Bitcoin’s Lightning Network is bringing fiat to every corner of the world, thanks to Visa-partnered startup Zap Inc.
Strike – the Chicago-based startup’s Bitcoin wallet and banking service – is rolling out native support for the euro, pound and Swiss franc, soon to be followed by the Australian and Canadian dollar after partnering with cryptocurrency exchange Bittrex Global, according to Zap founder Jack Mallers in a phone interview with CoinDesk.
Described by Mallers, as a “Bitcoin neo-bank,” Strike leverages the Bitcoin network and scaling technology the Lightning Network to move fiat fast from point A to point B. Zap plans on providing banking services in up to 200 countries via the international exchange.
“We can move any physical value anywhere in the world for no variable cost,” Mallers said. “Transaction finality from one point to another for free.”
Moreover, Strike will also list popular stablecoins tether (USDT) and USD coin (USDC), beginning with a pilot program in El Salvador. Stablecoins were one of the crypto industry’s breakout products in 2020. The market cap of dollar-pegged tokens rose some from around $7 billion to over $30 billion by the year’s end, according to Messari.
Read more: US Federal Regulator Says Banks Can Conduct Payments Using Stablecoins
Mallers said Bittrex Global will handle the behind-the-scenes operations with the tokens, which typically are issued on the Ethereum blockchain. Strike itself does not support ether (ETH) or Ethereum-based tokens. Rather, each tether or USDC token is credited to an account on Bittrex and mirrored on Strike’s internal database, he said.
“Leveraging Bittrex Global’s technology, Strike users will be able to seamlessly send and receive payments using both fiat money and cryptocurrencies,” CEO of Bittrex Global Tom Albright said in an email to CoinDesk. “This will allow billions of people around the world to access the financial system in a simple low-cost way, fulfilling the original vision and promise of Bitcoin.”
Mallers chose El Salvador to pilot the stablecoin project because of its large availability of dollars, Bitcoin ATMs and one of the largest remittance markets in the world. The Latin American nation swapped out its native currency, the colon, in the early 2000s for the greenback. At the time, El Salvador was trying to stimulate economic activity by adopting the stronger currency in a case of intentional “dollarization.”
South American neighbor Venezuela is next on the list, he added, with more stablecoin case studies on the way.
How Strike works
Strike moves fiat by buying and selling bitcoin in real time over the Lightning Network – an experimental scaling solution built on top of the Bitcoin blockchain.
To explain the process, the 26-year-old CEO used the example of shopping for one of his signature fashion choices. If you want to send money to a Berlin hoodie designer from the United States, Mallers explained, Strike will first auto-convert fiat into bitcoin. That bitcoin is then sent to a Strike Lightning node residing in the jurisdiction of the other currency. An auto-conversion between bitcoin and euros finishes up the transaction and deposits fiat in the Strike app, Mallers said.
Read more: What is Bitcoin’s Lightning Network?
This money maneuver has two results, Mallers said. First, fees are so low you can customize how and when you pay, even down to the minute (as he pays one Spain-residing Strike employee). Second, Mallers argues that the exchange of two fiat currencies through a permissionless intermediary like Bitcoin creates a “true” foreign exchange rate.
Mallers’ startup is working with two yet-to-be named banking providers on the venture. He declined to comment on the subject. Zap has also deployed an unspecified number of Bitcoin and Lightning nodes throughout the globe to support the project.
As reported by CoinDesk, Zap joined Visa’s Fast Track program in 2020. Capitalizing on the Visa partnership, Strike is rolling out its own debit card in the U.S. and EU in Q1 and Q2 respectively, Mallers said. The same instant and feeless experience exists with the card.
The startup joins a number of other crypto firms, such as Fold, to launch cards with the Visa network.
The Bittrex Global partnership follows the release of Strike’s newest payroll feature that already lists professional athlete and Bitcoin advocate Russell Okung and unnamed players on the New York Yankees and Brooklyn Nets, not to mention Billboard Top 100 artists.
Let’s block ads! (Why?)