In today’s Exponential Investor:

  • What do Kim Kardashian and crypto have in common?
  • What’s EMAX?
  • Why should EMAX be avoided?

What is Ethereum Max, and why is it in the news?

Are you guys into crypto?

This is not financial advice but sharing what my friends just told me about the Ethereum Max token. A few minutes ago, Ethereum Max (EMAX) burned 400 trillion tokens, literally 50% of their admin wallet giving back to the entire EMAX community.

Swipe up to join the EMAX community.

This was an Instagram post made by reality TV star Kim Kardashian in June 2021, regarding the Ethereum Max (EMAX) crypto network.

It has been grabbing several headlines in the crypto world lately, but for all the wrong reasons.

In exchange for promoting EMAX, Kardashian was given a $250,000 payment, which she failed to disclose. This illegal touting of the crypto led to the SEC handing her a fine of $1.26 million on 3 October.

The hype and furore following Kardashian’s involvement in Ethereum Max caused its price to surge to an all-time high of 0.000000863 on 1 June, and increase of 1,370% rise on its initial price of 0.00000005875.

However, the market soon dumped EMAX, with growing scrutiny towards the tokens.

On 1 August, EMAX’s daily transaction volume plummeted to $157,423, less than a hundredth of its initial capital outlay. The token has failed to recover, and is currently at 0.000000004345, which is a fraction of its initial listing price.

In the crypto world, this has understandably raised a few eyebrows.

Firstly, it has put the crypto regulatory landscape under greater scrutiny.

Secondly, it’s a reminder of the speculative, hype-fuelled nature of some crypto projects which tarnish the industry’s credibility.

Finally, it has got investors wondering what on earth EMAX is.

Let’s take a closer look at it, and why you should probably avoid it.

EMAX claims to be a “culture token” that will “bridge the gap between the emergence of community tokens and the well-known foundational coins of crypto.”

In other words, community tokens are “social” tokens required to gain access to the organisation’s network.

In this way, EMAX promises to provide access for holders to VIP experiences, such as sporting events and concerts, although there’s little evidence so far to prove that it can do this.

Is it the same as Ethereum?

Not at all. Although it has “Ethereum” in its name, don’t be fooled. Despite the fact that it’s an ERC-20 token built on the Ethereum network, the two are worlds apart in terms of their purpose, potential and credibility.

(ERC-20 is a smart contract standard that is used to develop tokens on the Ethereum network).

The Ethereum network is touted as the foundation of the future digital and crypto worlds. The developers of Ethereum constructed a blockchain upon which applications, businesses and even new cryptocurrencies can be built.

This is achieved through the use of smart contracts, which are automated protocols executed by the network.

For example, the Ethereum network hosts everything from decentralised gaming, computing, and even collectable kitties.

Ethereum’s native token, Ether, is the fuel behind the network. Ether is mainly used to pay for network transaction fees, allowing value to be exchanged through developers, applications and users.

As shown above, even though EMAX purports to be like Ethereum, it just doesn’t compare. Ethereum is the bedrock of the future decentralised finance (DeFi) system, whilst EMAX is likely another “boom-to-bust” crypto project used by celebrities to stroke their egos.

What is it supply?  

EMAX was launched with a total supply of 2 quadrillion tokens. If you like your numbers, that’s 2,000,000,000,000,000.

With so many tokens in circulation, the value of a single EMAX token is very small.

To combat this, the network has introduced a new token rule which sees that 6% of EMAX tokens that are sold or transferred to its native treasury wallet are burned (i.e. removed from circulation).

The more users transact with EMAX, the more tokens should be burned, and, theoretically, the higher its price should be due to the laws of supply and demand.

However, given the swathe of negative press and the lack of substance behind the project, it’s unlikely that EMAX token-burning will lift its share price substantially.

Can EMAX overtake bitcoin?  

We’re confident that this won’t happen. As stated, the project has little substance, and is already collapsing under its own weight.

In terms of value, one bitcoin is around 3.7 trillion times larger than one EMAX token. So, no, in this sense, it’s really not going to topple bitcoin.

What’s more, bitcoin is the poster child of the crypto world, and its value to the global economy is becoming more apparent by the day.

Bitcoin’s ability to provide securitised, 24/7 payments underpinned by blockchain technology is driving its adoption at a retail, corporation and sovereign level.

EMAX cannot compete with bitcoin or Ethereum. It doesn’t take an expert to see that its use case, centred around “VIP experiences”, doesn’t yet have the credentials or the infrastructure to become a pillar of a new money system.

This could change of course if the project gains traction and somehow strengthens its use case.

Is it worth investing in this cryptocurrency?

You’ve probably heard the expression “we wouldn’t touch it with a bargepole.”

Well, it couldn’t be more relevant here. EMAX has all the features of one of those hype, pump-and- dump projects that give crypto a bad name. Due to crypto’s open-source nature, it’s easy for developers to build networks on the blockchain rails provided by the Ethereum network or the Binance smart chain.

If or when the project gains traction from celebrities, it’s easy for speculative retail investors to get carried away, thinking there’s some real substance behind it.

It’s then just as likely to collapse once the market really sees it for what it is. This explains its volatile thousand-percent price swings in a matter of days, as outlined above.

Even by crypto standards, such swings are abnormal, and should be avoided.

When seeking your next crypto investments, it’s advisable to find companies with a strong track record and use case that could add value to the crypto and traditional finance (TradFi) worlds for years to come.

It’s also advisable that the next time you see a celebrity meddling with an unknown crypto, stay away.

Until next time,

Elliott Playle
Contributing Editor, Exponential Investor

PS If you’re wondering which investment is leaving both gold and bitcoin in the dust this year, well, it’s actually a particular strategy. Find out more about how it’s made an 89% cumulative return through 2022’s falling market here.