What is Bonfire and why is the price going up?

BONFIRE is the latest cryptocurrency on the block – and its price has gone up by 30% in the past 24 hours.

We explain all you need to know about Bonfire and why its value is rising.

Before we do, keep in mind that 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 Bonfire?

Bonfire is a cryptocurrency that launched as recently as April 18.

According to its whitepaper, it operates in a similar way to Safemoon.

This claims to reward people who buy and hold onto the cryptocurrency, while those who sell it will be slapped with a penalty.

This is known as multi-level marketing or a pyramid selling scheme, and can sometimes be a sign of a scam and makes it a very high risk investment.

5 risks of crypto investments

BELOW we round up five 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.

Why is Bonfire's value increasing?

Bonfire is currently worth $0.00000069 according to CoinMarketCap, but it's only been listed on the major tracking site for a few days.

In comparison, it was worth $0.00000023 on May 8.

At the time of writing, it's up by 30% in the past 24 hours.

The value of Bonfire is increasing as chatter on social media increase around the coin, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Having launched less than a month ago, an unverified Twitter account called "Bonfire Token" has already attracted 42,100 followers.

Cryptocurrencies have generally also enjoyed recent surges in value after the first major crypto exchange Coinbase went public last month.

Is Bonfire risky?

Investing in any cryptocurrency is essentially gambling and there are no guarantees that you will see what you pay in go up in value.

It's a speculative investment, with limited track records and no underlying value.

There is also no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market. 

Plus, investing in newer cryptocurrencies rather than Bitcoin, for example, is even riskier and makes you more open to scams.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun the similarity to SafeMoon is a red flag.

She said: "This should sound fresh alarm bells as the model appears to be geared towards helping early holders of the currency get rich, as others pile in after them, pushing the price up further.

"But when demand flares so quickly, it’s just as likely to extinguish rapidly, leaving those who bought in late with their fingers burnt.

"In this frenzied world of speculation it’s far from certain which of the thousands of coins and tokens will survive a market shakedown which could render crypto assets worthless."

In January, the UK's Financial Conduct Authority warned that households risk losing ALL of their money if they invest in cryptocurrencies.

Meanwhile, a Russian 27-year-old recently became the world's youngest crypto billionaire after his cryptocurrency Ethereum surged in value.

Who are Dogecoin's founders? We explain all you need to know.

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