After having just dropped in March, the new digital token ApeCoin (CRYPTO: APE) has already made waves in the crypto community. The price has jumped more than 1,000% since and has been extremely volatile.
The token is directly connected to the Bored Ape Yacht Club non-fungible token (NFT) collection, a set of extremely popular and expensive NFTs that have a big following. The popularity of these NFTs and the community around them has led some to believe that ApeCoin could go on a run similar to that of Shiba Inu (CRYPTO: SHIB), the popular meme-inspired cryptocurrency. Is ApeCoin the next Shiba Inu? Let’s take a look.
ApeCoin vs. Shiba Inu
There are both similarities and differences between ApeCoin and Shiba Inu. Both are ERC-20 utility and governance tokens, meaning they don’t use their own blockchain networks and are both issued on the Ethereum blockchain, which has smart-contract capabilities.
ERC-20 tokens all must follow a set of technical standards. This also means both use the proof-of-work (PoW) concept to mine new tokens, which involves lots of computer power and therefore energy to solve a cryptographic puzzle as quickly as possible when approving transactions and minting new blocks and tokens.
But Ethereum is in the process of updating to a proof-of-stake (PoS) concept, where validators on the network stake their tokens to approve transactions, so both ApeCoin and Shiba Inu will likely change with it once the upgrade is complete. PoS is much more energy efficient than PoW.
The total supply of ApeCoins is fixed at 1 billion tokens, while Shiba Inu has 1 quadrillion tokens, so while the amount of ApeCoin tokens is much less, it still is large enough that it likely wouldn’t be considered any kind of hedge for inflation. It has not adopted a burning capability, so the supply is not currently set to decrease, while Shiba Inu is planning to introduce a burning portal to reduce the supply outstanding.
Additionally, neither ApeCoin nor Shiba Inu appear to have any kind of real technical advantage over other cryptocurrencies. Being ERC-20 tokens, they are both limited by Ethereum’s minimal processing power in terms of transactions per second (TPS), although Ethereum is expected to greatly improve TPS once it completes a long-awaited upgrade.
How does the ApeCoin community compare?
The real power behind Shiba Inu has nothing to do with any kind of technical capability. It’s really all about the community behind it. Shiba Inu, as a meme-inspired cryptocurrency, is essentially a knockoff of Dogecoin; both use the lovable Shiba Inu mascot to stir up attention.
Shiba Inu was started as a joke, intended to make fun of Dogecoin, which itself was started as a joke. Shiba Inu started slowly and is up more than 16,500,000% ; even though it has dropped from its high, it still has a market cap of almost $14 billion. It grew in popularity by getting big and going viral on social media platforms like Twitter and Reddit.
ApeCoin comes from a popular community but with a different dynamic. It is connected to the Bored Ape Yacht Club; Yuga Labs, the company that created the NFT collection, owns 16% of the total ApeCoin supply. Bored Ape Yacht Club NFTs depict different kinds of apes with different wardrobes and facial expressions. They have gained popularity among high-net-worth individuals and celebrities (Justin Bieber purchased one for $1.3 million).
Is ApeCoin the next Shiba Inu?
Because of the different communities behind the two tokens, I find it hard to believe that ApeCoin will be the next Shiba Inu — although making prediction in the world of crypto is always risky. Shiba Inu started as a joke among the masses and came out of nowhere. ApeCoin has a more established following and is a status symbol of wealth, which could give it a negative connotation among your typical meme investor. Furthermore, ApeCoin already has a market cap of $3.7 billion, so obtaining the kind of gains that Shiba Inu has had seems unrealistic.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.