Things change quickly in the cryptocurrency arena.
A few weeks ago, powered by Elon Musk and Mark Cuban’s enthusiastic comments, Dogecoin was the hottest altcoin around. Now, though, Dogecoin has fallen back a bit after its tremendous run. Meanwhile, traders have turned their attention to the latest surging token: SafeMoon.
SafeMoon has had a wild April. It surged as much as 2,000%, hitting $0.0000130 at one point. However, it has fallen by roughly two-thirds from its peak to around $0.000006 now. With that sort of price volatility, it’s no surprise that traders are quickly figuring out how to buy SafeMoon to profit from the swings.
As SafeMoon has risen to prominence over just the past month, it’s not yet listed on many major crypto exchanges like Coinbase (ticker: COIN). In fact, so far there are two primary sources of SafeMoon trading. Here’s what prospective crypto investors should understand:
— What is SafeMoon?
— How to buy SafeMoon.
— Should you buy SafeMoon?
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What Is SafeMoon?
Out of all the cryptocurrencies and altcoins on the market, what makes SafeMoon unique?
This alternative asset has a clever strategy for rewarding long-term owners. Clayton Moore, CEO of NetCents Technology (OTCMKTS: NTTCF), a cryptocurrency-based payment processing platform, explains: “Unlike most other cryptocurrencies, SafeMoon penalizes investors who sell it by imposing a 10% exit fee. Half of that fee is redistributed to all SafeMoon holders, while the other half is burned. The company promises to implement a burn strategy that is beneficial and rewarding for long-term holders.”
In theory, this will operate like a turbocharged share buyback program. If all goes according to plan, owners of SafeMoon will see their ownership stakes increase over time as the exit fee is incrementally redistributed to remaining token-holders. Meanwhile, the burn — which functions like a stock buyback program — will decrease the overall amount of existing SafeMoon tokens over time.
How to Buy SafeMoon
The leading way to buy SafeMoon is through PancakeSwap.
PancakeSwap was launched last fall and serves as an automated market maker. It’s a decentralized finance (DeFi) application that allows a wide variety of trading, liquidity providing and yield farming operations. SafeMoon’s official Twitter account posted a video tutorial on how to buy SafeMoon using PancakeSwap.
[Read: How to Invest in Cryptocurrency.]
Users first need to buy Binance tokens. These should be put in a wallet that supports the technology; SafeMoon’s backers suggest that MetaMask and Trust are two good options. From there, traders can exchange the Binance tokens for SafeMoon over the BSC network.
The BitMart exchange is another good option. It listed SafeMoon back on April 5, before it really took off, and thus has established decent liquidity for the token as well.
Should You Buy SafeMoon?
So that’s how to buy SafeMoon and why it has drawn such strong trader interest so far — but is SafeMoon a good investment?
There has been widespread criticism of the project. Prominent crypto thought leaders on social media have blasted the currency, comparing it to the infamous Ponzi scheme Bitconnect.
Moore shares this skeptical tone. While he finds some positives with SafeMoon, on the whole, he is cautious. “Some experts have compared SafeMoon to a multi-level marketing scheme, designed to only get certain players rich. Furthermore, I think that it’s definitely alarming that it was reported that the SafeMoon CEO owns more than 50% of the liquidity,” Moore says. While there is a lock-up on these funds, it’s still concerning to see so much centralization of the coin’s ownership.
[See: What’s the Best Cryptocurrency to Buy in 2020? 7 Contenders.]
A common feature in the altcoin scene is that the people who discover a new token first make a large portion of the profits. “Personally, I think that it’s inevitable that SafeMoon crashes,” Moore says. “By the time most people find out about SafeMoon, it’ll probably be too late to make any short-term earnings.” That gets to the crux of the matter. While SafeMoon may end up being a good project, that doesn’t necessarily make the token a buy at the height of its initial hype cycle.
Brandon Mintz is the CEO of Bitcoin Depot, which operates more than 2,000 Bitcoin ATMs worldwide. Mintz thinks investors should be careful with SafeMoon for now, saying that unlike Bitcoin or Ethereum, SafeMoon “is not likely to have as much long-term underlying value.” Plus, “we’ve already seen a drastic plunge in its value. There is too much concern over the safety of the coin,” Mintz says.
Mintz isn’t totally negative on SafeMoon, however. “Investors seem to be flocking to new DeFi protocols such as SafeMoon, so the usage can definitely provide more underlying value as time goes on,” Mintz adds.
At the end of the day, that will be the crucial point. If SafeMoon is going to succeed, it needs to achieve some functionality beyond simply being a tool for speculators. The loyalty feature is a perk, but that alone may not support SafeMoon’s current value. “I think investors need to be cautious about a cryptocurrency that has no real utility. It’s clear that the SafeMoon team wants to reward loyal users, but if the cryptocurrency has no real use, what’s the point of holding onto it forever?” Moore says.
That’s a valid criticism, but it’s one that SafeMoon’s whitepaper appears to reject, with goals of establishing a marketplace for non-fungible tokens (NFTs), orchestrating charitable projects and creating educational crypto apps.
Still, it’s all talk until you walk the walk, so keep that in mind before buying in.
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How to Buy SafeMoon originally appeared on usnews.com
