Strike, a digital wallet that relies on the fast version of the Bitcoin network, I believe it can do something that no one has done in half a century. Challenge credit card giants Visa and Mastercard in daily payments.
The Chicago company announced on Tuesday that it would raise $80 million to advance those ambitions and break what its rough CEO Jack Mallers calls the "monopoly, anti-American" dominance of credit card companies. This round of financing is led by Ten31, with new investors including the St. Louis Washington University Endowment and the University of Wyoming Endowment.
In an interview with Fortune magazine, Mallers said Strike will use the funds to establish partnerships with major retailers such as Wendy and Starbucks and change the payment experience for merchants and customers.
While the idea of challenging credit card giants with Bitcoin may sound imaginative, Strike has shown real-world appeal by persuading e-commerce giant Shopify and global point-of-sale service NCR to adopt its technology.
Strike relies on a technology called Lightning Network, which is called the second layer solution in cryptocurrency terms. The Lightning Network works by creating batches of bitcoin transactions and then verifying them quickly, which is much cheaper and much faster than the basic bitcoin network, because in the basic bitcoin network, transactions can take an hour to complete and incur significant fees.
Twitter's tip and payment services have been used by Strike and Lightning networks.
Merchants using Strike have the option to convert any bitcoin payments they receive to USD immediately. Mallers predicts that up to 50% of U.S. businesses may adopt the technology by the end of 2023, while a report by investment bank Morgan Stanley shows that it can stimulate the use of Bitcoin and become the mainstream payment method. Mallers also believe Strike will challenge the status of the Western Union service.
That's all we need
Mallers' father built and sold one of the largest futures brokerage firms in Chicago, , a 28-year-old who loves to wear ball caps and hoodies and is a controversial figure both inside and outside the cryptocurrency world.
He is called "Bitcoin maxi" (slang for cryptocurrencies), and refers to those who prefer only the original cryptocurrencies and despise newer blockchains such as Ethereum and Solana. When asked if Strike could adopt other tokens on his network, including stablecoins, he told Fortune : "This is purely for Bitcoin. That's what we need."
Despite his rough personality, Mallers thoughtfully and even convincingly talked about why Bitcoin has matured in subverting traditional payment networks.
He pointed out that when you buy things online or in the store with a card, the merchant does not receive the money, but receives a promise from Visa or Mastercard to pay the transaction on your behalf. By contrast, Mallers noted that transactions made through the Lightning Network are equivalent to real-time transfers and do not require a lengthy settlement process.
Mallers added that Strike's use of the Bitcoin blockchain means fraud is actually impossible, which in turn means it has much lower operating costs, and it can charge far less than the 1.5% to 4% fees that merchants are typically charged. Meanwhile, Bitcoin is an open protocol so anyone can use it.
In Mallers' view, all of this means that anyone (even high school students) has a huge opportunity to develop payment services while providing new types of rewards and incentives to customers and merchants.
For its part, Strike is focusing on partnerships with large payment companies, including Block, whose cash app tools have millions of users. During the interview, Mallers also mentioned paypal, but said he could not disclose the entire company Strike is working with.
No regrets
Of course, facing some obvious challenges, it remains to be seen whether Mallers can turn their huge ambitions into reality.
This includes the ongoing volatility of Bitcoin, although as some have pointed out, cryptocurrencies have been less volatile than pounds in recent weeks. Another problem is that consumption of Bitcoin will cause tax liability, which may be reduced by proposed legislation in Congress, but is still very realistic.
Another risk is that for some potential Strike adopters, Mallers themselves may prove too controversial. In addition to appearing swagger at the Bitcoin conference, Mallers helped El Salvador adopt Bitcoin as fiat currency, a development that pleased fans of cryptocurrencies but also angered others as the currency’s price declines and the country’s president implemented the measure in an authoritarian way.
Mallers said he had no worries about helping El Salvador embrace Bitcoin, although the poor Central American country has lost a lot of money as a result.
He said: "My relationship with El Salvador is to advise them based on my opinion on Bitcoin. I don't regret it at all. I am a very principled and moral person." An earlier version of the story mistakenly listed the Series B financing at $80 million.
