Penny cryptocurrencies have gained popularity in recent years, with more and more people trading them. Some of the most popular penny cryptocurrencies are Doge clones, like Shiba Inu or Akita.
But in March 2021, a new alt coin made waves in the altcoin trading community, which investors call the SafeMoon.
It is a decentralized cryptocurrency that joined the volatile market of the crypto industry, giving traders more options to diversify their investment portfolios.
Safemoon is built on the Binance Smart Chain and uses the BEP-20 token standard. The cryptocurrency gets its name from the common crypto saying 'To The Moon,' which often indicates that the price of crypto will rise to the moon.
But what is SafeMoon, how does it work, and who can use it? Answering these questions will help you understand the purpose of SafeMoon and everything else that you need to know. This article will answer these questions and discusses crypto in detail below.
What Is SafeMoon?
SafeMoon is a decentralized finance (Defi) token and ecosystem that incentivizes both holding and trading. This token is known for its volatility and the price pumps that come with it.
SafeMoon reached an all-time high of USD$0.000014 in April 2021, a mere month after its launch. It was about a 20,000% increase before a drop of about 80%. However, SafeMoon price prediction indicates that it may realize a steady rise between 2022 to 2030, which would be in line with the popularity of penny cryptos.
The tech behind SafeMoon
SafeMoon seeks to promote peer-to-peer (P2P) trading and reduce transaction costs through its platform. It eliminates the need for a third party, such as a central bank or financial institution.
SafeMoon is redistributing a percentage of every transaction on the network back to holders. For example, when someone buys SafeMoon, they are charged a small percentage of the total transaction. That percentage is redistributed to all other SafeMoon holders. This system aims to incentivize holding rather than day trading, which can stabilize prices and reduce volatility.
SafeMoon’s blockchain has three functions: reflection, liquidity pool acquisition, and burn. Let's get to know them below:
- Reflection is a function that addresses mining outputs. It encourages holders to earn more rewards based on their tokens. It also discourages selling pressure caused by the early adopters selling the coins.
- Liquidity pool acquisition is a function that establishes a consistent price floor. It aims to avoid great dips in the market caused by whales selling their tokens by imposing a 10% fee for each transaction and giving existing holders 5% of it.
- Burn is when a small percentage of every transaction is taken out of circulation and sent to an address out of which it cannot be retrieved. Burning reduces the total supply, which in the right conditions can increase prices. SafeMoon uses manual burning to help increase openness.
SafeMoon Use Cases
SafeMoon has a variety of use cases, just like any other cryptocurrency. The uses include the following:
- Buying And Selling : You can buy and sell SafeMoon like any other cryptocurrency. However, users are discouraged against this to help curb the extreme volatility.
- Holding Crypto : SafeMoon can be held like any other cryptocurrency. Additionally, it has a staking system that allows users to earn extra income for holding. This makes SafeMoon a Web3 cryptocurrency.
- Payments : SafeMoon can be used to make and receive payments, at least in theory - it has low liquidity and it is not a preferred transactional cryptocurrency.
Where To Buy SafeMoon
Unlike some other cryptocurrencies, you can't buy SafeMoon through major crypto exchanges.
- One way is to buy SafeMoon for Tether on the non-KYC exchange Bitforex.
To buy on Bitforex, you first need to purchase USDT Tether on any exchange that lets you. Then take your Tether to Bitforex and buy SafeMoon.
A similar way is to first buy USDT Tether for your fiat money, but then buy Safemoon on BitMart.
- The DEX way to purchase it is for other crypto through pancakeswap.finance, a decentralized exchange built on Binance Smart Chain.
To buy SafeMoon on PancakeSwap, you first need to purchase Binance Coin (BNB) or another cryptocurrency that can be swapped for BNB on an exchange. Once you have BNB, you can then use it to purchase SafeMoon on PancakeSwap.
How to cash out SafeMoon
If you want to take profits on your SafeMoon holdings, the best way to do that is to sell SafeMoon for the Tether stablecoin.
The easiest way is to sell SafeMoon for USDT on Bitforex. Bitforex is a Hong Kong based exchange that doesn’t require KYC - not even to withdraw Tether.
Pros and Cons of SaFEMOON
Advantages Of SafeMoon
There are numerous advantages of SafeMoon that make it an attractive investment. Some of these advantages include:
- It has a low total supply, leading to price increases as demand increases.
- It has a reflection function that encourages holders to earn more rewards based on their tokens.
- The latest version SafeMoon 2.0, has low transaction fees, making it more attractive for investors and other future use cases.
- It has a consistent price floor that helps avoid great dips in the market.
- It also aims to reduce volatility by redistributing a percentage of every transaction made back to holders.
Disadvantages Of SafeMoon
SafeMoon also has some disadvantages that potential investors should be aware of. Some of these disadvantages include:
- It is known for extreme volatility, such as the high price rise one month after its launch and the massive drop.
- It's not as liquid as other cryptocurrencies such as Bitcoin, making it less desirable among vendors who want to accept crypto payments.
- If the prices drop and investors decide to sell, they'll incur capital losses and the 10% penalty charged for selling SafeMoon.
SafeMoon is a unique cryptocurrency that has the potential to become a major player in the industry. However, it's still relatively new and volatile, making it a risky investment. Therefore, research well and read resources such as this article to understand it better. Doing so will help you make informed decisions and avoid financial losses.