“B-b-but they reward me for HODLING!” I hear you yell.

Now before we get into it, this tax is not in the traditional sense of the government taking a cut of whatever coin you are buying. Instead, a cut of every transaction, whether buy or sell goes to something. The most common is redistribution to holders. This means that people that hold the coin will receive a very small portion of each transaction, and most the time that portion is just more of the coin that they bought.

On the surface, this sounds like a very good and noble goal — it’s almost like a stock offering dividends to its users. However there is a much greater malicious intent here that most people miss.

These cryptos offer this “dividend” to its users in order to pump the coins price up. The algorithm that determines price sees a large amount of buyers but no sellers.

Taxed cryptos are often seen in rug pull attempts. It’s a very easy way for a smart developer to trick people into buying their coin. These taxed coins are also not able to be listed on exchanges such as Binance or Coinbase, meaning that there is no real longevity to the coin. Eventually the pump will be dumped, having left investors holding the bag.

Cryptos with a tax on them are to be heavily avoided by any investor who does not want to risk the floor being dropped out from underneath them. They are risky and dangerous, and there are many creative ways to trick new investors into a coin.

Instead, you should look into a coin with longevity. Sure it might be cool to make $20 in a couple minutes, but what happens when the coin dumps and you lose everything you had invested? Crypto with longevity is the way to ensure that your gains are consistent and exponential, crypto such as Polygon, Cardano, and Tea Kettle are all great for longevity, and we’ll go over these coins in a future post.