How To Buy Safemoon – Forbes Advisor

Spend some time following crypto online and chances are you’ll hear people talk about a cryptocurrency that’s “going to the moon.” SafeMoon has built its brand on this popular turn of phrase, although there are quirks to this crypto token that make it more challenging to buy (and potentially riskier) than other leading cryptocurrencies.

What Is SafeMoon?

SafeMoon is a cryptocurrency token that launched in early 2021, using blockchain technology developed by Binance.

Throughout 2021, SafeMoon received celebrity endorsements from the likes of sports blogger David Portnoy, rapper Lil Yachty and YouTuber Jake Paul. This helped quickly drive up SafeMoon’s value, although as of writing its price has fallen nearly 90% from its peak.

The most distinctive feature of SafeMoon is that it charges a 10% fee whenever you sell the token. In other words, if you sold $1,000 of SafeMoon, you would pay a $100 fee on the sale. This is in addition to any fees you may owe a crypto exchange for facilitating the sale.

“The developers of SafeMoon say that this is done to encourage long-term holding, by both discouraging selling and rewarding holders of the coin,” says Shaun Heng, vice president of growth and operations at CoinMarketCap, a price tracking website for cryptocurrencies.

SafeMoon takes the proceeds of all sales fees and gives 50% to current token holders in a distribution that is called a “reflection.” The other half of the fee goes into a liquidity pool that SafeMoon uses to maintain price stability.

SafeMoon does not have any other special use case besides being a store of value. It doesn’t facilitate any automated contracts or decentralized applications, like Ethereum.

SafeMoon vs SafeMoon V2

In December 2021, SafeMoon launched an updated version of the token called SafeMoon V2. The new token aims to consolidate the original version at a ratio of 1 to 1000, and significantly lower transaction costs.

Note that people who hold their original SafeMoon tokens in crypto wallets will not have their coins migrated automatically to V2. Wallet holders need to manually transfer their SafeMoon tokens to the V2 platform.

Switching holdings to V2 is easy. For SafeMoon Wallet users, just update to the latest version of the app and follow the consolidation instructions. For users with any other type of crypto wallet, visit the SafeMoon Swap site to consolidate.

If you hold SafeMoon tokens on an exchange, there’s no need to do anything, the exchanges will handle the migration process and notify you when the process is complete.

For SafeMoon V2, the new transaction fee is 2%. Like the original version, 50% of the fee is distributed to current token holders. The other 50% is divided among the SafeMoon liquidity pool and the managers of the overall SafeMoon ecosystem.

How to Buy SafeMoon

There are some hurdles involved in buying SafeMoon, the biggest for beginners being that the only way to pay for purchases of SafeMoon is with other cryptocurrencies. That’s because it’s not currently listed on any exchanges that accept fiat currency, like dollars.

Which brings up another of SafeMoon’s challenges: Major exchanges like CoinBase and Kraken do not support trading in SafeMoon. It’s also not available on apps like Robinhood or SoFi Invest.

To buy SafeMoon, use SafeMoon’s proprietary SafeMoon Swap to trade other crypto, like Binance Coin (BNB) for SafeMoon tokens. A few other crypto exchanges support trading in SafeMoon.

If you don’t already have crypto, you’ll likely need to create an account on another exchange that allows you to exchange dollars for coins, as you can with many of Forbes Advisor’s choices for best crypto exchanges. You’ll then have to withdraw the coins from the exchange, place them in a wallet and then transfer those coins onto an exchange with SafeMoon.

Disadvantages of Buying SafeMoon

SafeMoon is a risky investment because of high volatility, meaning the price can swing up and down dramatically. While this is true of any cryptocurrency, if you decide to bail on SafeMoon, not only do you take your investment loss, but you will also lose another 10% because of the selling fee.

In addition, SafeMoon is not a good fit for frequent trading because every time you sell, you’re paying that sizable fee. Further, since it’s not listed on major exchanges, SafeMoon is also less liquid and it takes more work to convert it into cash, as you need to convert it to BNB first.

The fact SafeMoon isn’t on the major exchanges is a giant red flag, notes Jeremy Britton, CFO of Boston Trading Co, a crypto investment fund. “The exchanges have done their due diligence and found the project lacking. Ignore the experts at your own risk,” he says.

Advantages of Buying SafeMoon

As a memecoin, SafeMoon has the potential to go viral and if it does, and its value could shoot up, as its name aspires, to the moon. Consider, for example, what happened with Dogecoin: The cryptocurrency’s value went up by more than 200 times over a few months in 2021, simply because of word of mouth.

If you plan on holding SafeMoon over the long term, you’ll also benefit from the reflections as you receive a portion of the fee incurred whenever other people sell their tokens. This is a financial incentive you won’t get from holding most other popular cryptocurrencies, where you only make money if the price goes up.

In addition, SafeMoon’s recent SafeMoon 2.0 update lowered transaction fees, which could make it more appealing to exchanges in the future and for other use cases.

Should You Buy SafeMoon?

SafeMoon is a fairly high-risk, long-term investment, so before buying SafeMoon, make sure you have the nerves to accept short-term losses.

Even then, Britton is not convinced of SafeMoon as an investment. “I would suggest that anyone considering SafeMoon should run away screaming, or do some due diligence and then run away screaming,” he says.

But that doesn’t mean you have to stay out of crypto entirely. “Rather than risking your money on a token that is difficult to buy, and may become impossible to sell, consider a coin that is in the top 20, listed on all major exchanges, or invest in a diversified crypto fund. With major recognized names and decent market liquidity, it will be easy to exit your position when you need to sell,” he says.

If you do decide to buy SafeMoon, just make sure whatever you invest is money you can afford to lose.