Jack Mallers, founder and CEO of payments application, Strike, believes Bitcoin can bring the first real change to the payments industry since the invention of the credit card.
Trading just above $41,000 as of Tuesday afternoon, down about 2% over the past month, Bitcoin is used primarily as a store of value asset that critics and long-time investors agree trades like risk-on equity, making it much less useful as a medium of exchange than cash.
But Mallers argues that Bitcoin’s underlying network makes it the world’s most efficient payments network if harnessed correctly. He contends that “using Bitcoin as a payments network is superior to card processing networks or bank networks or remittance networks like Western Union.”
To reap the potential benefits, consumers and merchants don’t even need to touch Bitcoin, he argues.
“This is a payments network that can move value anywhere in the world at no cost in real time and anyone can build on top of it. It’s more inclusive, more innovative. To the consumer who’s remitting money or buying Chipotle, they don’t know Bitcoin is involved so whether you want to have a stablecoin, a Euro, Starbucks points, it’s the payment network that facilitates the settlement of value that’s the disruptor here,” Mallers told Yahoo Finance.
During his April keynote speech at the Bitcoin 2022 conference, Mallers announced a series of partnerships between Strike and big-name companies including Shopify, Blackhawk and the world’s largest point-of-sale supplier, NCR. But the talk began with the history of the credit card industry.
“It’s a story as old as 1949,” he told his audience as he strutted back and forth on the stage in a black baseball cap and hoodie. That year, Frank McNamara forgot his wallet while dining out in New York — sparking his idea for the Diner’s Club card, which became the first multipurpose credit card.
Since then the industry “has seen a lot of consumer innovation… but no one has helped the merchant,” Mallers argued.
Accepting credit cards costs merchant businesses anywhere from 1.5% to 3.5% on each transaction total, according to NerdWallet. According to Mallers, those fees can be eliminated by using the Lightning Network, a 2nd-layer payments application built on top of Bitcoin, which he likened to the internet’s impact on communication.
Major companies from the world’s largest asset manager, BlackRock, to institutions like the International Monetary Fund (IMF) and most governments including the United States, are exploring the use of digital assets to enhance payments.
Outside of the country of El Salvador, the majority of those organizations are considering either the use of a U.S. dollar-pegged stablecoin or creating their own digital currency issued by a central bank.
A recent report from digital asset firm, Arcane Research, found that use of the Bitcoin’s Lightning Network has grown more than 400% year-over-year with payment volume, averaging around $20 million per month for the first quarter of 2022.
But it’s nowhere near major payments networks like Visa, which in 2021 handled $1 trillion in payments volume and close to 20 billion transactions per month.
As for Strike’s own usage numbers, Mallers said he couldn’t share anything specific, telling Yahoo Finance that “we’re in the middle of some pretty big deals.”
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.
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