There’s no more divisive word in tech at the moment than “cryptocurrency”.
Either you see crypto as a giant Ponzi scheme or the future of money – or perhaps a bit of both.
Swyftx wants to open up crypto to more mainstream investors.
Launched in 2018 it’s the second-largest crypto exchange in Australia, and was created by Alex Harper and Angus Goldman who first bonded at a University of Sydney Summer Computer Science Camp.
“In 2018, we launched at the bottom of a long bear market,” recalls Harper.
“Living from a cheap apartment with our laptops, we had only a few thousand dollars deposited in our first month, most of which we ended up having to forego and blocking as confirmed fraud. We were confident in the product and what impact we would have in the industry. With the remainder of our life savings we pushed the platform over the line, it was an all or nothing situation.”
Swyftx wants to simplify crypto investing for the average person; stating on its website – “The industry is a young one filled with tech people, who although are brilliant minded and innovative, don’t necessarily always understand the needs of more traditional people. Swyftx solves this by bringing all the best elements into one end-to-end platform.”
It has ambitions to roll out to other territories but New Zealand is its first foray outside of Australia. Australia was a natural place to start as it has some of the most welcoming cryptocurrency regulation in the world – (Bitcoin and other cryptocurrencies were declared legal in 2017 by the Reserve Bank of Australia.)
The Brisbane-based start-up, which now employs more than 70 and has 300,000 users, traded AU$3 billion in the year till May.
Here at theBit we wanted to get behind the launch hype and reached out to Swyftx to find out a little more; whether crypto is here to stay, how Swyftx works and whether it’s paid off for users across the Tasman.
Answers are by Pav Hundal, a manager in Swyftx’s strategic partnerships team.
I feel with crypto everyone’s on a steep learning curve – including myself – I wonder how much did you personally know about crypto five years ago and what’s been the learning curve for you?
Looking back over the last five years, I certainly think I’ve got a better feel for the complexity of the market today than I did. But it is still a steep learning curve. We’re operating in a market that’s superfluid and highly innovative. Keeping up is a daily challenge. Twelve months ago, nobody outside the industry was really talking about the metaverse, the lightening network, smart contracts and so on. Today they’re mainstream and you’ve got people like Neil Finn and Dan Carter getting involved in NFTs.
In reality, I’d say for the large majority of people who are interested in crypto, it’s enough to understand the digital assets you’re thinking about buying. So I’d strongly encourage anyone who’s interested in buying a currency like Bitcoin to do a little bit of research around its market size, its use case and, if applicable, the team behind them.
Our own research suggests just over three-quarters of Australians made a profit from their crypto trades over the last year. But the least likely to record a profit were those who reported little or no understanding of the market.
Why did it take you so long to enter the NZ market – your first foray outside of Australia…
New Zealand and Australia have similar markets, so this is a move we’d wanted to take for a while but setting up banking in a new country does take a while, as does registering with regulators. Basically, we wanted to make sure we were offering the highest levels of support, security and confidence to our Kiwi customers from the start.
Are you aiming to be the Sharesies of the NZ crypto landscape?
Good question. Actually, we draw a lot of our inspiration from brands that have really focussed on customer service. I guess Apple would be the classic example. Just over 40% of our entire team are in customer service facing roles, which makes us pretty much unique not just in crypto, but right across global financial services.
If someone is investing their money through your platform, it should be pretty much a given that they can access support from actual humans. So, yes, we put a lot of work into our trading app and website to provide the best possible user experience for our customers and low fees, but customer service is a special priority for us. It’s one of the key reasons why we’ve grown so quickly and become Australia’s top-rated exchange.
What’s the biggest misconception with crypto?
That it’s just something that young people get into. This might have been kind of true five years ago but today there is no typical crypto user. In Australia, more than a third of under 50s own or have owned crypto. Parents are especially big adopters and we’re seeing more women using our platform.
What’s the average investment for a first time trader on Swyftx?
There is genuinely no average first-time investment. We’ve got a very wide range of customers using our platform, including high net worth customers and corporates. If there is a typical pattern, it is that you tend to see a lot of customers increasing their activity on the platform over time as they grow in confidence and understanding.
Are you in favour of more regulation in the industry?
Contrary to popular opinion, a lot of exchanges, Swyftx included, would welcome the introduction of higher standards for entry into the market and clearer rules.
Swyftx is registered with the Department of Internal Affairs, New Zealand’s lead AML agency for crypto currency exchanges and we’ve got strict anti-money laundering protocols in place. Both here and in Australia. But it’d be great to have more clarity and guidance from regulators.
That said, we do want to make sure that future regulation in New Zealand and Australia does not stifle innovation. We have a real opportunity for ANZ to become an Asia-Pac centre for blockchain and digital assets, if we create the right conditions.
How easy is it to convert digital assets to regular NZ dollars – and where does the taxman take his cut?
The Swyftx platform is an all-in-one solution for NZ residents, we provide the means for users to track all their holdings and provide tax reports for all our users. At any stage, a user is able to convert their crypto balance into a dollar balance and then withdraw that NZD value to their verified bank account.
Swyftx is a broker right, rather than an exchange… Is that a more secure option for investors?
We provide liquidity from multiple global exchanges; this means more liquidity and less impact of issues like spread for users.
Do you have a 24/7 help service?
We offer 24hr support to our customers throughout the working week. We’ve got online customer service teams in New Zealand and Australia, as well as in countries like Canada, Sweden and Portugal so that we can follow the sun and offer our customers in ANZ support round the clock. On weekends, we offer customer support from 9am to 9pm.
You can trade over 260 digital assets – Bitcoin, Ethereum, Ripple, etc through Swyftx – how can an investor check if a new coin is a worthy investment and not a scam? Online research?
At the moment, we have around 280 digital assets that you can buy and sell or swap. We’ve found a lot of our customers use our demo trading feature to build confidence and learn more about different coins. We also have quite a lot of information on our site to get you started.
But yes, it is important to also do your research online to find out more about individual assets before you invest. Good indicators generally are the size of a coin’s market and its liquidity. One pro tip, research the team behind an asset you’re interested in on a platform like LinkedIn to see how credible they are.
The value of crypto can be swayed by tweets, memes and a comment by Elon Musk… I know regular share markets have their ups and downs too but not nearly to the same degree as crypto. How have Aussie Swyftx users fared over the last few years… have you done any studies?
We don’t track the performance of individual portfolios. But we do know from recent work we’ve done with YouGov that the average crypto investor in Australia made a profit of AUD $10,662 over the last 12 months. That rose to an average $13,478 for those reporting a high or very high level of financial understanding.
Regular share traders are in for the long term – I take it that doesn’t apply as much to crypto investors…
You’d be surprised. Something like 65% of Bitcoins aren’t moved from one year to the next. A large number of our customers see digital assets like Ethereum, ADA and Bitcoin as a store of value and defence against inflation and low rates. So what you see is a lot of people buying crypto with the intention of holding onto it as a long term investment. To give you an example, around 33% of Australians who own, or have owned crypto, hold some in their super funds.
Why trade in and out of coins?
Good question. This really is all about where you see value. Nobody, as the old stock market adage goes, rings a bell at the top of the market. Some people see the relative volatility of certain digital assets as an opportunity to make returns that are not possible in traditional financial markets.
Say I have Bitcoin but want Audius. How easy is it to make that trade using Swyftx…?
Swyftx has a swap feature that allows you to directly trade one digital asset for another on exchange, in much the same way you might do a currency swap on a traditional FX exchange.
Can you ever see a time when crypto replaces fiat currency?
The short answer to that question is ‘almost certainly yes’. The longer, more complicated answer is ‘yes’, but it’s still difficult to assess how quickly it will happen and in what form.
We’ve got around one in five New Zealanders using, or intending to use, digital assets. In Australia, 25% of adults either own, or have owned, crypto. Famously, Bitcoin is also now legal tender in El Salvador.
But just as interesting from my perspective is the massive crypto footprint in emerging markets, especially in countries where people are looking for an alternative to sometimes weak currencies.
Africa is an interesting example because it’s become a bit of a bellwether for the global adoption of financial technologies. Mobile banking was an everyday reality of life for residents in countries like Nigeria well before it was in our part of the world.
Alongside this, you also have a significant number of governments in the OECD quietly investigating the potential for Central Bank Digital Currencies. Basically, it is a question of when, not if, cryptocurrencies of one form or another replace fiat currencies.
Finally – without giving advice – broadly – why is this a good time for newbies to invest in cryptocurrency?
It’s a good time because there is so much information and analysis now available to new investors to make informed decisions.
I would also argue that the crypto market is much more geared toward retail buyers than the traditional financial markets, where regular investors are trading against institutional investors and information holders of vast size and resources.
But again, please do your research before you buy and sell. I should also just stress that not everybody is buying crypto as an investment. For a significant number of people, digital assets are being used as a means of exchange. In Australia, some 43% of crypto holders have used their crypto to buy goods and services online and in cafes, hotels and restaurants.