Safemoon is a new cryptocurrency token that uses the Binance Smart Chain as its blockchain of choice. The token has gained attention from investors, as its price has appreciated rapidly in the past few weeks. The token doesn’t just go up, however. On April 21st, the token decreased over 60% in value from the prior day, leaving investors with a fraction of their investment. As a general rule of thumb, you should be weary of any cryptocurrency project that has “To the moon” across the front page of its website.
What is Safemoon?
Don’t be fooled by Safemoon’s buzz-word filled website. The token has no real world functions, and other cryptocurrencies on Ethereum can do everything Safemoon seeks to do but better. Being that the token is on Pancakeswap, a “decentralized” exchange ran in conjunction with Binance, the token tries to categories itself as a decentralized Finance “DeFi” token, but this is far from the case.
Safemoon works similarly to many other pyramid schemes. Like other pyramid schemes, early investors can make a lot of money, and late investors can lose a lot of money. Safemoon relies on investors buying the token and not selling it. To incentivize people to stay invested in a coin with little real-world value, Safemoon charges a 10% fee when you sell your Safemoon tokens. These tokens are then split between other holders of Safemoon, further incentivizing users to hold their investment.
Brief History of Safemoon
Safemoon is a very new cryptocurrency that uses the Binance Smart Chain (BSC) to secure its network. Binance Smart Chain is eerily similar to Ethereum, and it has very similar code to that of Ethereum. The major difference is that BSC is already Proof-of-Stake, an upgrade the Ethereum Foundation is still working on.
Safemoon started trading in March for $0.000000001, and it’s currently trading at $0.00000455. While this is a huge increase in terms of percentage gains, the crypto token is extremely volatile. The “safe” part of Safemoon is deceiving –– Safemoon is one of the highest risk investments you could possibly add to your portfolio.
Step 1: Open an online account.
Safemoon isn’t as accessible as cryptocurrencies like Dogecoin, so getting passengers to join the trip to the moon will be harder for the company. Safemoon isn’t a very legitimate cryptocurrency token, so popular exchanges like Coinbase and Gemini don’t support the asset.
Instead, you’ll need to make a Binance account to use its decentralized exchange, Pancakeswap. Pancakeswap works in a similar way to Uniswap, but it’s much less decentralized since it runs through Binance’s ecosystem. Since Binance Chain uses the BEP-20 token standard (which is different from Ethereum ERC-20 tokens), the platform can only swap between certain, lesser known cryptocurrencies.
To use Pancakeswap, you’ll need to buy BNB to pay fees on the Binance blockchain. Once you’ve bought your BNB on binance, you also need to convert your tokens to Wrapped Binance Coin (WBNB) and send it to your compatible crypto wallet. Once you’ve got Wrapped BNB in your crypto wallet, you’re ready to hop on the rocketship and arrive “safely” on the moon with 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 coins. While cryptocurrencies like DOGE and Safemoon could make you a quick buck, they aren’t regarded as viable investments for the long term.
Step 2: Download a Software Wallet.
Hardware wallets are great for crypto investors looking to securely store their crypto assets offline, but none currently support BEP-20 tokens. Ledger supports BEP-2 tokens, but these aren’t the same as BEP-20. BEP-2 tokens use Binance Chain, while BEP-20 tokens use the Binance Smart Chain.
In order to use Pancakeswap, you’ll need to use a software wallet that’s compatible to the exchange. TrustWallet and Metamask are good options, but you must enable them to work with Binance Smart Chain (BSC) before using it for these tokens, as the wallet was initially made as an Ethereum wallet.
Best Hardware Wallet: Ledger Nano S
Ledger has been in the hardware wallet business before since 2014, and the wallet can hold over 1,000 different cryptocurrencies. Although it can’t be used for Safemoon, you probably don’t want to hold onto your Safemoon tokens for all too long anyway. Ledger supports a ton of altcoins, and it also supports popular cryptocurrencies like Bitcoin, Ethereum, Litecoin and XRP.
Best Software Wallet: Metamask
Most cryptocurrency users who interact with decentralized exchanges use Metamask wallet, as its Google Chrome extension makes it easy to use with other programs on your PC. To do this, you’ll need to choose “Custom RFP” from the drop down tab in the upper right hand corner of the screen. Then, you’ll need to provide information about the Binance Smart chain to connect your wallet. The information you need includes:
- 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 you’ve made your Metamask compatible with BSC, you’re ready to make your purchase. This is your last chance to use your funds to buy a more sustainable cryptocurrency; rumor has it that Safemoon is running low on fuel, and the trip to the moon may not be as safe as the company makes it seem.
Step 3: Make your purchase.
Surprisingly, buying coins on Pancakeswap is a much more simple process than setting up your Metamask wallet and Binance account. The platform is an Automated Market Maker (AMM), meaning that it uses math to calculate token prices instead of order books. This way, all you need to do is choose Safemoon token, and you’ll be able to convert the WBNB tokens you bought on Binance to Safemoon tokens. Pancakeswap’s biggest benefit over other DEXs are its low transaction fees; you’ll likely pay less than $1 to process your transaction.
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 $40+ billion market cap!
Trade, Sell or Convert your Safemoon
When you want to sell your Safemoon, you’ll be charged 10% as a fee for exiting your position. This incentivizes naive users to hold their investment, even if there are better opportunities in the market. These fees are then distributed to investors who don’t sell their tokens, further incentivizing investors to keep their investment in the token.
Current Crypto Prices
Lots of subgroups of cryptocurrencies have gained attention in 2021. Namely, decentralized finance (DeFi) tokens, non-fungible tokens (NFTs) and shitcoins have gained traction among retail investors. As a general rule of thumb, you can monitor Bitcoin’s price to get an idea of market sentiment in the cryptocurrency industry.
Is Safemoon a Good Investment?
From a fundamental perspective, Safemoon is by no means a good investment. However, there may be money to be made, as seen by early investors in DOGE. The price of Safemoon is extremely volatile, and even with the price plummeting north of 50% today, the cryptocurrency token is still up over 1,000% in the past few weeks.
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