. There is no actual mining happening, it is a reference to how gold was mined and how medium of exchange currencies were previously pegged to the value of Gold.
In January 2009, The Bitcoin Network launched with just Satoshi mining the initial blocks called Genesis Blocks. The next person to join the network was Hal Finney and it was he who suggested that the value of bitcoins released can be calculated based on the amount of energy spent by the computer multiplied by the amount of money spent to purchase the electricity. It started of costing few cents for a 1000 bitcoins and the prices increased as more people started using Bitcoin network.
Satoshi eventually disappeared from the scene and the development of the network was taken over by volunteers and other interested parties. Bitcoin Mining became a billion dollar industry with Bitcoin mining concentrating in areas with cheap electricity like China, Iceland, Upstate NewYork and few other places with renewable and non renewable energy resources.
Bitcoin started to become a dominant medium of exchange currency on the internet and as more users joined bitcoin started becoming a store of value asset as well. The price rise has been meteoric with US Public listed company CEOs like Elon Musk and Micheal Saylor choosing to store part of their company’s treasury in Bitcoin choosing it as a better store of value asset than US treasury bonds which have been the gold standard of storing wealth since Gold Standard was removed.
There is now a global rush to acquire more mining equipment, create greener energy sources all just to keep the now worth over Trillion Dollar Bitcoin Network. As Bitcoin becomes a 100 Trillion dollar worth asset as PlanB’s Stock to Flow model suggest, Satoshi’s bitcoins pose a big risk to the price of Bitcoin.
Satoshi’s Fault.
The first few blocks mined by Satoshi containing more than a million bitcoins is now worth few billions of dollars. It could eventually be worth few trillion dollars. If Satoshi ever reveals who he is, there could be global ramifications. Which ever country chooses to accommodate him or tax him risk having their currency becoming too valuable or valueless depending on the country, the rules and tax laws.
Dogecoin and Ethereum founders knew of these risks and chose to give up the future wealth by reducing their respective holdings transparently. Both these networks use Proof of Work Mining similar Bitcoin. Ethereum has become the standard network used by hundreds of thousands of other tokens that use the ERC 20 standards. Vitalik Buterin has been leading the general direction of Ethereum Foundation as it moves to a less energy intensive Proof of Stake mining. This will reduce the decentralisation of the network but will scale the transactions to a level required by the user’s.
Dogecoin’s founder gave up development of the project. It withered but has recently got lot of traction with more users choosing to buy Dogecoin as their first crypto investment rather than the highly priced Bitcoin. These buyers generally tend to skip understanding the economics of the tokens in circulation and mostly just gamble on the numbers to go up.
Shiba Inu Project.
RYOSHI RESEARCH created Shiba Inu Token $SHIB token few months back with a very altruistic goal : to give an opportunity for fair distribution and ownership from day 1. It is a fun expirement to see if the community can build a 100% decentralized and autonomous perpetual community with no leader. As a mechanism to lock some of the tokens from creating unnecessary liquidity in the market, they ended up sending 500 Trillion $SHIB to Vitalik Buterin. I am guessing they are friends and he knows VB doesn’t need the money.
Then the pandemic hit. Initially all the Cryptocurrencies dropped in price with Bitcoin reaching almost $3000 on some exchanges in March 2020. But over the last year the prices have shot up with Bitcoin reaching above $60000 and Ethereum reaching $5000.
Vitalik Buterin is now one of the youngest self made billionaires. He has been making various philanthropic donations and last month Buterin sent 500 ETH and 10% of his SHIB tokens — some 50.6 trillion tokens — to Crypto Covid, a relief fund for India. This is not his first donation to Crypto Covid. He had previously donated a bunch of Ethereum and Maker tokens amounting to few million dollars each time. Maybe with $SHIB prices growing in the last few weeks and to avoid the Satoshi’s Fault problem with this token he decided to move his tokens to Crypto Covid wallet. This doesn’t mean the token has 1 Billion Dollars value. If they try to sell it all the price will just crash. .
