Like the dot com bubble in the late 90s, the cryptocurrency industry is still in its infancy. It’s likely that many smaller cryptocurrency projects won’t last in the long term, as many of these projects have small teams that have yet to deliver on their promises. One of the hottest small projects right now is SafeMoon, a token on Binance Smart Chain (BSC).
Cryptocurrency investors coined the term “shitcoin” to describe crypto assets with either no justifiable value or no utility. More and more useless coins are being made on Binance Smart Chain, as these tokens are easy to produce, and Binance’s blockchain attracts many retail investors due to its low transaction fees. For these reasons, Tik Tok influencers have been showing off SafeMoon to their followers, pumping the price of the crypto asset.
What is Safemoon?
SafeMoon is among the 1st cryptocurrencies on Binance Smart Chain to gain mainstream attention. Most of this attention has been gained from social media platforms, namely Twitter and Tik Tok.
If you visit SafeMoon’s website, you’ll be greeted by a plethora of crypto-related buzzwords. Terms like “Static Rewards” are used to hide the token’s resemblance to a pyramid scheme. These “static rewards” increase the amount of SafeMoon investors own based on how long they hold their investment.
To fund this, SafeMoon charges investors 10% to simply sell their tokens. This keeps investors from investment, even if SafeMoon doesn’t provide any real value.
SafeMoon classifies itself as a decentralized finance (DeFi) token. However, for well-versed cryptocurrency enthusiasts, it’s hard to consider anything on Binance Smart Chain as a DeFi token. While BSC shares many traits with Ethereum, such as smart contracts, it suffers from a huge lack of decentralization. To be part of Binance Chain’s network, investors must stake more than $11 million dollars. With such a high cost to be part of the network, the network is controlled by a few well off Binance Coin holders, including people involved with Binance directly.
Dave Portnoy and SafeMoon
Calling these highly speculative, pyramid-scheme-esque cryptocurrencies “shitcoins” doesn’t explain the complete nature of these investments. Instead, “Tik Tok Tokens” better describes the nature of these assets. With Tik Tok influencers promoting cryptocurrencies like SafeMoon, much of this newfound traction can be attributed to SafeMoon’s social media promotions.
As of May 17 2021, Dave Portnoy, founder of Barstool Sports, has voiced his allegiance to SafeMoon. He announced his support on Twitter, encouraging his followers to buy the crypto token. Admitting that he doesn’t really know what SafeMoon is, Portnoy told his followers: “If it is a ponzi [scheme], get in on the ground floor.” However, SafeMoon is far from being on the ground floor. The token is currently trading for a 1,000% premium over its price in April.
Brief History of Safemoon
SafeMoon has only been trading for about 2 months, and it’s appreciated more than the S&P 500 over the last decade. The token began trading in March for $0.000000001 before skyrocketing to an all-time high of over $0.000013. To help understand these gains, an investor who bought $10 of SafeMoon at $0.000000001 would have had $13,000 at SafeMoon’s peak.
Since its top, SafeMoon has dropped over 35% to $0.0000083. Given how much SafeMoon has appreciated, this may actually be a bullish sign. In the past week, SafeMoon has only fluctuated about 10% either way, so some crypto traders are expecting the token to break this trend soon.
Although SafeMoon has a relatively small market capitalization, the token price is a bit misleading. There’s a max supply of over 585,000,000,000,000 tokens, so there are far more coins in supply than other cryptocurrencies like Bitcoin (with a 21,000,000 max supply) and Ethereum (with a current supply of 115,000,000). With so many tokens in circulation, it’s essentially impossible for SafeMoon to ever reach $1, like some investors suggest. To reach this price target, SafeMoon would need a market capitalization about 600 times the size of Bitcoin’s.