A NEW cryptocurrency called SafeMoon has gained popularity in recent months and surged in value.
It launched in March, but what exactly is SafeMoon? Here, we explain everything you need to know.
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But first, a word of warning: buying cryptocurrencies and decentralised finance tokens as well as stocks and shares is a risky business.
Investing is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the money.
Cryptocurrencies and decentralised finance tokens are also highly volatile, so your cash can go down as well as up in the blink of an eye.
What is SafeMoon?
Not a huge amount is known about SafeMoon meaning the risk to your investment may be even higher.
SafeMoon technically isn’t a cryptocurrency but a DeFi token, according to its website.
DeFi stands for decentralised finance token. They are very complex but essentially aim to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
Like Bitcoin they use a complicated method called blockchain technology.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
SafeMoon claims it will reward people who buy and hold onto the cryptocurrency.
While those who sell the currency will be slapped with a penalty.
Its Facebook page states: “Remember, getting to the moon takes time and the longer you hold the more tokens you pick up.”
This is known as multi-level marketing or a pyramid selling scheme.
Experts warn that these can sometimes be a sign of a scam and make it a very high risk investment.
Laith Khalaf, financial analyst at investment platform AJ Bell, previously told The Sun that although long-term investment is encouraged, SafeMoon “doesn’t sound too different from a pyramid selling scheme”.
He added: “You’re simply reliant on someone further down the line being willing to pay more than you did to turn a profit, which is a risky bet indeed.”
How much is SafeMoon worth and will the price go up?
The value of SafeMoon is currently sitting at $0.000004939 – and it’s up by 23% over 24 hours, according to CoinMarketCap.
In comparison, it hit its peak on April 20 when it reached $0.000014.
SafeMoon recorded a 99% rise in one day last month after Bitcoin had its biggest single drop for months.
The latter has since dived further after Tesla boss Elon Musk withdrew his support for the currency and China announced a further crackdown.
Mr Musk had previously said his car firm had bought $1.5billion of Bitcoin and said his business would accept them as payment for its cars.
However, he later said the electric car company would not accept the digital currency due to environmental concerns over how it is mined.
China last week also banned banks from providing services related to cryptocurrency transactions, and warned investors against speculative crypto trading.
It’s impossible to say whether the value of SafeMoon will rise due to the volatility of cryptocurrencies.
If you’re keen to invest, make sure you don’t put in more cash than you can afford to lose.
Is SafeMoon legitimate?
It is unclear if Safemoon is legitimate. Very little is known about SafeMoon and this could mean that your money is at higher risk.
This is because cryptocurrency firms are not regulated. This means that you won’t have any protection if things go wrong.
Investing is always a risk but investing in cryptocurrency is an even higher risk as they are VERY volatile.
SafeMoon’s US founders have been holding “Ask Me Anything” sessions to reassure investors.
UK crypto asset businesses must register with the Financial Conduct Authority – and you can check to see if they are on the Financial Services Register or if they are on a list of firms with temporary registration.
There is also a list of businesses not registered. If they are on this list then they may be operating illegally.
Even if they are on the list the city watchdog is not responsible for regulating them and they don’t have any power over how they conduct business with customers.
Essentially it is very hard to tell which firms are real and which ones are scammers.
Currently SafeMoon is listed on the BitMart exchange as well as major leading platform Coinbase.
How to spot crypto scams
CRYPTO scams are popping up all over the internet. We explain how to spot them.
- Promises of a high or guaranteed return – Does the offer look realistic? Scammers often attract money by making fake promises.
- Heavy marketing and promotional offers – If they are using marketing tricks to con customers you should beware.
- Unamed or non-existent team members – Just like any business you should be easily able to find out who is running it.
- Check the whitepaper – Every crypto firm should have a white paper. This should explain how it plans to grow and make money. If this doesn’t make sense, then it could be because the founders are trying to confuse you.
- Do your research – Check reviews online and Reddit threads to see what other people think.
Brits are being warned they risk losing all of their money if they invest in bitcoin and other cryptocurrencies.
It comes after a ban on some crypto-related investment products.
People considering investing in Bitcoin or shares and stocks have also been warned over “risky” tips being shared on TikTok.