The meme currency has grown by more than 130 times this year
In case you are wondering what the hell are we talking about, Vitalik Buterin donated a billion dollars in Shiba Inu Coin, a cryptocurrency, for India to battle Covid-19, whose second wave has ravaged the country. But it’s not as easy as that, and it is unlikely anyone is going to actually get a billion dollars. Let us explain-
Who is Vitalik Buterin?
Russian-Canadian Buterin is co-founder of Ethereum, one of the best known forms of cryptocurrency, and the 27-year-old billionaire is one of the most recognizable people in the crypto industry, having been involved in crypto from as early as 2011.
What did he do?
Buterin on May 13 donated a billion dollars worth of Shiba Inu Coin to the India Covid Crypto Relief Fund, run by Indian crypto entrepreneur Sandeep Nailwal. At that price of the coin, it is the largest investment into fighting Covid in India from anyone, public or private.
What is Shiba Inu Coin?
This is where it gets interesting. Shiba Inu Coin, named after a Japanese dog, was started as a rival/competitor to Dogecoin, itself a meme coin, based on the dog who is in all the memes. With celebrities tweeting about Dogecoin, its price shot up, and its entire supply is worth $50 billion currently. Shiba Inu Coin was specifically created to rival Dogecoin, a meme coin of a meme coin, if you will.
So what?
These coins were created as a joke, but with broad usage and because of the volatile nature of cryptocurrencies, have taken off. However most crypto prices can shoot up or crash on any given day, more so for these meme coins. In fact, right after Buterin transferred the coins, Shiba Inu Coin’s price fell. It is down 40% currently. So while India may still get a sizeable donation, it is likely to be far less than a billion dollars.
So how much actual money will that be?
“I think we will eventually get around $50 million. If Elon Musk or some celebrity talks about it again, maybe $100 million but more than that is unlikely,” Sandeep Nailwal, crypto entrepreneur and the man spearheading the relief fund told Moneycontrol. Two other people confirmed the same to Moneycontrol.
“This is some random currency, a joke on top of a joke. There is no way it will materialise to more than$100 million,” one person said. The actual money the relief fund gets will depend on the price of the coin when they are selling, and upon liquidity- as in, who is ready to buy the coin, and at what price. Different exchanges often have slightly different prices for a currency.
But that’s nowhere near a billion?
Exactly. Which is why, while the donation was welcomed and appreciated by many, it has to be understood better. The truth is, no one knows how much the currency can fall before it is sold for actual cash. Such is the nature of cryptocurrency, although more so for meme currencies, which were explicitly made as a joke. Better known assets like Bitcoin and Ethereum are more stable.
So where does that leave us?
Even if the relief fund gets $100 million, or about Rs 700 crore, that is still a lot of money, and can help many people with their pandemic needs and the health of their loved ones. It is still a generous donation and indicates the growing popularity of crypto, deemed illegal or illegitimate by many, but also invested in by millions of Indians recently.
How will this meme crypto become actual money?
Because cryptocurrencies are decentralised- no company or state owns them- and because of India’s regulatory flip flopping on cryptocurrency, the route is a little different. The relief fund has set up an entity in the UAE which has a bank account with FV Bank, a global digital bank based in Puerto Rico. The Shiba Coins will be sold to an over-the-counter player, generally brokers or institutions dealing in high value crypto transactions. It will be converted to US Dollars, which goes into a specific digital wallet meant for these donations. Then it is transferred to India, only if the donation is for an organisation that is allowed to accept crypto donations under the Foreign Contribution (Regulation) Act.
How did Buterin get these coins in the first place?
Shiba Inu Coin was created by Ryoshi, an internet alias, in August 2020. This is similar to Satashi Nakamoto, the founder of Bitcoin, whose actual identity is similarly unknown. Ryoshi gave half of all the coins he created to Buterin. Buterin’s donation is in fact, 10% of the entire coin’s global supply.
Have others donated too?
Yes, a number of crypto enthusiasts and entrepreneurs, most notably Balaji Srinivasan have donated money via crypto for India to battle Covid. Srinivasan, former CTO of Coinbase and a Silicon Valley investor donated $50,000 and an additional $100,000. Buterin himself also donated via Ethereum worth $650,000.