Should You (or Anyone) Buy Bonfire?

Bonfire aims to protect buyers from a volatile market, but it has been a bumpy ride so far.

Bonfire is a cryptocurrency token that launched in April. According to its website, it gives holders a refuge from the storm, meaning the volatile crypto market. If you invest in Bonfire, you can collect taxes when others sell and "watch your profits soar."

It didn't take long for Bonfire to find an audience, and early returns were promising. In two weeks, it hit 100,000 holders. By May 10, it had seen a price increase of over 1,700%. But the success didn't last, as the value has steadily declined since hitting that all-time high in early May.

That's not an issue unique to Bonfire, as the entire market has been shaky recently. If you're figuring out which crypto to buy, the question is whether Bonfire has the potential to bounce back or if this token's toast.

How Bonfire works

Bonfire is one of many new tokens that employs static rewards, which are a tax on sellers that are used to reward holders.

Here's how Bonfire's static rewards work -- every transaction has a 10% fee. For example, if someone sells 10 million Bonfire tokens, 1 million would go toward the fee. Half the fee is redistributed to everyone who holds Bonfire. The other half goes to a liquidity pool, a collection of funds that makes it easier to trade Bonfire.

Static rewards are a feature that have become extremely popular among new tokens, and they can work out well if the price increases or stays the same. However, most of these tokens end up going into a freefall. When that happens, you still lose money even after factoring in the rewards you earned.

Bonfire's plans

There are several goals in Bonfire's roadmap and whitepaper. Here are the most notable and the progress on them so far:

• A non-fungible token (NFT) marketplace: The Bonfire team is building "the most unique NFT frictionless trading market." It's listed as one of Bonfire's goals for the third quarter of 2021, and the current progress is 0% according to Bonfire's website.
• A Bonfire app: This will allow users to buy Bonfire, track their passive income from the token, view market data, and get updates from the team. It was listed as one of Bonfire's goals for the second quarter of 2021, but the current progress is only 30%.
• A crypto exchange: Bonfire is planning to launch a decentralized crypto exchange called FireSwap in the third quarter of 2021. The current progress is 0%.

The team is also reaching out to major cryptocurrency exchanges to try and get Bonfire listed. However, that's unlikely to happen, as the biggest exchanges tend to be selective about the cryptocurrencies they sell. Most buyers get Bonfire on PancakeSwap, a decentralized exchange that's home to many smaller projects.

Bonfire has lofty goals, but they're not any different than the goals set by numerous other projects. There's no shortage of new tokens whose teams plan to build NFT marketplaces, apps, and exchanges. And like Bonfire, all these projects are supposedly going to the moon.

The problems with Bonfire

When evaluating Bonfire, several red flags come up.

Failure to complete goals

After about two months, Bonfire's team has had trouble following its roadmap. The big miss is the Bonfire app, which wasn't ready for the second quarter of 2021.

The roadmap also mentioned weekly ask me anything's (AMAs) and billboard advertisements. Neither of those were completed, either. There have been AMA videos, but they haven't been weekly.

It's not a good sign that Bonfire has already failed to complete goals, especially simple ones like weekly AMAs. It brings into question the team's ability to handle the more ambitious objectives.

Massive price drop

Bonfire had one spectacular week in early May, but since then, it has bombed. The price is down over 90%, and trading volume is a fraction of what it once was.

The reasoning that Bonfire's team and supporters hold on to is that the entire crypto market is down, so a lower price is to be expected. There's just one problem with that logic: The whole point of Bonfire is that it's "sheltered from the storm."

The front page of the website talks about how the market can be a scary place and that Bonfire lets you "seek refuge from the storm outside." The whitepaper echoes that sentiment, saying that Bonfire "allows the user to seek shelter amidst the uncertainty of the market." You're not exactly sheltered from uncertainty when your investment loses 90% of its value.

No competitive advantages

When you compare Bonfire to all the tokens flooding the market, there's nothing that makes it stand out. The 10% transaction fee has been done before, and its plans aren't any different than those of other projects.

Even the "Why Bonfire?" section in the token's whitepaper is a generic description that could apply to a number of cryptocurrencies. It says that Bonfire has a passionate team, they want to build a financially appealing cryptocurrency for short-term traders and a suitable asset for long-term investors, and they're determined to change the status quo in decentralized finance (DeFi).

You could copy and paste that description to hundreds, if not thousands of other cryptocurrencies.

Should you buy Bonfire?

Bonfire is a poor choice for a cryptocurrency investment. Tokens like this are a dime a dozen.

They have big goals, like launching their own exchanges. They tack on a 10% transaction fee and tell you how you'll profit just by holding. And the teams pump these tokens as much as possible on social media with talk about how the price is going to get 100 times bigger.

There are many projects out there exactly like Bonfire, and most of them go nowhere. Buying Bonfire or anything similar is like buying penny stocks. There's a very slim chance of picking that needle in a haystack that makes it. But 99 times out of 100, you lose money.