Safemoon – What to Know Before Investing
Safemoon is a newer cryptocurrency (became available in March 2021) that is a hot topic for investors. It is often labeled as a Meme coin, and after the success of Dogecoin ($DOGE) and Shiba Inu ($SHIB), people now are wondering if Safemoon will have the same success. This article will cover our thoughts on Safemoon – What to know before investing.
Before we start, I want to preface with saying this is not financial advice and we are not financial advisors. Every investment choice is your own, and you should do proper due diligence prior to investing. That should include many pieces of information that go beyond our thoughts and this article. This post is for informational and entertainment purposes only. Also, at the time of writing we do not hold any Safemoon, nor do we plan on adding it to our portfolio any time soon (if at all).
What is Safemoon?
Safemoon has all the makings of a ‘Meme-coin’, and that is not always a bad thing. Lots of people made a lot of money on other meme-coins ($DOGE and $SHIB for example), and if you catch it early, it could make you a millionaire. However, for every winner, there are usually ten losers.
What makes Safemoon meme-like? If we use our Top 3 Things That Make a Crypto a Meme Coin list, we can see that Safemoon checks all the boxes.
Let’s start with the name, Safemoon. In the crypto world, if a coin is “going to the moon” it means it will skyrocket in price to unimaginable heights and do so in a quick manner. Much like a rocket ship taking off into space. Usually, there is a hefty amount of risk with coins expecting to moon, but for Safemoon, the naming convention tries to alleviate that fear. This crypto, as the Safemoon name implies, is a play off the idea that the coin is a safe investment and will skyrocket. Maybe it will, maybe it won’t. But if we say Safemoon 5x in front of a mirror, it may help convince us!
The second item on the list is low cost per unit, which attracts many Meme-investors. At the end of the day, the price of a crypto is meaningless when you get into it. If you invest $100 into Bitcoin and only get .002 $BTC (at time of writing) or invest $100 into Shiba Inu and get 2.9 million $SHIB, it is the same thing. However, meme coins like to have a low entry price so investors can feel like they own a lot. In the case of $SHIB, it is often wondered if it will hit $1, and if/when it does, they will be a millionaire many times over. And heck, you can buy a burger for $1… so how hard could it be for $SHIB to hit a $1? That’s where Tokenomics comes in, and if you are unfamiliar with the terms (or need a refresher), check out our ARTICLE on it.
The reality is, entry price of a coin doesn’t matter. All that matters is the % loss/gain while you hold it. If Bitcoin goes up 50% and Shiba Inu goes up 50%, you will have $150 worth of value regardless of having .002 or a coin of over 2 million. But the mental side of having millions of something perceived to have value is more power than holding a fraction of it, which is why meme-coins are often priced as they are.
The Third is Celebrity support over case use, which also describes Safemoon. There is a comprehensive list HERE, but in short, celebs such as Jake Paul, Brett Ratner and more support the coin. Unfortunately, Safemoon isn’t widely accepted as a form of payment and is limited in its technological advantages over other crypto projects. So a lot of the support has been hype supporting hope.
Safemoon’s Biggest Pro?
The biggest benefit of Safemoon is dependent upon your opinion of Safemoon. If you are already a believer and have decided to hold for the long term, it could generate a source of passive income for you. Safemoon was created to incentivize long-term investing and deter selling. As such, every Safemoon transaction incurs a 10% fee, of which 5% goes to Safemoon holders and the remaining 5% splits with Binance Coin, added to PancakeSwap’s liquidity pool. Safemoon investors can gain passive income through these incentives.
Safemoon’s Biggest Con?
Unfortunately, Safemoon’s biggest Pro is also its biggest Con. As mentioned, it is better to hold rather than get in and out of the investments whenever there are signs of vulnerabilities. One of Safemoon’s outlining characteristics is the imposition of a 10% fee for selling Safemoon. The motive is to encourage holding, but many investors will perceive it otherwise. Now when selling, not only would you have to be able to absorb the 10% penalty, but also consider any tax implications if you are in a country that imposes such things. That makes it even more difficult to turn a quick profit.
Whether or not you should start stacking Safemoon is up to you. If you’re a fan of volatile, meme-type token that lacks liquidity and availability, AND you are willing to hold on to it for the long term, then Safemoon may be for you.
However, if you got into crypto because you are a fan of new, decentralized technologies that give you the freedom to control your own finances, then you may want to look elsewhere in 2022.