Previously, Strike had only been available through a closed, private beta program. In the private beta, Mallers claims that they have “already seen $100,000 in payments”.
Strike is an application that allows you to transact with Lightning payments with just a debit card or bank account. But, here’s the secret sauce: instead of having to buy bitcoin to load up your Lightning channels, users on Strike never touch BTC. According to Mallers, “This is important as Strike users are not exposed to any volatility, tax consequences, custody challenges, node management, channel management, etc. When a user makes a Lightning payment with Strike, their balance is debited. When a user receives a payment into Strike, their balance is credited.”
In other words, you pay in fiat, but use Lightning. If you want to convert fiat into bitcoin, then create a Lightning invoice and pay yourself through Strike.
Here’s my favorite part: to use Strike, all you’ll need is your name and a phone number. Don’t believe me? Check out this quick demo showing the on-boarding process on Youtube.
Bitcoin as a Settlement Rail
“Historically, Bitcoin has two main value propositions: censorship resistance and wealth creation. However, with the introduction of Lightning, we now see a third emerging: the use of Bitcoin as a settlement rail.” Mallers told us.
Originally, Zap had created a Lightning-enabled fiat on-ramp named “Olympus”. Essentially, when you used Olympus, you were relying on Turbo channels to settle transactions where you’re purchasing a Lightning channel connected to a wallet provider and then they’ll push the corresponding amount of sats over to you. Therefore, even if you had an empty Lightning wallet, you could still receive payments.
As Strike evolved, Maller’s realized that the problem they were trying to solve wasn’t really focused on using bitcoin, but they needed to create an interface for the traditional finance world to leverage the Lightning network directly. To quote Mallers, “What if everyone’s bank account could speak Bitcoin?”
“One of Strike's key value propositions is its interoperability with the Bitcoin and Lightning network. With Strike, users can interact with millions of existing users from day one. It benefits from the existing network effect that is Bitcoin; from day one users already have a variety of use cases. We've seen Strike be used for general online commerce, brick and mortar commerce, buying Bitcoin, selling Bitcoin, etc.,” Mallers told Bitcoin Magazine.
The Risk for Strike
At the end of the day, Strike is a custodial wallet. When we asked Mallers about the potential trade-offs with the wallet being custodial and he replied, “I think Strike is a really innovative product and I’m not sure there’s ever been a product like it. It’s not custodial in the traditional sense.”
Mallers continues, “The user can custody fiat currency with us, but it is FDIC insured through our banking partner, so there is never a risk to having any customer funds lost. Yes, the set of nodes performing Lightning functionality are hosted and maintained by us, but we don't ever host or maintain any keys or BTC on behalf of our users. If the BTC is hacked, I'm fucked, nobody else. That's the way it should be.”