Swipe is a relative newcomer to the cryptocurrency industry with a 2019 launch. However, this recent launch should not scare you off – this project has proven to be one of the more promising projects over the past few years. And this article will explain exactly why Swipe is so promising, why it’s sometimes not so promising, and whether or not Swipe (SXP) is a good investment.
What is Swipe?
Swipe is a company (for profit) that offers a range of cryptocurrency products that bridge the gap between traditional finance and cryptocurrency. The company is probably most well known for their Swipe debit cards that allow holders to use their cryptocurrency as a debit card.
Swipe was also purchased by Binance in 2019, which drew a lot of positive attention to the company. Anyway, here are some of the things that Swipe actually does and why it has gained so much attention over the past year or so.
Swipe Debit Cards
Again, Swipe is most well known for its debit card, which is offered as a Visa card that uses your SXP balance as funding. This separates it from other cryptocurrency debit cards that require a user to manually convert the card.
Signing up for the card requires staking SXP on the Ethereum blockchain. And staking more SXP unlocks higher tier debit cards. Debit cards with higher tiers earn more cashback (paid in Bitcoin, capped at 8%) and rebates on popular digital subscriptions like Netflix and Spotify.
Unfortunately, Swipe debit cards have a tendency to get declined and customer support for these debit cards is rather lackluster.
Swipe also has a fairly popular cryptocurrency wallet. The main feature of the wallet is that it allows users of the wallet to swap their cryptocurrency with over 30 other cryptocurrencies. Users can also buy cryptocurrencies via credit card, debit card, or even wire transfer.
Now, the Swipe Wallet is backed by Binance, Coinbase, and BitGo for some extra security. Even better is that the wallet stores most funds in cold storage.
One thing to note is that this wallet is centralized and you do not control the keys to the wallet. As always, not your keys; not your crypto.
Thankfully, SXP is an ERC-20 token, so you can store it on any wallet that supports ERC-20 tokens for extra security.
Swipe Pay is the merchant end of Swipe. Basically, it allows merchants to accept cryptocurrency payment or to convert cryptocurrency into fiat currency.
It is available in almost every country in the world other than the Philippines and the United States.
Finally, Swipe Credit is a centralized cryptocurrency lending platform similar to BlockFi and Crypto.com.
It’s centralized, so it’s really not that exciting of an application. It’s also overcollateralized, so you have to deposit more than you want to borrow.
In our opinion, centralized lenders are a terrible option as they have all the disadvantages of centralization for a similar fee. But centralized lenders are still fairly popular, so it’s almost a necessity for a full cryptocurrency ecosystem.
How SXP Works
Swipe actually works in an interesting way. First, it is a for-profit, private company, which itself already makes things interesting.
Next, Swipe runs on the Ethereum blockchain and then connects the balance of SXP at an address to a Visa issued debit card for spending. This, of course, is only one aspect of Swipe. Remember, Swipe is creating an entire ecosystem.
Anyway, Swipe has an entire ecosystem that revolves around its native cryptocurrency – SXP. Basically, the cryptocurrency is used to pay for all the services offered by Swipe. Those services include the debit card, merchant fees, lending fees, and transfer fees on the network.
The most important feature of SXP, however, is the staking rewards offered. These are important for a few reasons. The primary one being that SXP is proof of stake, so staking is required for the function of the blockchain. The other reason is that staking SXP is required to receive a Swipe debit card.
With that in mind, SXP actually has decent tokenomics compared to other cryptocurrencies. For one, it is deflationary with a set amount of SXP burned during each smart contract interaction. A deflationary currency does a good job of gaining value and attracting investors, which we will cover in a later section.
Where to Buy SXP?
SXP can be purchased on a few different exchanges. But most of the trading takes place on Binance, so that’s where we recommend that you purchase it.
It can also be purchased for a discount if you use Binance Coin (BNB) to purchase it. Of course SXP is an ERC-20 token, so you can store it in your normal Ethereum wallet without any problem.
Swipe Wallet Roadmap 2021
Swipe does have a roadmap for 2021 in regards to its flagship product – Swipe Wallet. The biggest change is that the wallet will become primarily non-custodial. This means that users will have full control of their (read: access to the crypto keys).
Users will still have access to a custodial section of the wallet to fund their debit card. That is a temporary upgrade with the end goal being all card-related activities utilizing Binance’s wallet.
There are some other upgrades to the wallet with the goal of the update to allow easier access to DeFi through the wallet app.
Big Problems With Swipe
We admit that Swipe is a good cryptocurrency project despite initial scamcoin appearances.
However, there are still some points that make us very weary of Swipe despite the decent performance of SXP over the past year and acquisition by Binance within a year of launch.
A big concern with Swipe is that the project is closed source. We know that Swipe has an open source GitHub repository, but that is only for the API. The actual code that runs the backend is all closed source.
That is very unusual and a little alarming in the cryptocurrency industry.
It would be more alarming if Swipe did not have the backing of Binance and other major players in the industry, so we give that one a pass. If you are a hardcore open source advocate, then you should give Swipe a pass.
Scant Video Footage of The Team
This is where things start getting weird with Swipe. The cryptocurrency launched in 2019 and was launched by someone called Joselito Lizarondo. Lizarondo serves as the CEO to this day.
What is interesting is that Swipe had no initial coin offering and no mention of investment. Lizarondo apparently funded the entire company himself with money he earned from the early days of Bitcoin.
More interestingly, the YouTube page for Swipe has two videos on it. Only one of the videos actually has footage of anyone from the team, and he is clearly reading from a script during his short appearance in the video.
That raises some huge red flags.
The more shocking part is that a self-funded cryptocurrency landed massive partnerships with Coinbase and Binance within months of operating. It then was purchased by Binance.
Something suspicious about the entire operation and how it ramped up so fast with no investors.
This problem was recently resolved, but Swipe also had a pretty bad whitepaper when it launched. It did not say anything technical in it and basically just outlined how to use the debit card and wallet.
In our opinion, the original whitepaper was extremely generic and had the hallmarks of a scamcoin whitepaper.
Finally, Swipe was purchased by Binance within a year of launch. Binance allegedly purchased Swipe because they had their act together.
The real reason Binance purchased Swipe, though, is that Binance had failed to launch their own crypto debit card. And it’s easier to purchase a company that already has done it than to form a team to accomplish the task.
This brings us to another interesting theory that has made the rounds in the crypto world?
Did Binance fund Swipe and subsequently ‘purchase’ Swipe to insulate itself from problems that may arise from crypto debit cards. We know it sounds crazy, but it would make sense from a business perspective. Adding to this point is that Swipe is starting to dive into DeFi services that might be risky for Binance to do under their main exchange business.
To summarize, ownership by Binance is a red flag for something decentralized. We would be weary about investing in something owned by Binance for that reason.
Is Swipe (SXP) a Good Investment?
SXP being a good investment boils down to one thing at the end of the day:
Do you trust Binance?
More broadly, do you trust decentralization or centralization?
Again, we know that Swipe is technically decentralized, but it’s owned by Binance, has a partnership with Visa, and has a closed source backend.
It’s not decentralized.
In our opinion, this goes against everything that decentralization stands for and will likely fail in the long term when decentralization catches up. Remember, decentralization protocols still have a lot of grassroots infrastructure to it without the money that Binance has behind them.
But that’s the long term vision.
In the short term, SXP certainly seems like a good investment. It’s the first in the space and has the backing of a big centralized player in the space (Binance).
With that said, the choice is up to you. If you are interested in investing, then the price appears to be in a good spot at about $1.50 at the time of writing. Just remember that this crypto project is owned by a large centralized exchange.