Should You Buy Safemoon? 4 Pros, 4 Cons

Last Updated November 29th 2021
11 Min Read

Safemoon came to the crypto market in March 2021, but it didn't take long for the coin to capture the attention of crypto investors. Safemoon quickly whipped up a frenzy of interest within a month of launch. In a matter of days, the price of Safemoon shot up by 7,000%.

Safemoon has many sceptics believing it's a scam or a Ponzi scheme. Undoubtedly, as this post will show, Safemoon is a volatile and highly speculative investment with a great deal of risk for investors. But does that mean you shouldn't buy Safemoon? Is it worth investing in Safemoon, and can Safemoon make you a millionaire?

In this post, we aim to take an unbiased view of Safemoon by looking at the 4 pros and 4 cons of buying Safemoon. In conclusion, you can decide to buy Safemoon or choose another altcoin for investment. 

What Is SafeMoon (SAFEMOON)?

In March 2021, Safemoon launched onto the crypto market with 777 trillion Safemoon tokens at a starting price of $0.0000000010. Before launch, developers burned 223 trillion tokens.

Safemoon is community-driven, generating liquidity for DeFi using the token. Built on the Binance Smart Chain (BSC), Safemoon uses proof of authority (PoA) consensus and runs on the BEP-20 standard.

Safemoon has three core functions for each trade:

  1. Reflection – the 10% Safemoon fees for transactions distributed to Safemoon token holders.
  2. LP (Liquidity Pools) Acquisition – transaction fees go to liquidity pools on PancakeSwap and other platforms.
  3. Burn – Safemoon burns tokens to help stabilise Safemoon prices.

Safemoon recently launched eleven Safemoon NFTs on Opensea.io. With the growing popularity of NFTs, that could be a good move for Safemoon.

Safemoon has also branched out into merchandise.

SafeMoon offers a simplified solution to the DeFi process with high levels of security for yield farming or liquidity mining, generating a good APY for Safemoon investors.

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Pro #1 – Earn A Passive Income With Safemoon

Every Safemoon transaction incurs a 10% fee. 5% goes to Safemoon token holders, and the remaining 5% splits with half to Binance Coin (BNB), added to PancakeSwap's liquidity pool, and the remaining half sells through a smart contract in BNB.

If you HODL Safemoon, you'll receive incentives, but you'll have to pay 10% fees if you sell. The idea behind this process is to help stabilise Safemoon prices by preventing large sell-offs of Safemoon tokens.

When an investor sells their Safemoon, you receive rewards. So the more people sell, the more rewards you earn.

Check Out: Will SafeMoon (SAFEMOON) Make Me Rich?

Con #1 – Supply Of Safemoon Could Exceed Demand

Safemoon has a massive maximum supply of 1,000,000,000,000,000 Safemoon coins. The crypto market, like most other financial markets, works on supply and demand. With an almost unlimited supply, there's decreased demand. Despite burning tokens, Safemoon could struggle to see the exponential growth of altcoins with a more limited supply.

Institutional investors are less likely to be interested in such a speculative investment as Safemoon.

Pro #2 – Safemoon Has A Valuable Meme Crypto Brand

There are over 14,700 listed cryptocurrencies. Some have failed to gain traction and remain near the bottom of the list. But Safemoon nailed their branding straight out of the gate. Indeed, as Safemoon trended on social media, some Safemoon critics describe its mass following as cult-like.

Realistically, Safemoon has nothing to distinguish it from other cryptocurrencies. It has no technological edge over competitors, so Safemoon positioned itself as a meme crypto brand by creating a solid social media presence.

Con #2 – Safemoon Is Volatile And Lacks Liquidity

Safemoon is exceptionally volatile, as are many meme altcoins. But Safemoon may be more volatile than many other cryptocurrencies.

The lack of liquidity leads to significant price swings. Adding to the liquidity issues is the fact that the leading cryptocurrency exchanges do not list Safemoon. Coupled with Safemoon's discouragement to selling, it results in risky and speculative crypto.  

The only way of trading Safemoon, right now, is to swap for BNB via PancakeSwap's decentralised exchange.

Pro #3 – Safemoon Has (Some) Support From High-Profile Influencers

Without real-world utility, Safemoon's only route to success may be via support from high-profile influencers.

This year, Dave Portnoy, Barstool Sports founder, said he had invested $40k in Safemoon. Unfortunately, his accompanying statement did nothing to ease Safemoon sceptics' concerns. He said, "Why? I don't know why. It could be a Ponzi scheme," Portnoy went on to say, "I like the word moon because that's where I want to go."

For Safemoon to gain credibility, it requires more support from high-profile investors or influencers.

Con #3 – Safemoon Has No Utility

Safemoon sceptics quite rightly say that it has no utility. No major merchants accept Safemoon as a payment method. You can't trade Safemoon for fiat currencies, and it's not available to buy or trade on the leading cryptocurrency exchanges.

Safemoon has no unique features. It has no technological advantages or a competitive edge like faster transaction speeds, interoperability, security etc.

Safemoon has recently launched a secure digital wallet on Google Playstore and Apples Inc and has outlined plans for a Safemoon video game and an app. But, as yet, details on these projects are not forthcoming.

Without real-world utility, Institutional investors will look to other cryptos with better utility because of increased growth potential and scalability, something Safemoon could struggle with in the future.

The lack of legitimate uses for Safemoon causes the opinion that it could be a pyramid scheme or Ponzi scheme.

Pro #4 – Safemoon Is Inexpensive To Buy

Throughout this post, we've discussed the risks of buying a volatile cryptocurrency like Safemoon. Many crypto enthusiasts are asking, "Is Safemoon legit?" and crypto experts advise caution when investing in any crypto without real-world purpose and one pumped up with the hype.

But, you can sign some of the dangers off against the fact that you don't need to invest significant capital outlay to buy Safemoon.

Today, you can buy Safemoon for $0.000002926. For $10, you could buy 3,417,634.9965823 Safemoon.

Don't Miss: Why Is SafeMoon So Cheap?

Con #4 Centralised Ownership

One of the most significant cons of buying Safemoon is it does not have its own blockchain. As Safemoon is on the Binance Smart Chain (BSC), it is under the platform's control. BSC could change the rules at any time, and Safemoon has no say in the matter.

Reportedly, Safemoon's CEO owns over 50% of Safemoon's liquidity and, with the 10% transaction fees, many insiders at Safemoon are making a great deal of passive income.

This scenario is typical of a classic Ponzi scheme. Some have compared Safemoon to Bitconnect, a cryptocurrency that went under due to allegations of fraud. Factually, Safemoon is not unlike many popular altcoins in that early investors and platform developers get wealthy, and later buyers end up losing their money.

There's no evidence for proof of Safemoon being a Ponzi scheme. But, if you plan to buy Safemoon, be aware of the risks.

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Recap Of Should You Buy Safemoon? 4 Pros, 4 Cons

Safemoon is a relatively new crypto to market, and very few vendors accept Safemoon as a payment method.

None of the leading cryptocurrency exchanges list Safemoon and, right now, buying Safemoon is complex and fiddly. On Trust Wallet, you have to buy BNB, convert to Smart Chain and then convert it on PancakeSwap. Safemoon has launched a secure wallet, which should make the process a bit easier.

If you use an external wallet for Safemoon, you have to pay 10% fees to transfer your tokens. If you have a Safemoon wallet, these fees are still applicable if you transfer from or to an external crypto wallet.

Safemoon holders receive a percentage of the 10% fees when someone moves or sells their Safemoon tokens.

Safemoon has no institutional support because of the lack of real-world utility, but it has a loyal band of followers that believe in the meme coin. Safemoon sceptics describe the mass followers as cult-like.

Safemoon has launched eleven NFTs on the OceanSea.io platform recently. It's too soon to tell if these additions will impact the popularity of Safemoon.

Many crypto enthusiasts and experts are cautious of buying Safemoon because of the branding hype and because Safemoon insiders are making a lot of money from the transaction fee allocation.

On the plus side, you can buy Safemoon at a low price, meaning you do not have to risk the bank to add Safemoon to your crypto portfolio.

Another concern is that Safemoon is not a blockchain. The protocol sits on the Binance Smart Chain (BSC), which means it's not a decentralised blockchain because BSC has overall control.

Financial experts once said that Bitcoin was a Ponzi scheme. But Bitcoin has been around for a long time now, disproving the Ponzi theories. Bitcoin became widely accepted as a payment method via vendors and is available on every crypto exchange.

The leading crypto exchanges have a reputation and a duty of care to their users to ensure that the cryptos they list are likely to be around for the long term. And, right now, the consensus from crypto experts is that Safemoon is over-hyped and, because of no real-world purpose, is unlikely to garner institutional support.

Weigh up the pros and cons before deciding to buy Safemoon. As it's less than a year old, time may appease the current concerns that Safemoon could be a Ponzi scheme.

Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor's financial circumstances.

Trading or investing in financial instruments such as cryptos may not be suitable for all investors. It does involve risk and the possibility of a loss of capital. There are no guarantees for profiting from cryptocurrencies, and it's advisable only to risk what you can comfortably afford to lose.

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Read More:

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Should You Buy Safemoon? 4 Pros, 4 Cons - FAQs
Where can I buy Safemoon?
Could I become a millionaire from buying Safemoon?
Will the leading cryptocurrency exchanges list Safemoon?
How do I store my Safemoon?
Is the Safemoon wallet safe?
Will Safemoon reach 1 dollar?
Does Safemoon have a future?