A memecoin invaded the world of philanthropy this week, bringing with it extreme price volatility and bewildering questions about whether $1 billion worth of a joke cryptocurrency can hold its value.
Sandeep Nailwal, a cryptocurrency entrepreneur from New Delhi, set up the India Covid Crypto Relief Fund about three weeks ago after witnessing firsthand deaths caused by a lack of oxygen at the hospitals he volunteered in, as the country battled a devastating health crisis. At first, donations came trickling in, raising roughly $7.5 million up until the middle of this week.
That’s when Vitalik Buterin, one of the creators of the cryptocurrency Ethereum, donated more than 50 trillion -- yes, with a T -- Shiba Inu coins, a meta joke about the joke that is Dogecoin. It has rallied more than 11,000% in the past month, and based on prices late Monday, 50 trillion of it would have been worth almost $2 billion.
But Buterin’s donation -- which represented more than 5% of the total Shiba Inu coins in circulation -- sent prices plummeting about 50% by Thursday, leaving people who had bought into it scrambling to figure out whether to sell or hold on. It has also sparked a broader question about the value of such memecoins and whether donating cryptocurrency to charity is more trouble than it’s worth for recipients who might need immediate liquidity.
“A huge challenge here is estimating the value of the gift,” said Brian Mittendorf, an Ohio State University professor who studies nonprofits and the rise of cryptocurrency in charity. “If something is stated as being worth $1.5 billion but it can’t be liquidated, then is it really worth that amount?”
Crypto’s Wild Week
Buterin’s gift and Shiba Inu’s wild ride are part of a week during which cryptocurrencies have drowned out activity in the rest of the market. Tesla Inc. chief Elon Musk roiled prices of Bitcoin after announcing that the company would no longer accept it as a form of payment for cars due to environmental concerns. That was just a few days after the billionaire’s appearance on “Saturday Night Live,” where he joked that Dogecoin was a “hustle” and sent prices of that coin tumbling.
Despite the slump in Shiba Inu prices, the 50.7 trillion Shiba coins Buterin donated are still worth about $1 billion based on prices as of Thursday night. Nailwal said the fund is planning on slowly selling off the coins so it won’t affect individual investors who have begun to worry about their deflating holdings.
“Many retail traders invest their life savings in these coins,” Nailwal, who is also a co-founder of the crypto organization Polygon, said in a phone interview Thursday. Nailwal said the plan is to gradually offload hundreds of thousands or millions worth of the coin each day, as opposed to unloading it all at once, in a bid to avoid slamming prices. “We want to be careful.”
Hanging On
Robert Browning lost thousands of dollars following the donation, but the Indiana-based retail investor isn’t getting out just yet. He’s going to hang onto his millions of Shiba Inu coins, which make up about a quarter of his crypto holdings, and maybe even buy more.
“Crypto is not for the faint of heart,” Browning, 52, said in a phone interview, adding that he thinks everyone should increase their holdings by 25%. “Instead of complaining maybe we could take our own power back.”