USA: Payment with Bitcoin Lightning will soon be possible almost everywhere

At the Bitcoin Conference in Miami on April 7th, Jack Mallers, CEO of Strike, announced various partnerships with the most important players at the point of sale. Strike is an American regulated finance company that leverages the Bitcoin Lightning network to process dollar payments through the Bitcoin Lightning network.

What is Bitcoin Lightning

The Bitcoin Lightning Network (LN) is a peer-to-peer network that allows Bitcoins to be transferred “off-chain” without being recorded as a transaction in the blockchain. As a result, the Lightning Network enables bitcoin payments that are secure, virtually free, and real-time. Payments of very small amounts are possible without any problems.

What distinguishes Strike

In contrast to other payment providers such as PayPal, Strike is not based on a self-contained payment network in which only participants in your own network can make payments. Strike uses the Lightning network and the key point is that Strike enables dollar transfers as follows:

> User connects his/her traditional bank account to the Strike app.

> User:in makes a $100 transfer from the US to, for example, El Salvador.

> Strike deducts the $100 from the sender’s bank account and sends the equivalent value to El Salvador via Bitcoin Lightning.

> Recipient: will be credited with the $100.

In this example, neither the sender nor the recipient came into contact with Bitcoin as an asset. 

Until now, relatives living in the US had to send the money to El Salvador via Western Union. High fees. High risks when withdrawing cash. So Strike converts the dollars into bitcoin, sends them through the Bitcoin Lightening network, and then converts them back into dollars. The Strike app has even been linked to Twitter so users can easily use Twitter. According to Strike CEO, this can save the people of El Salvador up to USD 400 million per year. For a small country with a very low income, that is extremely high. The Western Union business was completely disrupted overnight.

In contrast to Visa, MasterCard or Western Union, neither Strike nor El Salvador had to build up a huge infrastructure and develop expensive software. The Bitcoin Lighting Nodes are operated by volunteers all over the world and the basic software is provided by the Bitcoin Core and Lightning developers. El Salvador as a poor country has Instant Payment that works perfectly. Relatives living in the USA can now send money home with Strike or a normal Bitcoin Lightning wallet.

Currency exchange without traditional foreign exchange markets

Interestingly, it will also be possible to instantaneously make a transaction where the sender sends USD and the recipient receives in euros, without any traditional forex markets being involved. Instead, the USD is first converted into Bitcoin and then the Bitcoin into EUR. Because bitcoin is sufficient for retail purposes. If there is liquidity in the USD/BTC and EUR/BTC pairs, the resulting rate will not deviate from the exchange rate. Bitcoin markets operate 24 hours a day, 365 days a week and Bitcoin has ample liquidity in multiple currency pairs.

Bitcoin Lightning at the point of sale

For example, if I use Apple Pay to pay for my chewing gum at the kiosk today, I have deposited my credit card with Apple Pay. The credit card company charges transaction fees for this. I got the credit card from my house bank, where I also pay an annual fee. The kiosk operators use an acquirer for billing, who technically processes the whole thing and usually sells the terminal at the same time.

The user experience is convenient, which means that I no longer have to take my credit card with me, but simply click the button on the iPhone twice. But what is happening in the background is still the same as it was 50 years ago.

Jack Mallers has now announced the following partnerships:

Shopify: Strike makes the Bitcoin Lighting Network accessible to Shopify merchants. This allows all retailers using Shopify to accept payments in Bitcoin. However, these will be exchanged for US dollars as part of the transaction. Shopify has approximately 1.7 million merchants in over 175 different countries.

NCR / Blackhawk: Using the same mechanism, Strike enters into point-of-sale partnerships with the largest point-of-sale provider NCF and the payment service Blackhawk. An unbelievable number of 400,000 traders can now use the Lightning Network and save on the previous fees. These also include McDonald’s, Starbucks and Walmart.

The existing legacy setup is simply not competitive, since Strike’s solution is based on a globally available decentralized payment network and Strike has to spend very little money on the basic infrastructure

Open payment network of the future

We now have an open payments network that can physically settle any amount of value, anytime, anywhere, at virtually no cost. The network is not closed, anyone can connect to it via the Lightning Network.

In contrast to today’s providers, who are self-contained, a Japanese user could suddenly send an instant payment to an American user who uses a completely different provider. That has enormous potential. Today, only payments from PayPal to PayPal, for example, are possible. With regard to network effects in the global world of the Internet, such a self-contained payment system has no chance compared to an open network.

In the USA you can potentially pay with Bitcoin Lightning almost everywhere in the future.

What’s more, Madeira, Prospera’s in Honduras and Mexico have announced plans to introduce Bitcoin as official tender.

Bitcoin with the Lightning Network is becoming a serious competitor to the existing payment infrastructure.