Like the dot com bubble in the late 90s, the cryptocurrency industry is still in its infancy. It’s likely that many smaller cryptocurrency projects won’t last in the long term, as many of these projects have small teams that have yet to deliver on their promises. One of the hottest small projects right now is SafeMoon, a token on Binance Smart Chain (BSC).
Cryptocurrency investors coined the term “shitcoin” to describe crypto assets with either no justifiable value or no utility. More and more useless coins are being made on Binance Smart Chain, as these tokens are easy to produce, and Binance’s blockchain attracts many retail investors due to its low transaction fees. For these reasons, Tik Tok influencers have been showing off SafeMoon to their followers, pumping the price of the crypto asset.
What is Safemoon?
SafeMoon is among the 1st cryptocurrencies on Binance Smart Chain to gain mainstream attention. Most of this attention has been gained from social media platforms, namely Twitter and Tik Tok.
If you visit SafeMoon’s website, you’ll be greeted by a plethora of crypto-related buzzwords. Terms like “Static Rewards” are used to hide the token’s resemblance to a pyramid scheme. These “static rewards” increase the amount of SafeMoon investors own based on how long they hold their investment.
To fund this, SafeMoon charges investors 10% to simply sell their tokens. This keeps investors from investment, even if SafeMoon doesn’t provide any real value.
SafeMoon classifies itself as a decentralized finance (DeFi) token. However, for well-versed cryptocurrency enthusiasts, it’s hard to consider anything on Binance Smart Chain as a DeFi token. While BSC shares many traits with Ethereum, such as smart contracts, it suffers from a huge lack of decentralization. To be part of Binance Chain’s network, investors must stake more than $11 million dollars. With such a high cost to be part of the network, the network is controlled by a few well off Binance Coin holders, including people involved with Binance directly.
Dave Portnoy and SafeMoon
Calling these highly speculative, pyramid-scheme-esque cryptocurrencies “shitcoins” doesn’t explain the complete nature of these investments. Instead, “Tik Tok Tokens” better describes the nature of these assets. With Tik Tok influencers promoting cryptocurrencies like SafeMoon, much of this newfound traction can be attributed to SafeMoon’s social media promotions.
As of May 17 2021, Dave Portnoy, founder of Barstool Sports, has voiced his allegiance to SafeMoon. He announced his support on Twitter, encouraging his followers to buy the crypto token. Admitting that he doesn’t really know what SafeMoon is, Portnoy told his followers: “If it is a ponzi [scheme], get in on the ground floor.” However, SafeMoon is far from being on the ground floor. The token is currently trading for a 1,000% premium over its price in April.
Brief History of Safemoon
SafeMoon has only been trading for about 2 months, and it’s appreciated more than the S&P 500 over the last decade. The token began trading in March for $0.000000001 before skyrocketing to an all-time high of over $0.000013. To help understand these gains, an investor who bought $10 of SafeMoon at $0.000000001 would have had $13,000 at SafeMoon’s peak.
Since its top, SafeMoon has dropped over 35% to $0.0000083. Given how much SafeMoon has appreciated, this may actually be a bullish sign. In the past week, SafeMoon has only fluctuated about 10% either way, so some crypto traders are expecting the token to break this trend soon.
Although SafeMoon has a relatively small market capitalization, the token price is a bit misleading. There’s a max supply of over 585,000,000,000,000 tokens, so there are far more coins in supply than other cryptocurrencies like Bitcoin (with a 21,000,000 max supply) and Ethereum (with a current supply of 115,000,000). With so many tokens in circulation, it’s essentially impossible for SafeMoon to ever reach $1, like some investors suggest. To reach this price target, SafeMoon would need a market capitalization about 600 times the size of Bitcoin’s.
Step 1: Open a Binance account.
Since SafeMoon is a new and controversial cryptocurrency token, popular exchanges like Coinbase and Gemini don’t support the asset on their platforms. Due to this, the process of investing in SafeMoon is more involved than some other cryptocurrencies.
You’ll need to make a Binance account to use the platform’s decentralized exchange, PancakeSwap. Creating an account with Binance is easy; you just need to provide an email address and create a password. Depending on where you live, you may have to provide additional information before you’re approved to begin trading.
Once you’re approved to trade, you’ll need to purchase Binance Coin (BNB). Since you’ll eventually be swapping these tokens for SafeMoon, you should buy as much BNB as you wish to invest in SafeMoon.
Remember, names can be deceiving –– there’s a good chance you’ll end up losing close to your entire investment if you decide to invest in pump-and-dump Tik Tok Tokens. While cryptocurrencies like DOGE and SafeMoon could make you a quick buck, they aren’t regarded as viable investments for the long term.
In order to use Pancakeswap, you’ll need to use a software wallet that’s compatible with Binance Smart Chain. Trust Wallet and Metamask are good options, but you must enable them to work with Binance Smart Chain (BSC) before using it for these tokens, as these wallets were initially intended to be Ethereum wallets.
Best Software Wallet: MetaMask
Most cryptocurrency users who interact with decentralized exchanges (DEXs) use MetaMask wallet, as its Google Chrome extension makes it easy to use with other programs on your PC. To set up your wallet to be compatible with BSC, you’ll need to choose “Custom RFP” from the drop down tab in the upper right hand corner of the screen. You can then set up your wallet by providing the following information:
- Network name: Binance Smart Chain
- New RPC URL: https://bsc-dataseed1.binance.org:443
- ChainID: 56
- Symbol: BNB
- Block Explorer: https://explorer.binance.org/smart
Once your wallet is set up with Binance Smart Chain, you can send your BNB tokens to your wallet. Once these tokens are in your wallet, you can use the bridge feature on PancakeSwap to enable your tokens to work with BSC.
Step 3: Make your purchase.
Luckily, buying SafeMoon is much easier than setting up your crypto wallets to interact with PancakeSwap. If Tik Tokers can figure it out, then it can’t be too hard, right?
PancakeSwap is an Automated Market Maker (AMM), meaning that it uses mathematical equations to calculate token prices instead of centralized order books. All you need to do is choose SafeMoon token, and you’ll be able to swap the tokens in your wallet for SafeMoon.
Pancakeswap’s biggest benefit over other DEXs are its low transaction fees; you’ll likely pay less than $1 to process your transaction. However, these low fees come at the cost of centralization; while it’s an attractive short term solution, the small number of validators on Binance’s blockchain raise security concerns.
If you’ve ever used Uniswap, then Pancakeswap should look familiar. While they operate in similar ways, Uniswap is the leading decentralized exchange on Ethereum, while Pancakeswap is the leading DEX on Binance Smart Chain.
Bonus:
After DOGE pumped well over 10,000%, investors are now paying attention to the worst coins on the market, referred to as shitcoins. Shitcoins are fundamentally bad investments, but that doesn’t mean there isn’t money to be made in them. Just look at Dogecoin’s $60+ billion market cap!
Leverage Your Investment & Avoid Capital Gains with BlockFi
BlockFi is a cryptocurrency lending service that lets investors leverage their capital or earn interest on a crypto savings account. With talks of an increased capital gains tax, collateralizing your cryptocurrency to receive a loan is a great way to take profits from your investment without needing to pay capital gains.
Some investors use BlockFi to leverage their investment positions. Since you’ll receive your collateralized cryptocurrency back once you pay back your loan, there’s potential to profit from investments made from your loan as well as the appreciation of your collateralized crypto.
However, if you default on your loan, your cryptocurrency will be used to pay it back. If that happens, you’ll also be required to pay capital gains tax on the collateralized crypto.
For investors who aren’t looking to take on extra risk, BlockFi offers interest bearing cryptocurrency accounts. Simply make an account, deposit your crypto and start earning up to 10% annual interest on your crypto holdings.
Current Crypto Prices
The cryptocurrency industry is far more than just shitcoins pumped by Social Media influencers. This year alone, crypto has taken huge strides towards mass adoption. Visa announced it will be using Ethereum’s blockchain to settle credit card transactions; Institutions are adding billions of dollars of bitcoin to their balance sheets; and over $65 billion has been locked into Ethereum smart contracts.
Is Safemoon a Good Investment?
Getting in early in any cryptocurrency can be an appealing way to get rich quickly. However, most small cryptocurrencies don’t end up pumping like DOGE or SafeMoon, so your money may be better put to use in more established, large cryptocurrencies. With Bitcoin up over 500% in the past year and Ethereum up more than 1,000%, these returns are nothing to scoff at.
Gemini builds crypto products to help you buy, sell, and store your bitcoin and cryptocurrency. You can buy bitcoin and crypto instantly and access all the tools you need to understand the crypto market and start investing, all through one clear, attractive interface. Gemini Crypto Platform offers excellent account management options. You can manage your account at a glance, view your account balance 24-hour changes and percent changes. Get started with Gemini now.