By his own standards, 40-year-old Gabe is no longer “a young man”.
Working in construction for his “entire life” has made his body perpetually ache. Plus, his status as an independent contractor – rather than an employee – means he has no pension or a “401k, or anything like that”.
When coronavirus isolation forced him into a hotel room and away from his job earlier this year, Gabe started looking into cryptocurrencies as a way to plug the monetary gap that quarantine had enforced on his finances.
A week later, boom: his humble $40 (£29) investment in a new – and mostly useless – cryptocurrency called Safemoon had mushroomed into $3,400 (£2,445) in profit. Close to the average American’s monthly salary.
Turning away from established cryptocurrencies like Bitcoin and Ethereum had been strangely fortuitous. Gabe first invested in cryptocurrency in 2017 – when deregulated finance first made its way from darknet psychedelic suppliers to mobile-based investing apps – but lost access to his wallet and cryptocurrency after going through a divorce and misplacing his password.
In the four years since then, hundreds of newer, even more underground forms of cryptocurrency have popped up. Shilled on Reddit threads, discussed on Discord servers and posted by TikTok influencers, these new tokens are experiencing rocket-fuelled gains.
According to stats from cryptocurrency price tracker Coingecko.com, Bitcoin – the world’s number one, most recognised, most used cryptocurrency – reached its current all-time-high on the 13th of April, 2021, climbing by 845 percent since the 14th of April, 2020. That’s a large jump over just one year.
Safemoon, however, leaped 23,225 percent, from $0.00000004 on the 14th of March, 2021 to its current all-time-high of $0.00000933, on the 21st of April, 2021. That’s 27 times more than Bitcoin, in a little over a month.
To spell that increase out in luminous green dollar signs: if Gabe had held on to his $40 investment in Safemoon from early March, it would have been worth tens of thousands of dollars when the value peaked on the 21st of April.
“Hindsight is always a bitch, because you look back thinking, ‘I could have thrown thousands in,’” he says. “But it was basically just a gamble.”
While all investments involve an element of risk, Gabe is part of a new crypto investor cohort who toss small investments into what are called deflationary tokens – or, if you like, meme or “shitcoins”, because they don’t have much real-life use beyond making a few people very rich.
Safemoon has had the most attention, but there are others too, like Hoge, Elongate (named after the balding Tesla daddy) and Bonfire.
Jack, a trader and market analyst with a substantial Twitter following, explains that “these assets hit the market at extremely low valuations of sometimes less than $100-200k market caps” – AKA, they’re cheap.
Because of this valuation – Safemoon’s current all-time-low price on Coingecko is $0.00000004 per token – there is theoretically loads of room for the token’s price to grow. When these extremely low-valued tokens begin sucking in starry-eyed retail investors like Gabe, the peanut-sized price means the token can “reach 10x and higher relatively quick”, says Jack.
Like Gabe, I discovered Safemoon back in March, after browsing the cryptocurrency subreddit SatoshiStreetBets. Similar to its hedge-fund obliterating brother WallStreetBets – which helped to pump the price of Gamestop shares earlier this year – people try to make money on SSB together.
Denizens of SSB and its sister subreddit, CryptoMoonShots, regularly post cryptocurrency tokens that posters say will “x50”, “x100” and help “take you to the moon”. While there are some coins with real-life uses, others seem to do little more beyond making the money printer go: brrrr, brrrr.
Dennis, a 27-year-old IT project manager from Switzerland, chucked 800 Swiss Francs into Safemoon after reading about the project on CryptoMoonShots earlier this year. He had already 10x his money on Hoge, and wanted more. “Everyone was hyping Safemoon because it was already pumping. They’d already x10 or so – so I thought, ‘Fuck it: let’s jump in,’” he says.
Back when it launched in early March, Safemoon could barely break beyond niche, Dorito-dust-fuelled cryptocurrency subreddits. Then, after a sharp jump in price on the 23rd of March, the wider world began taking notice.
“#safemoonisthenewdogecoin,” said rapper Lil Yachy, via his Twitter account, on the 29th of March. YouTuber Jake Paul responded to Yachty a day later: “factssss”.
Jack explains the rise like this: “Uneducated retail [buyers] pile in, seeing the recent returns, having missed the boat on other cryptocurrencies like Bitcoin – and the speculative craze continues.”
Money printer goes: brr.
By the time Backstreet Boys member Nick Carter tweeted “it’s time for blast off [rocketemoji] #SAFEMOON” on the 19th of April, the coin’s price had climbed 9,000 percent above its all-time-low. While some early investors started off small, other larger investors (known as whales) had come out to play.
Brandon, a 25-year-old mortgage broker in-training, invested $100,000 (£72,000) into Safemoon back in March. “All these DeFi (Decentralised Finance) tokens started coming out of the blue, doing 50x, 100x. I thought, ‘If I could do that once, with the amount of money I currently have, I would be set,’” he says.
Brandon threw $100,000 in on the 17th of March and waited. No less than 24 hours later, the price tanked, leaving $35,000 (£25,200) on his balance.
“To see it collapse like that...” He pauses, then groans. “Everyone on Discord and Reddit was calling Safemoon a scam. There were a load of YouTube videos saying, ‘I told you so.’”
Though cryptocurrency is generally more volatile than stocks, tokens like Safemoon bring a new meaning to the idea of “peaks and troughs”. Michaël van de Poppe, a full-time trader with a large following, says of this instability: “I wouldn't call putting money into these projects anything related to investing. It’s gambling and speculating, and should be avoided by most people.”
Still, despite the warnings from high-profile crypto investors and experienced traders, tokens like Safemoon continue to proliferate. Bolstered by celebrity endorsements, TikTok hype, new exchange listings and a flood of retail investors, Safemoon’s price exploded in mid-April, rising to an all-time-high.
After holding his investment through the dip, Brandon had become a millionaire from Safemoon by the time we spoke on the 16th of April, and a multi-millionaire by the 21st of April. “I thought, ‘Listening to a crowd who are convinced of something isn’t going to help you. It’s better to trust your own instincts than trust a crowd that’s swaying by price,’” he says.
The Safemoon price at the time of publication is sitting at around $0.00000438 per token. That’s less than the all-time high, but still far more than anyone paid for one Safemoon in early March. The huge increase of price for a token that has zero utility can be explained by one 21st century acronym: FOMO.
From Brandon the millionaire to Gabe the construction worker, everyone I spoke to said they invested in Safemoon because they wanted to make fast money. They’d seen other tokens reach similar heights, so they jumped in.
“Newcomers see the tremendous amount of money that people make, and they want to have the same in the next few days,” says van de Poppe. Thus, Safemoon’s price sharply rose after breaking free from Reddit.
But staying famous is even harder than getting famous, and cryptocurrencies like Safemoon still have no real-world use. They’re not like Bitcoin, which is a store of value, or Ethereum, which is helping lay the foundations for a wave of new technology and decentralised applications.
“These tokens have zero purpose, aside from making early speculators and themselves rich, as the token itself won't be used for anything,” says van de Poppe. “It’s the flip-side of everything that the cryptocurrency ecosystem tries to achieve.”