• Shiba Inu surged last year, but the cryptocurrency still trades for a fraction of a dollar.
  • Shiba Inu isn’t a blockchain. This limits its uses.
  • This cryptocurrency’s main use is as a currency for trading, staking, or payment.

Shiba Inu  (CRYPTO:SHIB)  soared an eye-popping 45,000,000% in 2021. At its highest, it climbed more than 109,000,000% from the start of the year. That translates into major gains for investors who bought this popular meme token in its early days.

Why such gains? Shiba Inu's strong community of supporters have driven interest in this cryptocurrency. Now, the question is whether this group -- known as the Shib Army -- and Shiba Inu's other attributes can fuel more growth. Could Shiba Inu even be a multibagger in 2022? Let's find out.

40,000 merchants

First, a quick look at Shiba Inu. This cryptocurrency offers three tokens -- one for investing and trading, another for staking rewards, and a third for voting on proposals. Shiba Inu holders also can use the cryptocurrency as a payment method at about 40,000 merchants thanks to a recent partnership with payment system Flexa.

All of this is great. But Shiba Inu has one big problem. It doesn't stand out from other cryptocurrencies. Most others also can be used for trading, payment, and can generate passive income through staking. And Shiba Inu isn't a blockchain network like rivals Ethereum or Cardano. Instead, it's a cryptocurrency built on the Ethereum network.

Japanese Shiba Inu dog Japanese Shiba Inu dog, the official mascot of the internet meme-centric cryptocurrency Dogecoin. Photo: Matt Cardy/Getty

Blockchains have the advantage of offering many real-world uses. For example, developers build decentralized applications on them that allow people to buy insurance or lend money to others. The idea is blockchain networks may eventually transform the way business is done. But as it stands right now, Shiba Inu can't take part in such a transformation.

Now let's talk about potential for gains. Just because Shiba Inu isn't a blockchain doesn't mean potential is zero. I expect the Shib Army to continue rallying support. And developments such as more merchants accepting Shiba Inu for payment could lift Shiba Inu's value. Right now, Shiba Inu trades for a fraction of a dollar. It looks unlikely Shiba Inu will rise above that point. That's because, if it does, it would be valued at $549 trillion. That's more than the entire cryptocurrency market. (The market is worth about $3 trillion.)

What if Shiba Inu triples?

But Shiba Inu still may be a multibagger this year. For instance, if it triples from today's level, its market value would total more than $55 billion. That would make it the world's fifth-biggest cryptocurrency, up from its spot in the 13th position. Technically, this could happen.

Still, I wouldn't recommend buying Shiba Inu to get in on this potential multibagger opportunity. First, there's a big risk Shiba Inu won't extend last year's gain. It's already lost some momentum. It's down 58% from the high it reached in October. Second, the fact that it doesn't stand out from rivals and probably will never reach a dollar could seriously weigh on investor interest. And third, these factors make me extremely wary about Shiba Inu's potential as a major player in this market over the long term.

So, yes, Shiba Inu could be a multibagger in 2022. But for the long-term investor, there are better bets elsewhere.

This article first appeared in The Motley Fool.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Adria Cimino owns Ethereum. The Motley Fool owns and recommends Ethereum. The Motley Fool has a disclosure policy.