What if you could send anyone, anywhere, any currency of your choice, and have them receive money in their preferred currency at the speed of light without any fees?
That's the future Strike is building. Never heard of Strike? They're the team that bootstrapped the movement to put a Bitcoin Race Car on the front row of today's Indy 500.
Today I want to share more about what they're building and why it's important. Strike is delivering real products, saving customers both money and time, and I think more people need to know about them.
What is Strike?
Strike is an app built on Bitcoin and Lightning Network technology that enables free, instant, and global transactions by side-stepping traditional fiat payment rails.
One insight Strike's founder Jack Mallers discovered early on was that despite Bitcoin's strength as sound money, there were four pain points preventing people from using the Bitcoin network to make transactions:
- Using the Bitcoin network requires you to spend Bitcoin, and Bitcoin holders naturally tend to hold their Bitcoin as a way to protect their wealth
- Regulations make it difficult and cumbersome to spend Bitcoin, as each Bitcoin sale incurs a capital gain in most regions around the world
- Bitcoin's price volatility makes for a bad experience in day-to-day commerce
- Using the Bitcoin network requires a level of technical knowledge that acts as a hurdle to newcomers interested in Bitcoin
Strike was designed to solve all four of these problems. Now people can leverage the Bitcoin network's settlement speed without spending their Bitcoin, without incurring capital gains, without exposing their counterparty to price volatility, and without needing any technical knowledge of the Bitcoin network.
In a way, Strike has built an interoperable user interface layer on top of the Bitcoin network that abstracts away the challenges of spending Bitcoin.
How Does Strike Work?
When using Strike, users simply link their bank account and make payments through the app as if it were any other payments app like Cash App or Venmo.
On the back end, Strike converts those fiat payments into Bitcoin, and can send them across the Lightning Network to be received by a separate financial institution which then converts the Bitcoin into the preferred currency of the Strike payment recipient.
The only thing end users see are deposits and withdrawals of the currency they're sending or receiving. The transactions taking place on the Lightning Network are completely out of sight.
Why Strike Matters
Strike's innovation seems like a neat idea in America, but right now it's most impactful for helping people make cross-border remittance payments.
In a recent interview, NYDIG founder Ross Stevens explained how difficult it is for someone in America to send money to a relative in El Salvador and how Strike improves the process:
"A housekeeper in New York wants to send $100 to her sister in El Salvador. Before Strike and before Lightning, the way that transaction worked is it would go through Western Union, the sister would go to the Western Union in El Salvador, the $100 would turn into $60 (due to fixed fees), the sister would have to be fearful of gangs hanging outside the Western Union, and since there aren't a lot of Western Union's in El Salvador, the sister might have to drive 3-5 hours on a bus each way, to get to the Western Union, to risk her life, and to get $60, not $100.
Today with Strike and Lightning, the sister in New York can open the Strike app, buy $100 of Bitcoin, that Bitcoin zips to El Salvador across the Lightning Network, her sister gets it in El Salvador, instantly and for free. So $100 doesn't turn into $60, it turns into $99.80, there's no trip to Western Union to battle the gangs, there's no 10 hours on a bus and taking that day out of your life every single week just to survive."
There aren't many Bitcoin apps that can claim to have this kind of real world impact on their users, saving them both time, money, and improving their personal safety.
Combined, it's no surprise that the Strike app has quickly become one of the most popular apps in El Salvador.
Strike By The Numbers
Strike was the #1 app in the El Salvador App Store for 4 days in the last month, and the #1 Finance app for 21 days in April and May. For reference, Coinbase only spent 2 days as the top app in the US App Store in May.
The biggest difference between the two apps, is that Coinbase launched in 2012, while Strike launched in El Salvador in March 2021.
In the Ross Stevens' interview highlighted above, he said "6-8 weeks ago, there were 10-15 signups a day, now there are 15,000-20,000 signups a day."
20,000 new users a day would be impressive in America, but it's even more impressive in El Salvador, a country of only 6.5 million people.
Strike in El Salvador
As Jack Mallers explained on Peter McCormack's What Bitcoin Did podcast, one thing that makes El Salvador a perfect market for Strike is that remittances have a cost structure that prices out people trying to move small amounts of money. It just so happens, that many of those users live in El Salvador.
In fact, 24% of El Salvador's entire GDP comes from inbound remittances, or money being sent in from other countries. This is among the highest rates of remittance payments in the world, and due to small average size of remittance payments in El Salvador, people there have to deal with some of the highest payment fees in the world.
Cross-border payments typically have a fixed and variable cost, and it's the fixed costs that become prohibitive at smaller transaction sizes. For a company moving $1,000,000 across borders, they're barely noticeable, but for an individual moving $100 across borders, they are crippling.
Even on-chain Bitcoin transactions are too expensive for day-to-day transactions in El Salvador, which is why the Lightning Network is such an essential tool there.
On Stephan Livera's podcast, Jack Mallers talked about how users in El Salvador have actually leap-frogged Bitcoin users in America, becoming far more proficient in sending Lightning transactions by necessity:
"Of all of the transactions Strike users have made since our launch [in El Salvador], which has been a lot, only three have been on-chain. And to give you context, we're already at thousands and thousands of users, tons of money transferred, and this market is the only market that is this sophisticated and interoperable with Lightning. That is not the case in the United States. In the United States we see an absolutely massive amount of on-chain volume, and in [El Salvador], they're already predominantly Lightning."
One other factor that makes El Salvador the perfect place to launch Strike is that it already has a burgeoning network of merchants, ATMs, and various fiat on/off ramps that either accept Bitcoin directly, or allow El Salvador users to spend their remittances directly from their phones.
Strike's Expansion Plans
Right now, the Strike app is only available in the US and El Salvador, but Europe, the UK, Canada, and Australia are some of the next markets Strike will launch in.
As they expand, one key advantage Strike has over closed systems is that they can leverage existing fiat on/off ramps and networks of merchants that already use the Bitcoin network in every new country they launch in.
A quote I really liked from Jack Mallers' interview with Stephan Livera covered this advantage:
"If I told everyone at Strike to take the rest of the year off, Strike would be a much better product a year later than it is today. PayPal can't say that, Square can't say that, VISA can't say that."
The fact that the global Bitcoin community is working 24/7/365 to improve these integrations is what makes building on Bitcoin so much more powerful than building closed integrations with PayPal, VISA, or banks on a country-by-country basis.
Strike's technology is already having a real impact on thousands of customers in the US and El Salvador today, and they are quickly expanding their service to enable free and instant payments around the world.
With a global remittance market that's already measured in the hundreds of billions of dollars each year, Strike could become a major global player with just a fraction of their El Salvador success in any future markets they enter.
Strike is also proving that the Lightning Network is an essential and scalable piece of Bitcoin infrastructure, and I suspect Lightning adoption will continue to break all-time highs throughout the rest of 2021.
In short, don't sleep on the Lightning Network, and don't sleep on Strike.