Vitalik Buterin, the founder of Ethereum cryptocurrency, May 12, donated Shiba Inu coins worth a billion dollars to support India’s fight against the COVID-19 pandemic.
This is the second donation by Buterin, with the earlier donation standing at around $600,000 via Ethereum cryptocurrency. He joins other cryptocurrency enthusiasts and investors such as Balaji Srinivasan, who recently donated $1,50,000 in total.
The donation by Buterin, the highest amount so far by any individual or organisation to India, looks huge as $1 billion in Indian currency amounts to approximately over Rs 7,300 crore. However, in reality, India is expected to get an amount of $50-$100 million (Rs 350-700 crore).
Here is a look at why India is unlikely to actually get a billion dollars in real money.
What is this Shiba Inu Coin all about?
The Shiba Inu token was created as a meme coin and has the mascot of a Shiba pup, a Japanese dog. Shiba Inu was launched as a competitor to Dogecoin, another meme coin, and has a mascot of a dog. Dogecoin has been in the news consistently, with Elon Musk, followed by other celebrities, tweeting about it, which caused its valuation to jump to $50 billion.
Currently, Shiba Inu is valued at $7.8 billion, from a high of over $40 billion. After Buterin made the donation for India, the value of Shiba Inu coins saw a price fall by around 40 percent.
The price fall was noticed after Buterin gave away 10 percent of the total coins globally available in the market. The founder of Shiba Inu, Ryoshi had a tacit understanding with Buterin to never sell these coins, thus maintaining an artificial scarcity. It was a gift that Buterin re-gifted to the India COVID Fund, leading to this price fall.
Who is Vitalik Buterin?
He is the co-founder of Ethereum cryptocurrency. The 27-year-old Russian-Canadian has been in the crypto industry for the past 10 odd years. A billionaire who has featured on the cover page of reputed magazines, he donated his billion dollars in crypto to the India COVID Crypto Relief Fund, run by Indian crypto entrepreneur Sandeep Nailwal.
When will India get the Funds?
The India COVID Relief Fund has been set up by Indian tech entrepreneur Sandeep Nailwal, also the co-founder and COO of Polygon.
With the fund sitting on this huge pile of coins donated by Buterin in its wallet, it has to strategically sell to ensure prices do not fall further.
As per a report in Mint, the fund is based out of the United Arab Emirates (UAE), and the 50 trillion Shiba Inu tokens have to be first converted into fiat currency. After that, the entity converts the currency through various exchanges and brings it to a bank account outside the country. Once the funds are in the bank, it is then transferred to Foreign Contribution (Regulation) Act (FCRA) compliant non-governmental organisations (NGOs) in India, where it will be disbursed as deemed fit.
Why So Less for So Much?
Unsurprisingly, India will not get the billion dollars as expected. Experts scoffed at that number saying it won’t go beyond $100 million. However, Sandeep Nailwal in an interview with Moneycontrol said India would ultimately get a mere $50 million.
For the uninitiated, cryptos work on a different level altogether. Shiba Inu is a meme or joke coin. So, when Sandeep eventually starts to sell, it would depend on the liquidity and at what price any cryptocurrency exchange would want to buy it. Unlike Buterin’s Ethereum, which is far more stable pricewise, and high in demand, joke coins after all come and go.
(Edited by : Shoma)