New cryptocurrency SafeMoon suddenly plunges in value
New cryptocurrency SafeMoon has suddenly plunged in value.
The volatile coin lost two thirds of its value on Thursday
morning, plunging from $0.000015 to $0.000005 in just an hour. It later recovered
to $0.000007.
The decentralised finance token was launched by CEO John
Karony earlier this year.
SafeMoon appeared to acknowledge the huge drop, with its
official account writing on Twitter: “Who said there wouldn’t be turbulence”.
The digital coin had gained popularity in recent days and
had surged in value.
It launched this month, but what exactly is SafeMoon? Here,
we explain everything you need to know.
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.
Before investing you should do your research and make sure
that companies are legit.
What is SafeMoon?
Not a huge amount is known about SafeMoon meaning the risk
to your investment may be even higher.
Technically it’s not a cryptocurrency - it’s an 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.
SafeMoon claims it will reward people who buy and hold onto
the cryptocurrency.
For those who sell the currency on 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.”
SafeMoon charges sellers a fee worth 10 per cent of the
amount of the cryptocurrency they are flogging to buyers.
It then claims to reward investors that hold onto their
purchases by redistributing 5 per cent of the cash gained from the penalty
charge among those who already have the currency.
These multi-level marketing tactics mean that is requires
more buyers to keep buying to keep the price up, making it a very risky
investment.
As always you should never invest any money that you aren’t
prepared to lose.
How is it performing?
SafeMoon had recorded a 99 per cent rise on Sunday after
Bitcoin had its biggest single day drop for months.
It comes after Dogecoin’s price increased 91 per cent in 24
hours after Elon Musk tweeted about the cryptocurrency - and a 20,000 per cent
increase from this time last year.
The cryptocurrency, which started as a joke, has risen 365
per cent in the past month to close to 20p per unit.
It comes despite the currency not being listed on any
cryptocurrency exchange platforms
Dogecoin has risen from relative obscurity to become a
cryptocurrency that is making punters serious money.
What are the risks of investing in cryptocurrency?
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.
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