There is no proof/evidence that SafeMoon is a fraud crypto. So, it is safe to say that SafeMoon is not a scam. However, many crypto experts warned that there is a risk involved in investing in new cryptocurrencies. Since the release, it has started to make headlines about its design to encourage early investors not to sell. So, currently, SafeMoon is an extremely high-risk speculative investment.
- SafeMoon crypto is the latest introduction in the crypto world and it was released in March 2021 on the Binance Smart Chain blockchain
- Currently, SafeMoon is in 3rd place by market capitalization in Binance
- The SafeMoon transactions are charged a fee and the fee amount is then distributed among holders of the token
- The SafeMoon transactions are taxed a 10% fee where 5% of the fee goes to reflection rewards and 5% goes to liquidity pools
- Bitcoin operates on Proof of work and this mechanism is basically used by blockchains
What Is SafeMoon?
SafeMoon is a cryptocurrency and it is a BEP-20 token which is launched on the Binance Smart Chain (BSC) ecosystem on March 8, 2021. BSC is a centralized finance (CeFi) ecosystem and a competitor to Ethereum’s decentralized finance (DeFi) ecosystem. Currently, SafeMoon is in 3rd place by market capitalization in Binance. According to SafeMoon’s official website, it has three core components and they are reflection, transaction fee, and token burn.
The SafeMoon transactions are charged a fee and the fee amount is then distributed among holders of the token. Moreover, the fees charged on transactions are given to various liquidity pools on Pancake Swap and other platforms. On the other hand, each trade will cause a token burn and the transactions are taxed a 10% fee which is split two ways. 5% of the fee goes to reflection rewards and 5% goes to liquidity pools. Here, 2.5% of the 5% that is sent to liquidity pools is converted into Binance Coin (BNB) to ensure the liquidity of the SafeMoon and Binance Coin pair. According to the SafeMoon whitepaper –
“Having burns controlled by the team and promoted based on achievements helps to keep the community rewarded and informed. SafeMoon aims to implement a burn strategy that is beneficial and rewarding for those engaged for the long term. Furthermore, the total number of SafeMoon burned is featured on our readout located on the website”
Currently, SafeMoon ranks 202 on coinmarketcap and it has a market capitalization of $2.9 billion and a circulating supply of 585 trillion tokens. The total supply cap of SafeMoon is one quadrillion tokens.
How Is SafeMoon Different Than Bitcoin?
SafeMoon is a BEP-20 token and it is different than Bitcoin in many ways. SafeMoon is issued on the Binance Smart Chain which is not decentralized. Here is how SafeMoon is different from Bitcoin.
Proof Of Authority
The Binance Smart Chain uses proof of authority. In this method, the block creators are known as validators. These validators are usually chosen by Binance and they are pre-approved. If you want to become a validator then you must have to confirm their real identities, invest money to prove long-term commitment, and be equal to all other candidates. So, in this model Binance has absolute control over the blockchain. They decide who becomes a validator and they remove validators at their discretion. Therefore, all the users must have trust in Binance that they will behave in everyone’s best interest.
Proof Of Work
Bitcoin operates on Proof of work and it is a totally different consensus mechanism. In fact, proof of work was the original consensus mechanism used by blockchains. This method has proved that it is very effective at securing a decentralized system from bad actors. In this method, computers compete against each other to process and validate transactions. Here, the computer has to solve complex mathematical puzzles. When a computer completes a puzzle, it adds a new block of transactions to the blockchain. We know these computers as mining computers. These computers generate new Bitcoin for completing a new block of transactions. This is a very complex process as well as very energy-intensive and helps to secure the Bitcoin network. Miners around the world create a decentralized network without a central authority, which is drastically different than how the BSC operates.
Is It Worth Investing In SafeMoon?
Investing in SafeMoon is totally a personal decision and you should make this decision based on how much risk you would like to take. SafeMoon completely depends on Binance therefore, the success of SafeMoon also depends on Binance as well as the SafeMoon team and whatever community is built around it. So, if you want to invest in SafeMoon then you must make a calculated investment and you should also take into consideration the centralization of the Binance Smart Chain and how much control Binance has over it. SafeMoon, along with all other tokens on the Binance Smart Chain operates based on proof of authority. Therefore, investing in SafeMoon at the current stage will be based on pure speculation as it is not yet a proven team or project. That said, over the last month or so, the price of SafeMoon has increased rapidly and if the market can continue the bull run then the price of SafeMoon will increase rapidly and you can consider a short-term investment in SafeMoon.
Pros And Cons Of Buying SafeMoon
Investing in SafeMoon has both advantages and disadvantages. Let’s check out some important pros and cons of buying or investing in SafeMoon.
Pros Of Buying SafeMoon
1. Valuable Meme Crypto Brand
There are more than 13,000 cryptocurrencies available in the crypto world and every day new crypto is popping up. But the best part of SafeMoon is its branding even though it is a new cryptocurrency. To remain strong and stand high in the crowd of top-performing cryptocurrencies, you have to maintain cult-like social media followings and the brand must spread like wildfire via online memes. Since the launch, SafeMoon has been trending on social media. The long-term success of SafeMoon largely depends on the strength of its branding because it won’t cope with Bitcoin (BTC), Ethereum (ETH), or other top crypto’s strong and significant technological advantage.
2. Passive Income
The business pattern of SafeMoon is to incentivize long-term investing and punish selling. If you want to sell your SafeMoon then you have to pay a painful 10% fee. Half of this fee is added to a liquidity pool to support price stability which is an excellent feature of SafeMoon. The other 5% of the fee is distributed o SafeMoon’s existing holders. So, Investing in SafeMoon can generate some passive income for the investors. Moreover, the more you will hold the SafeMoon the high your reward will be.
3. Dave Portnoy And Other High-profile Influencers
SafeMoon lacks advanced technology therefore it is going for high-profile online influencers to boost its publicity and branding. Recently, Barstool Sports founder Dave Portnoy announced a $40,000 investment in SafeMoon and it boosts the price of this crypto token. Moreover, Social media celebrity Jake Paul also endorsed SafeMoon immediately after the launch back in March.
Cons Of Buying SafeMoon
1. Illiquidity And Volatility
Illiquidity and volatility are two risky disadvantages of SafeMoon. SafeMoon is extremely volatile and it also lacks liquidity. Therefore, while trading SafeMoon, you might get an adrenaline rush but the potential of crashing can increase concerns among the investors. Moreover, SafeMoon charges high fees to discourage the selling of SafeMoon which makes the SafeMoon market far less liquid than other popular cryptocurrencies.
2. No Utility
Another disadvantage of SafeMoon is no major vendors accept SafeMoon as a payment method. Moreover, it is very difficult to trade SafeMoon for fiat currencies or other cryptocurrencies. SafeMoon doesn’t trade on major centralized crypto exchanges and it also doesn’t have a technological advantage over other cryptos that includes transaction speed, security, or other features. So, currently, SafeMoon has little or no real-world utility.
3. Centralized Ownership
Another key disadvantage of SafeMoon is its centralized ownership. SafeMoon’s CEO owns around 50% of SafeMoon coin’s liquidity. So, it is quite clear that SafeMoon insiders are generating a tremendous amount of passive income compared to investors who are buying SafeMoon.
Key Facts Of SafeMoon
1. SafeMoon launched with 777 trillion tokens
2. You have to pay a 10% fee for selling SafeMoon
3. Safemoon tokens are burnt manually by the developers
4. The price of SafeMoon increased by over 20,000% and then fall down over 75% from that all-time high
5. SafeMoon doesn’t have a real-world purpose or competitive advantage
6. You can’t buy SafeMoon via fiat money or via major cryptocurrencies
7. SafeMoon is one of the riskiest cryptocurrency investments
With any crypto, there could be a chance of making a huge profit as well as there is always a possibility to lose money and SafeMoon is not an exception. It is new crypto therefore it is very difficult to predict the price of SafeMoon. Therefore, if you want to invest in SafeMoon then you have to do it based on speculation.
Last Updated on October 31, 2022 by Magalie D.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.