Originally published: December 2021
Back in April 2020, I turned bullish on bitcoin at about $6,900/BTC, and recommended it to my premium subscribers. Since then, I’ve written a series of public articles researching bitcoin, and I continue to provide coverage in my research service as well.
The most common question I received from readers around that early time of recommending it was, “where should I buy bitcoin?” and my initial answer to them was that I didn’t have a specific recommendation. I bought my initial core tranche through a major crypto exchange, so I often just suggested buying from any major reputable exchange.
This was during the initial pandemic lockdown period, markets all over the world had crashed, and I was spending a lot of extra hours researching the macro situation across multiple asset classes. Sorting between crypto exchanges to find the “best” way to buy bitcoin just wasn’t a high priority for me.
I did get some feedback from readers about poor customer service at certain exchanges, and I looked up some of the reviews myself and indeed they weren’t great.
As the macro situation cooled down a bit, I spent more time looking into other bitcoin buying platforms and studying the history of the industry in general. I eventually came across Swan Bitcoin, a small startup company at the time, and after further research, decided to switch my buying through them starting in June 2020. They had launched pretty recently at that point, around March 2020. I set up a sizable dollar-cost averaging plan with them.
I was one of their largest customers in that early period, and a few months later I became a startup advisor for them, since I liked their team and the product that they were building. I also added them to my partner list.
Here in autumn 2021, I joined their board of directors as their independent director, since everything I’ve seen from them over the past year continues to impress. They just completed a $6 million Series A capital raise on a $90 million valuation as well, and their core business is cash flow positive.
How Swan Bitcoin Works
Swan Bitcoin isn’t a crypto exchange. It’s a bitcoin-only accumulation platform, with options for both one-time purchases and recurring purchases (dollar-cost averaging plans). It works easily on both a desktop device or mobile device.
For most users, fees will be 0.99% to 1.19% on your purchase. They don’t take a spread on the purchase either. Some “no fee” platforms take a spread.
With Swan, you can auto-withdrawal to your own self-custody address, or you can keep it with Swan’s institutional-grade custodian for free and access it through them, with the bitcoin held in your name. The cool combo, then, is that you can setup a dollar-cost average plan that automatically buys bitcoin regularly, and then also regularly sends it to your hardware wallet or other custody solution.
In addition to their consumer-focused platform, they also have Swan Private for large buyers, family offices, and businesses. This has become an increasingly important part of their business. If you want to buy a large amount, want to add bitcoin to a company balance sheet, or want to consult with experts about custody, that’s your portal.
And they’re in the process of launching Swan Advisor Services, which allows financial advisors to integrate bitcoin into client portfolios easily, including reporting and rebalancing.
Crypto exchanges make most of their money from you trading many different types of tokens. They directly or indirectly promote speculation, basically. In that sense, the crypto exchange business model is similar to the casino business model; they want you in the door and then as active as possible, because the more you gamble, the more the house wins.
The vast majority of crypto tokens lose value over the long run, meaning that the popular ones from the 2011 bull market aren’t really around anymore, the popular ones from the 2013 bull market aren’t really around anymore, most of the popular ones from the 2017 aren’t around anymore (except for a few). In 2021 there has been another big altcoin bull market, and many of these tokens probably won’t be popular or worth as much as they are now in, say, 2025.
Plus, even if you pick one of the handful of the 10,000+ coins that has some staying power through more than one cycle, most people are not professional traders, and most people who trade frequently without being professional traders will underperform a buy-and-hold strategy.
In recent months, the US Securities Exchange Commission has stepped up its regulation rhetoric around altcoins as well. The SEC’s chairman, Gary Gensler, has referred to the Howey Test as it applies to cryptos, meaning that if a token project raises capital in expectation of profit with a rather centralized group of developers, then it’s probably a security (and typically, an unregistered security). Gensler has further stated that most exchanges likely have unregistered securities on their platforms, based on how many cryptos meet the definition of being securities.
Bitcoin is one of the only digital assets that is known to not be a security. Instead, it has been firmly classified as property for years. It raised no capital and there is no centralized developmental/marketing organization associated with it, which is why it’s property and not a security.
In fact, back in 2017, the majority of the bitcoin miner companies, as well as the near-monopoly maker of mining equipment, several large exchanges and custodians and other crypto businesses, and a number of prior key bitcoin developers, all teamed up to try to change bitcoin’s block size, and failed to do so because the globally distributed node network was in their way. Bitcoin is the only digital asset that is sufficiently decentralized and immutable, and that passed a real-world test like that to prove it.
For reasons like this, Swan Bitcoin doesn’t have altcoins on its platform, and encourages setting up a recurring purchase plan for bitcoin, mean you can set up a recurring purchase daily or weekly for example. In that sense it is saving in bitcoin, rather than trading cryptos.
For their Swan Private clients, it’s about onboarding high net worth individuals, family offices, and small businesses, so that they can safely buy bitcoin. Swan has experts on hand with years of experience in the bitcoin ecosystem for private clients to talk to as a resource, rather than them contacting customer service and being in email dialogue with an intern who only got into cryptocurrencies three months ago and mainly trades third-tier altcoins, as they might find at a typical exchange.
Obviously, people who want to buy other coins or trade frequently need to use other platforms. Swan isn’t for them, or at least, they would also need a separate exchange account in addition to their Swan account.
For those who want to have bitcoin exposure in a straightforward way, Swan’s business model comes with a significant advantage.
Swan Bitcoin’s Advantage
In short, Swan’s advantage is that it has lower fees than most other platforms, and better usability and customer service than most other platforms. I don’t know any platform that can claim a better combination of both fees and service, along with a sustainable business model. It comes with specialization.
That’s why I switched to Swan in early/mid 2020, after previously using the major crypto exchanges.
Being bitcoin-only reduces Swan’s expenses by a lot, which means they can keep fees lower for the user than most exchanges. For any coin that an exchange deals in, it has to run a node or validator to verify those coins. Many of those coin projects have very challenging requirements to run a node or validator, with high hardware and bandwidth costs and labor expertise. Imagine being an exchange with dozens of coins to manage.
All of that overhead means more employees, bigger IT expenses, and a huge compliance department, which translates into higher trading fees. So, if you just want to buy bitcoin on an exchange, you’re basically subsidizing those expenses for the exchange so that they can deal with dozens of other speculative coins. It also complicates the security situation, and digital assets are not a space where you want to take on unneeded security risks.
Swan skipping those other coins and associated expenses means they can pass lower costs onto the user, and invest in better customer service. Virtually everyone on their team including backend staff is well-studied on bitcoin.
After launching their initial service focused on retail investors, they’ve been able to expand into private client services to focus on large investors, family offices, and small and medium businesses who want bitcoin on their balance sheet and need some more personal service associated with that scale of purchase. And now they’re expanding into the RIA market, so that advisors have better ways to give clients exposure to spot bitcoin compared to some of the publicly-traded trusts that don’t track bitcoin’s price closely, or that are based on cash-settled futures.
Basically, it’s a function of being deep into bitcoin, rather than broad into numerous cryptos. Swan is expanding its depth and quality of bitcoin-based services, rather than expanding its multi-coin approaches. Quality over quantity, in other words.
From the large review site Trustpilot (LSE: TRST) as of this week, I’ll let this comparison speak for itself:
First of all, the Bitcoin network itself has risks like any other asset. It can go down in price for long periods of time, and nobody can forecast its forward price or network potential with 100% accuracy. Appropriate position sizing is important, and the right position size varies based on your views of the asset and other details about your unique financial situation.
Besides that, dealing with any counterparty has risks. Swan does not currently perform lending, leveraging, or anything like that, which sharply reduces their number of attack surfaces, but it’s always important to be mindful of tail risks.
Swan encourages the self-custody of bitcoin when you are comfortable with it, so that you can eventually remove counterparty risks even from Swan and their custodian. They want to teach you to fish, in other words, rather than just selling you fish. However, many people do like to use a custodian, so it’s important to note that Swan’s is an institutional-grade custodian. And the CTO is always working on making Swan’s side of the business as secure as possible, which is easier to do thanks to their bitcoin-only focus.
There have been some high-profile scams in the industry where companies have their email lists compromised and send out phishing emails, which trick people into revealing their passwords, private keys, hardware wallet seed phrases, or other scams to steal your coins. Any company has some chance of that happening to them in some way.
Whether it is bitcoin, crypto, exchanges, social media, Swan, or any platform, never give anyone your private key or wallet seed phrase. No legitimate customer service person from any company will ever ask for those things. Always check the URL of any website you go to from a link, to ensure you are on the correct website rather than a fake clone.
Also, be aware of impersonator accounts on social media that impersonate prominent bitcoiners, Swan staff, or other high profile people like Elon Musk. These scam impersonator accounts sometimes direct message people to trick them into crypto scams.
So, I’m a huge fan of Swan Bitcoin and they manage security very well, but I always want to make sure people use good security practices on their own end as well, to avoid the possibility of any sort of phishing or other security risks that could affect you, Swan, or any other business in the ecosystem.
About the Company and Founders
Swan Bitcoin was co-founded by CEO Cory Klippsten and CTO Yan Pritzker in 2019, and the platform launched to the public in March 2020.
Along with an MBA from the University of Chicago, Cory had prior roles at Microsoft, Morgan Stanley, McKinsey & Co, and Google, and then shifted into venture capital where he invested in and advised dozens of startups for the better part of the past decade. In addition to being the CEO of Swan Bitcoin, he’s currently an advisor to Riot Blockchain (NASDAQ: RIOT) and other companies/funds.
Yan had a number of software development and startup co-founder roles, with his most high-profile one as the co-founding CTO of Reverb, where he worked for six years. In 2019, Reverb was acquired for $275 million by ETSY (NASDAQ: ETSY). He’s the author of Inventing Bitcoin, a 2019 highly-rated book about how the Bitcoin protocol works.
Since then, they’ve hired several bitcoin experts and have one of the strongest teams in the industry, with dozens of employees and contractors. Andy Edstrom, CFA, CFP, serves as Swan’s head of advisor services. Stephan Livera, an early bitcoiner and top podcaster/educator serves as Swan’s head of international services. They also have a large media arm on Youtube, Twitter Spaces, and other platforms where they interview industry experts and discuss current ecosystem news, as well as a widely-read blog on their website. They are also building out their Bitcoiner Jobs and Bitcoiner Events networking sites to further connect the industry.
As an advisor to the company, I was able to see their growth through much of 2020 and 2021, including some of the challenges and growing pains that the company experienced as a startup. When I joined as a client in June 2020, Yan himself was the customer service support for my onboarding process, but they’ve of course come a long way since then as they built out their team.
From what I saw, they handled all challenges with integrity and always dealt with things in the customers’ favor wherever possible, so I’m not surprised to see their level of growth and positive endorsements. Their business decisions were always based on sustaining long-term trust and brand strength, rather than falling for short-sightedness or high time preference behavior.
One of their philosophies is to build the company in such a way as to survive a bitcoin bear market. Many companies seem to plan as though a bitcoin/crypto bull market will last forever, but these things tend to go in cycles and the bear markets wash out a lot of companies that didn’t plan ahead. Cory and Yan directly plan for inevitable bear markets in bitcoin and the rest of the ecosystem.
That’s why I continue to buy my bitcoin through them with a dollar-cost averaging plan, and have been willing to advise them and serve as their independent director.
Check them out here.