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The altcoin, Safemoon, has skyrocketed in the past months gaining cryptocurrency investors’ attention. Safemoon more than tripled in price by the end of 2021. Created in March 2021, as a relative cryptocurrency newcomer, it was unexpected to see how Safemoon immediately began making headlines upon launch with a huge run-up in April 2021. According to experts, Safemoon was developed to encourage early investors not to sell and exercise patience. This design had produced a loyal group of early investors but it has also opened the crypto up to criticism from skeptics. At this point, safemoon seems to be an extremely high-risk investment.
Here are three pros and three cons to consider before buying Safemoon:
Pros of Buying Safemoon
1. Unique Branding
There are over 13,000 cryptocurrencies out there and new ones popping up weekly, the most worthy thing about Safemoon is its branding. Safemoon stands out in the crowd, top-performing cryptocurrencies have generated cult-like social media followings and their brands have spread like wildfire online, thanks to the viral memes. Since its launch, Safemoon has regularly been trending on social media. The long-term success of Safemoon lies in the strength of its brand.
2. Passive Income
Safemoon was developed to incentivize long-term investment and penalize selling. Any Safemoon investor who sells their Safemoon is charged a whopping 10% fee. Of which half of the fee is added to the liquidity pool to support stability in price. The other half is sent to Safemoon’s existing holders. This way, Safemoon investors make passive income every time another investor sells. In times when the price is weak and the pressure to sell is picked, Safemoon investors earn more passive income as a reward for holding. Safemoon is a great investment for traders who are patient and disciplined despite unexpected cases.
3. Support from High Profiled Influencers
SafeMoon’s marketing strategy is strong and effective. Without technology, it is difficult to stand out in the growing crowd of thousands of altcoins. Endorsements from high profile online Influencers are one thing Safemoon did to gain popularity and trust. Social Media celebrities like Jake Paul and Big investors like Dave Portnoy were endorsed for publicity. Aside from publicity, it entails trust and assurance and is not a Ponzi scheme.
Why you shouldn’t buy Safemoon
1. Centralized Ownership
Even Bitcoin (BTC) has been accused by critics of being a Ponzi strategy, but the centralized ownership of SafeMoon has users particularly concerned. SafeMoon’s CEO, John Karony, reportedly acquires more than 50% of the coin’s liquidity. SafeMoon insiders are inducing a tremendous amount of passive income. Some detractors also see similarities between SafeMoon and Bitconnect, a notorious cryptocurrency that collapsed amid charges of fraud. There’s no proof that SafeMoon is an absolute fraud, but analysts have advised that many popular altcoins appear designed largely to help developers and early investors get rich at the expense of later buyers.
2. Little or No Utility
There’s no major vendor that accepts Safemoon as a payment method, and it’s even difficult to trade it for fiat currency or other cryptocurrencies hence Safemoon doesn’t trade on major crypto exchange platforms. SafeMoon doesn’t have a technological advantage over other cryptos in transaction speed, security, or other features. SafeMoon recently launched its digital wallet on Apple Inc.’s (AAPL) iOS platform. Developers also have enterprising plans, including a unique exchange, a SafeMoon app, a SafeMoon video game, and the cryptic “Project Pheonix.” Unfortunately, until investors get more details on these goals, SafeMoon in its current state has little or no real-world utility.
3. Illiquidity and Volatility
Like other meme altcoins, one of the most dangerous things about investing in SafeMoon is its extreme volatility and lack of liquidity. For investors looking to get an adrenaline rush or a gambler’s high trading SafeMoon, the potential for the crypto to crash as hard as it has skyrocketed may be part of the thrill. However, the fact that SafeMoon charges fees to prevent selling and is not traded on leading crypto exchanges such as Coinbase Global Inc. (ticker: COIN) and Gemini makes the SafeMoon market far less liquid than other popular cryptocurrencies. So far, the only way to trade SafeMoon is by using Binance’s PancakeSwap decentralized exchange, which is not convenient for many traders.
Pros and Cons of Investing in SafeMoon
- Pro: Unique Branding
- Con: No Utility
- Pro: Passive Income
- Con: Illiquidity and Volatility
- Pro: Support from High Profiled Influencers
- Con: Centralized Ownership