Bitcoin + Lighning Network + Strike: the world’s financial system just got smashed — and we hardly noticed!

Malc Simmonds
Bitcoin Malc
Published in
4 min readAug 2, 2021

(Last checked and edited May 2023. Edits are labelled.)

In the video is Jack Mallers of Strike. Don’t be fooled by this Millenial’s hoodie and fruity language; he meditates a lot, has a really good heart, is “driven” — and he is setting out to change the world. Incredibly, Strike has already increased the income of tens of thousands of poor El Salvadorians by 20–30% at a stroke — by allowing migrant workers to send money home almost for free: genius. At 27, he’s already achieved much more than most of us can in a lifetime. And he’s only just started.

In the video, he’s rubbing Coinbase’s nose in it: publicly calling out Brian Armstrong of Coinbase — the only publicly quoted crypto exchange — and telling him straight that he’s a fool for choosing a business model which is doomed — this year. (Armstrong certainly seems not to have been thinking ahead…)

Edit May 2023: Coinbase is still going. :)

As I’ve said before, Coinbase makes over 90% of its money from the 4% commission it charges selling crypto. Other companies in the States [CashApp, Venmo) have undercut Coinbase by half a per cent: but Strike has just blown them all out of the water by charging 0.3%, soon to reduce to 0.1%. Jeepers!

Currently Strike is operating only in the States and El Salvador, but rolling out next to the EU, hopefully in 2021.

How does Strike do it? Simple — Mallers has realised that charging for trading crypto is “a race to the bottom”. So, to avoid that game, Strike’s business model offers this service at cost price, and they make their money elsewhere; small margins, automated, quickly increasing to massive scale. Strike is also very progressive: i.e. it helps the poorest massively. Jack likes that very much, and so do I. Strike’s approach looks like making it unstoppable. (OK — of course, there’s a chance they’ll misstep. But, in any case, the writing’s on the wall for Barclays / Visa / Coinbase and their ilk: **blockchain allows super-low charges for all financial transactions — NOW!** Game-changer. Financial company boards should be in deep discussions right now…)

The first key to how the Strike app does all this is simple: A. swap any currency into bitcoin: B. send the bitcoin over the Internet/phone to anywhere in the world for free, and in 4–5 seconds: C. swap it back into any currency the recipient chooses. The speed of sending negates Bitcoin price volatility. Strike even allows the recipient to keep a % of what they receive in Bitcoin if they want some for investment.

The second key is facilitated by the Lightning Network (LN), a so-called “layer 2” solution. Layer 2 means it sits on top of the Bitcoin network. In development for several years, the LN is a very safe and effective way of increasing the possible “transactions per second” (TPS) on the Bitcoin network from its standard 7 TPS. Through absolutely brilliant programming, Lightning now rivals Visa/Mastercard for TPS.

The third and final key is: inter-operability — something the banking system does not have — or want, as this is a source of much profit. Do you want to send money in the UK? You need the Faster Payments system or the slower BACS. Do you want to send to France or Germany? You need SEPA. The States? Use ACH — Automated Clearing House. So you have to go to your bank to send money abroad, and we all know the cost of that. This complexity, much of it dating back to the 1960s/70s, has been swept away by Bitcoin + Lightning + Strike. (And now Strike has done it, there will be imitators.)

Strike has a massive, massive lead, which is why Jack’s aim to be the biggest company in the world is not as far-fetched as it might initially sound. He’ll be taking most of Western Union’s remittance business (migrant workers sending money home, which is massive — e.g. >20% of El Salvador’s GDP). EG for sending $100 home, W.U. can charge a migrant $30–40. Buggers.

Retail purchases: When fees for retail traders are Strike’s 0.1% instead of Visa/Mastercard/Amex’s 2–3–4%, what is a retail business going to do? Switch to Strike! Thousands of businesses in El Salvador now take Strike. When Strike is in the UK my herbal business will ditch NatWest and their >1.8% charges in a second. I’ll pay 0.1%, please!

Finally, sending money abroad — when on holiday or businesses buying foreign goods — charges of converting from £ Sterling or $ or € to another currency will be 0.1%. Stunning times are ahead.

PS Have you noticed — every week, another bank announces record profits? F*ck ’em. LOL

Edit May 2023: I’ve been waiting for Strike to arrive in the UK/Europe for 18 months now, when Jack Mallers forecast it. He’s obviously got other things on his mind. Hopefully all is still well with the Strike project. I expect so.

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Malc Simmonds
Bitcoin Malc

Entrenpreneur - alternative health field. I love new ideas: Bitcoin happened to me in 2017. Truly down the rabbit hole. Bitcoin & Blockchain will be BIG.