WBD296 Audio Transcription
Jack Mallers vs The World
Interview date: Friday 8th January
Note: the following is a transcription of my interview with Jack Mallers. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In this interview, I talk to Zap CEO Jack Mallers. We discuss the newly launched Strike Global, revolutionising global payments, neobanking with Bitcoin and helping to bank the unbanked in 3rd world countries.
“We have banked the unbanked. We have given them free and instant international money transfers, we have provided them financial services that have had gatekeepers for hundreds of years.”
— Jack Mallers
Interview Transcription
Peter McCormack: Good to see you, Jack man; how are you?
Jack Mallers: I'm good, how are you?
Peter McCormack: Good, man. Glad you can fit me in now you're in so much demand from mainstream news now; you can fit in this little podcast in Bedford, you fucking baller?!
Jack Mallers: You're the biggest thing since sliced bread. Congratulations! I feel like I owe everyone congratulations nowadays. It's been a long time coming for everyone, but you're huge. Thanks for having me, buddy. Just remember we were friends before the fame.
Peter McCormack: Dude, you can come on whenever you want; you've got the fame, man. You're changing Bitcoin. Look, we've got loads to get into. We've done a few shows together over the last year or so, we've got a load to get into, man; but the first thing is, I'm sat here, I've got TradingView open, I see Bitcoin at like $32,600 and it looks stable. It looks fucking stable! How do you take this in?
Jack Mallers: I don't think anyone could have emotionally prepared for this. It's surprising for all of us. But, with that being said, I knew it was coming, you knew it was coming; that's why we've invested our lives into this space. So, it's a little bit of mixed emotion. I'm flawed by it. I think all of our lives are changing in real time. The world is changing in real time so fast, it's hard to keep up.
But, at the same token, I very confidently said on your podcast that Bitcoin was going to easily be a trillion-dollar asset in the year 2021 and what are we; five days in and we're almost there.
Peter McCormack: Almost there, dude.
Jack Mallers: Yeah, that's my immediate take on it. It makes sense; it makes sense to me what's going on in the world. Bitcoin should be priced this way; it's still at an immense discount and I've been expecting this for years. So, as surprising and taken aback I am by it, I am so confident that this is correct and good for the world.
Peter McCormack: So, what's the Strike price on that trillion dollar; what is it, about $52,000?
Jack Mallers: Something around. I guess it depends on how you calculate the circulated supply and coins in existence and such, but it's around the $50,000 mark.
Peter McCormack: We could do that by the end of the month.
Jack Mallers: Oh yeah. We could do it tomorrow; who knows?
Peter McCormack: Yeah, man. Do you know what I think it is; it's that we went from that $10k mark, which we couldn't get out of, to where we are pretty quick. It's been an almost straight line and the dips have been small. They've been like 10%. We haven't had any of the 30%-ers. I think it's just the speed that it's happened that's taken us all back.
It's not that, "Oh, I've made a shit load of money", thing; it's, "Oh, we're really real now. We've got a lot of interest from institutions". There's what's going on with what you're doing. You're hearing about the likes of JP Morgan now selling Bitcoin. There's just so much happening, so many different directions. I think it's more that, I think; well, it has been for me; maybe it's different for you?
Jack Mallers: Listen, I know my stepmom, Brook, will text me all the time, "Why did the price go up? Was it this piece of news [or] this institution?" In reality, markets are unique and strange and act within their own realm; they don't care about anybody else. And so, the truth is there are just more buyers than sellers.
My personal opinion is this recent quote I've been spewing all over the internet is that, everyone's operating their life at a loss if they're not protection their wealth in something else, and we can touch on that. But, whether you're Michael Saylor; whether you're Russell Okung; whether you're a normal individual living an everyday life, commuting to work and working a nine-to-five, you all face the same problem.
So, especially now with coronavirus, with the recent influx of US dollars and printed currency, everything's going to go up in price, every single asset, even the couch in your home is probably going to sell at a premium on eBay. And, those that trade at a significant premium though, where cash flows are going to sprint to an absolute emergency evacuation, is scarce assets; hard, scarce assets that have defined supply, that have defined monetary policy and that are hard, reliable, liquid money.
You've seen a rise up in the S&P 500 for example. People are treating that as a safe haven. But, Bitcoin is engineered for this exact moment. So, depending on the day, you could say, "Hey, dips are getting bought quicker, institutions are here, innovation's finally here"; whatever your narrative is, I don't think it really matters. I think that Bitcoin is just a really hard and scarce money and there are more dollars being printed than there are things to purchase. There's not the equivalent amount of houses popping up everywhere. Bitcoin's popping up everywhere, but there's an immense amount of dollars coming and so they have to go somewhere. So, I think that's all it is and it's not a surprise that they're choosing Bitcoin.
Peter McCormack: Conversely, everything's getting cheaper if you hold Bitcoin?
Jack Mallers: Yeah, life for bitcoiners gets immensely cheaper, almost at 100% clip a year on average. And, if you don't and you hold dollars and just let them sit in your chequing account, life for you gets more expensive; life will get doubly more expensive every five years at this rate.
So, it's becoming a no-brainer and people are waking up to it. And so, yeah, I've been twisting the words and just saying things and cuter phrases on national TV, but it's all the same thing. You have to storm-protect your wealth in something; and dollars, clearly, if you hold it in dollars, then the assets around you, everything that you want to achieve in life, so not the CPI Netflix subscription; but, if you want a house, if you want your kid to go to Harvard, if you want a nice car, if you want a vacation, all of those things with dollars in your chequing account is getting 15% to 20% more expensive every year; so, they will double in price in the next three to five years for you.
Now, if you hold it in Bitcoin, something like a harder asset, things actually are going to get cheaper, because that harder asset is going to retain value and the assets around it are going to depreciate against the harder money. And so really, from a high level, it's very simple. It's where you preserve and protect your wealth, the assets around it are continually getting repriced; and that's just an interesting and different way to think about it, but that's all that's happening, is that the assets around Bitcoin are going down in price and the assets to the dollar are going up.
So, it's a no-brainer, and I don't care if you're Michael Saylor, if you're Jack Mallers, if you're Peter McCormack, that problem scales to everyone on the planet. So, yeah, it's happening at a rapid pace, but all markets do. Markets don't wait for anybody. Things happen overnight. They're not going to allow you to realise all of this and then safely accumulate as much Bitcoin as you need, you know. Markets run from you and run from you fast.
Peter McCormack: Well, dude, it's funny; back when the price was like $6,000, I wasn't really accumulating. I don't know why, I just wasn't. I think I was probably still nervous it was going to go lower, and I know we had that 12 March big drop with the COVID. But, I was just nervous about it. I started scaling in all my company and personal money around $10,000, and that's worked out right. There'll come a time when it won't; there'll come a time when it tops out, but hopefully if you've accumulated enough through that period, you can ride something else out. But also, maybe the next bear market will be different.
But anyway, look, we can talk about that forever; I can have these conversations with anyone. I need to find the 101 about Strike from you, because last time we spoke, you just told me a little bit about it, a little bit about what you'd been up to, what you'd been working on; and then, here we see you on national TV talking about Okung and it's important what he wants to do to get his salary in Bitcoin; super interesting.
Then, I reached out to you and I was like, "Holy shit, I can use that for me, right?" I think that solves a couple of problems for me, but let's do the 101; let's go right back so anyone listening, who may not have heard of Strike, they've certainly heard of you, but let's cover what Strike is.
Jack Mallers: Yeah, so I think it's firstly important to discuss monetary networks as they exist today before Bitcoin and Lightning and things like Strike. So, the most popular monetary networks that exist today are the Visa Network, the PayPal Network, the Square Network, the TransferWise Network, the SWIFT Network. Now, what do all these things accomplish and do as networks? And, don't be mistaken; they are networks just like the Bitcoin Network and the Lightning Network.
The Bitcoin and the Lightning Network has the tendency to attract this kind of nerdy, highly technical, you know, the hacker screen with the green letters on the black overlay; but, all of these things are networks and they attempt to achieve the same thing. So, let's visit. I mean, Visa is just ACH plus the Visa Network. What the Visa Network does in combination with ACH, which is a way to move American dollars, is they achieve things like identity. Like, how does one identify oneself on the Visa Network; how do I say, "Hey, I'm Jack Mallers" in the Visa Network, and I can send and receive money.
The second is specifying a payment protocol for one identity to pay to another. The third is receiving money. How does some merchant, or recipient within the network, request and receive and settle money. Then there are things like crediting and debiting. And, Square does the same thing; PayPal does the same thing; my Cashtag is my Square Network identity and I can use that identity and use their payment specifications within the Square Network to make and receive payments.
The interesting thing about these networks is they're all bifurcated and segregated and private. Someone on the Square Network cannot participate on the PayPal Network. My Cashtag cannot pay to your PayPal account, right. Cash App and PayPal don't speak to each other; they're segregated. Transfer-wise, you either use TransferWise or you use SWIFT; you don't use them both, they're different networks.
The insight and thesis behind Strike is that the Bitcoin and Lightning Network combined is the most efficient and open monetary network. It's the first and most efficient, fastest, cheapest, open, global monetary network. It achieves all of these things, like identity within the network, payment specifications in sending and receiving, how final clearance and cash finality is achieved; all of these things are defined in an open matter and achieved from day one within this network.
So, Strike's 101 is, if Square is ACH plus the Square Network and PayPal is ACH plus the PayPal Network, Strike wants to enable ACH plus the Bitcoin and Lightning Network. We think that this network is going to outcompete all of the other private networks and it won't even be close. And so, from a very high level, that is our thesis. It's a Bitcoin native neobank in your pocket that's built directly on top of these new monetary networks known as Bitcoin and the Lightning Network.
We can achieve frankly anything cheaper, faster and inherently global than anyone else, and it's very important that it's an open network, which gives us an unbelievable competitive advantage that I can't even begin to explain, but I'll stop there. And just from the highest level ever, you've got ACH plus the Visa Network, ACH plus the PayPal Network; Strike is ACH plus the Bitcoin and the Lightning Network, and that's our thesis; we're using Bitcoin, the network, not necessarily the asset, but the network. So, I'll stop there for a sec!
Peter McCormack: Well, no, because we've got a few things to unwrap there. First, you probably need to explain to people what ACH are, because some people won't know who don't work in the sector?
Jack Mallers: ACH is Automated Clearing House. It's a network to move dollars. For those that are in Europe, I think it's the SEPA Network, right. It's just a way to move dollars around between parties. So essentially, your on-ramp has to come somewhere; like Visa plugs into something, plugs into some bank account or such. But it's just an enabler. So, I'm using ACH more broadly, but Strike can also be the Visa Network plus the Bitcoin and the Lightning Network, right; prepaid card plus the Bitcoin and Lightning Network; cash plus the Bitcoin and Lightning Network. It's some ramp into the network. Does that make sense?
Peter McCormack: Yeah, it does. So, if I want to open up a Strike account, I download the app; what do I get? Do I have a Bitcoin wallet; do I have a dollar wallet; do I have a pound wallet; what do I have?
Jack Mallers: It acts just like Cash App or Venmo. You have a neobank account. You get an account number, you get a routing number and you can custody and hold. For the United States, we're currently active in the US, you hold dollars. Hold dollars, FDIC insured. But, those dollars, in this new really novel, interesting bank account on your phone, is interoperable with this new monetary network all over the world, so you can scan Bitcoin QR codes and pay them with your dollars; you can make Lightning payments with your dollars; you can receive Bitcoin and Lightning payments as dollars.
So, as Bitcoin comes flying into this new bank account of yours, it gets automatically converted and credited to your account as dollars. You can process US payroll, for someone like Russell Okung, natively on the Bitcoin Network, and puke it out to his address as dollars. So, here in the US, it's a US dollar native bank account, which is built on this new monetary network. And for the UK, it's pounds; for the EU, it's euros; and so and so forth.
Peter McCormack: So, if I'm sat here with my Strike account, say I've got $100 in it and I'm like, I owe Jack some money, I owe Jack $50 from when I last saw him, I send you $50 through the app; I send it to your ID; how is that actually getting to you; talk me through what actually happens there?
Jack Mallers: Well first, the reason we're talking is we actually have a massive announcement, so let me first highlight that. One, we partnered with Bittrex Global and Strike will be coming to over 200 countries.
Peter McCormack: Woah, let's say it a little bit louder; 200 fucking countries, man!
Jack Mallers: Yeah. We partnered with one of the biggest exchanges in the space. Strike will be coming to over 200 countries and plans to support all major fiat currencies. We'll be onboarding all 1 million plus Bittrex users onto Strike, enabling them on to the Lightning Network, so this whole, "Lightning Network doesn't get used and doesn't have a lot of users" also dies today. And, we'll be launching our Strike card, partnered with Visa here in the US, in Q1; and in Q2, will be available for those in Europe and the UK.
On your topic of how does money move and what's being accomplished here, let me concretely tell you, I think the first killer app that I think Strike is going to attack and the killer app for Lightning is going to be free and instant international transfers of money, and that's what we're going to first accomplish with our global launch here. It's not simply taking the US product and giving it to people in Europe, but I can send any amount of money anywhere in the world instantly and for free with this new monetary network and Strike.
So, let's explain that. So, let's say, Peter, I want to send you $1,000, but you are in the UK and you operate in pounds, correct?
Peter McCormack: Yeah.
Jack Mallers: So, here's how this would work. What happens when you have Strike in the UK and I send you $1,000, Strike is then going to debit $1,000 from my US balance, or a linked bank account, right; it's going to take the $1,000 I want to send. It's going to programmatically and automatically trade that into Bitcoins in real time, and in a way that's available and accessible in our United States Bitcoin and Lightning infrastructure set.
Now, it's going to take that Bitcoin and zip it across borders and over the ocean, in real time, where it lands in one of our various UK Bitcoin and Lightning infrastructure sets. As soon as it gets there, physical value is transferring across an ocean, over borders, in less than a second at no cost. And then, when it arrives in the UK, we convert it right back into pounds and we give it to you, Peter.
Now, what happened there is extremely novel; let's break that down. We now have an asset class and a monetary network that's able to achieve cash finality anywhere in the world at any time at no variable cost. Never in the world have we been able to escrow physical value for no cost and in real time.
First, we would need a digital bearer instrument that actually holds physical value, which is Bitcoin. Then we would need a layer on top of it that offers cash finality that removes the cost to escrow and the time to escrow. So, Bitcoin without Lightning carries variable cost and variable time to achieve transaction finality. With Lightning, those problems are solved.
The third real problem is that in order to use this novel new monetary network that is Bitcoin and Lightning, you have to use Bitcoin, the asset. For us, that's okay; we don't mind using Bitcoin; we've set up our Lightning node; we've done the podcast with Matt Odell. For the everyday person, actually obtaining and using Bitcoin is not something they're interested in. But, with Strike, we solve that. We allow you to use these new monetary networks with US dollars, with British pounds, with euros, with the Swiss franc.
So now, all of a sudden, the combination of Bitcoin, Lightning and Strike enables me to send physical value anywhere in the world at any time at no cost. It is absolutely transformative. I'll let you come in!
Peter McCormack: I've got so many questions. So I'm like, okay, so I've got my wallet here, you've sent me $1,000; it comes in at, say, £750. That £750 that's in my wallet, is that £750 represented by Bitcoin that exists somewhere --
Jack Mallers: No.
Peter McCormack: -- or is it represented by cash? So, you're just using the Bitcoin to trade?
Jack Mallers: Correct. One of the very important points and why we're able to pull this off is, not only do we have a new digital bearer instrument that carries physical value; not only do we have a Layer 2 that's able to achieve transaction finality at any time, at no cost, at anywhere in the planet; but, we also have this commodity, this asset class, that has sufficient liquidity in every single currency pair that's ever existed.
You can think of the satoshis in our infrastructure. So, we have infrastructure spreading across the globe. We've got different sets in the UK, different in the EU, Central America. Depending on the currencies or the regulations or the policies, they're just physical Bitcoin and Lightning pieces spread all of the global labelled as Strike. And, you can think of these little satoshis that we're sending around as soldiers.
I'm like, I want to send $1,000 to Peter, and a group of satoshis takes that. So, my $1,000 gets converted into this little batch of soldiers that are satoshis on the network, and they run over to the UK in less than a second at no cost, and they say, "Hello, I'm here to carry out a task for Mr Jack Mallers. We need British Pounds for Peter McCormack and we need them now". Well, thankfully Bitcoin has liquidity in the British pound. When? Oh, 24/7/365. There is no market close at any time; no problem. And, they swap themselves into British pounds and they enter right into your pocket.
Then, you may need to send them to El Salvador, and they'll run over to Central America and do the same thing. And El Salvador may need them in Australia. Now, what's actually happening is we're moving physical value that has the liquidity profile that any asset in the world would ever need; and they're just running round the world and escrowing value in real time. The fact that I'm using dollars and you're using pounds is purely convenience, but convenience is important and we're able to make real-time and instant remittance payments at no cost.
Here's another thing. It doesn't matter the size of the payment. I can send you a dollar; it will get to you UK in real time at no cost. There are no minimums. I could send you a dollar; I could send you a million dollars and we'll get the same output. There's no variable cost to achieve any of this and it's honestly remarkable.
Peter McCormack: Yeah, it is. So, that leads me to more questions. So, you've essentially got a trading engine in the background that allows this to happen, but you're doing this at zero cost. But, there's usually a cost to trading, so how are you doing it at zero cost?
Jack Mallers: We're just not charging the fee. The counterparties that we have established, there's no fee to execute with them. I mean, there's a trading fee for the average retail trader that's on Coinbase Pro, but we do millions of dollars of volume alone here in the United States in this beta, and our counterparty partners don't charge us anything. So, we're delivering the service at no cost.
Peter McCormack: Well, how do you generate money then? Where's the Zap business model; what's going to make Jack Mallers a billionaire?
Jack Mallers: We have plenty of revenue models and we're going to be transparent about where we charge money. Right now, there is nothing I want to discuss. I mean, people copy me all the time; I'm very cautious of spilling out my blueprint too much. For example, our relationship with Visa, the Strike card, we collect all the interchange on that, for example.
Peter McCormack: Oh, course you do.
Jack Mallers: So, there's one example. We have merchant services that we'll charge for, but yeah, I think I really want the focus to be on the progress humanity is taking here and international transfers. I mean, our world is now immensely more connected in a significant way by this new open monetary network that is Bitcoin and Lightning; and, what it's able to achieve is fundamental progress for humanity. It's actually really insane.
There are so many golden nuggets packed in here; here's another one that's going to blow your mind. When I sent you the $1,000 that was received as pounds, you just asked, what's the conversion rate? Oh, it's at £750. You immediately questioned, "Well, what was the Forex exchange rate used?" and when I walked you through the user story, you'll notice there was no Forex exchange rate referenced, right?
That transfer was comprised of two transactions. One was a Bitcoin buy, where my US dollars were converted into Bitcoin; then the other was a Bitcoin sell where the Bitcoins were converted back into pounds, okay. When you net those two out, it actually achieves the exact Forex exchange rate. In fact, in our testing, sometimes it's even cheaper than the going Forex exchange rate, which just outlines some flaws and lag in how the Forex exchange rate is used.
But Strike is an example, in broad daylight, of how maybe the real Forex exchange rate between any two currencies is the net between a buy transfer and sell through Bitcoin as the world's now new novel reserve asset, and that the price between dollars and pounds when exchanging should only be calculated by getting it into Bitcoin and moving it across the world and getting back out first.
There are so many nuggets in here that this new monetary network is going to escrow, just a new epoch really; a new way to think about international transfers and how we make and receive payments.
Peter McCormack: This is why I wanted to speak to you about whether I can use it for my business, because a majority of sponsors, if not all of them, are in the US, right. So, they all pay me and they all pay me in different ways. I've got one who pays me by Bitcoin; I've got one that pays me via bank transfers; they all pay in different ways.
The least efficient one is the bank transfer, because I have the foreign exchange rate. But, the foreign exchange rate that the bank offers is wildly different from the quoted foreign exchange rate. I lose money. I've been losing something like 0.05% or something which, you know, adds up. So, there is that. I have clearance issues. I've got one invoice that was paid back on 14 December that still hasn't come through yet. It's all just a bit of a pain and so causes me a problem. But, it's also making me think of other things.
So for example, Jack, you know I used to travel a lot with work, right, so I would go from here to South America to Boulder to Chicago to New York, whatever. Everywhere I'm going, if I haven't got the money out in advance, which I usually haven't because I'm fucking useless, I'm withdrawing either cash from an ATM and I'm paying $5 every time, sometimes more; or, I'm paying this 50p, whatever that is; 60 cents fee on every card transaction.
If I use my Visa card globally from my Strike account, does that eradicate that issue?
Jack Mallers: Yeah. I mean, so what you're talking about, let's first cover the bank transfer one. I mean, what you're discussing is that you have someone that's located elsewhere in the world that needs to get you physical value. And, what I'm describing is there's now this new novel way to do that from a high level. The best way to accomplish that is take their currency, convert it into this new monetary network that's able to achieve finality instantly and for free at any time, get that to you in your physical location and convert it back.
So, the real currency exchange rate; fuck what a bank says; fuck the bank; that's the real, most efficient and fastest way to get you the money. So, let's say that you're a merchant and you have some checkout on your What Bitcoin Did podcast to schedule a session, and I'm in the United States. I could go check out $50 to Peter McCormack, or What Bitcoin Did, and I make the payment. Strike is going to take the dollars, convert it to Bitcoin over a Lightning infrastructure, zip it over to the other side of the world, and then convert it back to pounds and check you out.
The cost for us to achieve that is nothing; there is absolutely no cost. It's insane! And, if we were to charge something, someone else is going to copy me, listening to this podcast, and charge less. I mean, the fact that there is no cost to do that, I mean the free market is going to drive it down to what it needs to be. It's remarkable; it's honestly remarkable. And, the fact that it's an open network…
I mean, I have so many stories. I want to tell you about our pilot in El Salvador, I want to tell you about the story in India, the UPI open networks. And so, yeah, anyway, I'm so proud of it, honestly. It's a huge achievement.
Peter McCormack: Hold on; did you, in El Salvador, go and stay with Michael, go and visit Michael?
Jack Mallers: So, I'm going in January. We're launching a pilot in El Salvador, so I think that this shows exactly how powerful this really is. So, El Salvador, I think it was 1892, introduced the colón as their currency. But in the 1980s, they had this devastating civil war, and the economy went haywire.
Eventually, they introduced the US dollar as their official currency, but they don't have the banking infrastructure, or the legal right, to print US dollars, so everyone there is relatively unbanked, or banking infrastructure is not very accessible. So, the world around them is priced in dollars, but access to US dollars, especially in a digital manner, is not there. Also, El Salvador is ranked eighth in the world for inbound remittance from the United States. In 2017 alone, there was over $4 billion sent from the United States to El Salvador in one calendar year.
Now, when talking to El Salvador residents, sending money from the US to El Salvador is expensive, through SWIFT and Western Union. It takes sometimes over a week, but at least days. And, it's not very safe. These people go and pick up the money in physical locations and they'll be gangs that sit outside the Western Unions and just kick your arse if you don't give them 25%.
Now, let's do this whole thing with Strike. Strike, I can send $1,000 to someone in El Salvador. Again, the $1,000 is going to debit from my bank account, convert it live in real time into these little satoshis in our infrastructure. They're going to run over the Gulf of Mexico and run over to El Salvador in one second and at no cost. And, they're going to convert themselves into, now we support tethers. So, what does an El Salvador person really, really want? They want access to a synthetic digital dollar that they can store their value in.
The rest of their world is priced in dollars; so now, those little satoshis that travelled from Chicago, from my Chase Bank account, then to satoshis, then zipped into our Central American infrastructure and converted into sats and credited to the user. The user now has 1,000 tethers, free at no cost, safe, and to their mobile phone and the safety of their home. Now, all of these El Salvador residents have essentially a Cash App on steroids. They can make P2P payments between each other with these tethers.
Like, oh, I get a haircut; 2 tethers. I went Christmas shopping; 7 tethers. Okay, perfect. And then, if you want to, they ask me, "Well, am I stuck with tethers; what if I don't want tethers; what if I need local currency for an emergency? There are no Strike tether tellers or ATMs; there are no Strike ATMs here?" No, but Strike is interoperable with the Bitcoin and Lightning Network; that's its whole point; it's an open network.
So, you can go to the Bitcoin ATM in El Salvador, go to the Bitcoin teller in El Salvador, and you can scan a Bitcoin QR code to withdraw from the ATM. Strike is going to take the tethers in your app, live convert it into these satoshis; the satoshis are going to enter the Bitcoin ATM and the Bitcoin ATM is going to puke you out the local currency.
So, we already have on- and off-ramps everywhere that there are Bitcoin on- and off-ramps. Strike is natively interoperable with these networks. So, an El Salvador user can get free and instant remittance. You want $1; done, instant, free. You want $100, you want $1,000, you want £100,000; same thing. Now they have a synthetic digital dollar that they can use P2P like Cash App. They want to buy Bitcoin on Strike; done. They want to make P2P payments; done. They want to cash out to local currency; done.
We have, via mobile, banked the unbanked. We have given them free and instant, international money transfer. We have provided them financial services that have had gatekeepers for hundreds of years; and we're doing this all on --
Peter McCormack: That is awesome.
Jack Mallers: -- an open permissionless network. It's very important.
Peter McCormack: I was down in El Salvador, I think it was the end of last year, and I was with the Bitcoin Beach guys and they've got that programme where they've got local youths and they're trying to keep them away from crime. They reward them in Bitcoin and then the local businesses accept them. But, the problem they had is that the volatility in the Bitcoin was causing a problem and they were having to swallow the volatility so nobody lost any money. You've solved that as well?
Jack Mallers: Exactly. So, this isn't just about El Salvador. This is a Cash App on steroids for billions of people in smaller markets; billions. I mean, this is absolutely massive. You get access to a synthetic digital dollar that you can make P2P payments with your friends and family. You want to buy Bitcoin, you want to take some of it and save it in Bitcoin; you can buy Bitcoin on Strike; it's free and easy. You want to send money to and from Europe, to and from the UK, to and from the US, remittance to your family; easy, free, safe, no cost; all from your phone.
Strike acts as the bank account you never had if you're El Salvador. So, not only is this about, yeah, I can send dollars, received as pounds, but this is about reaching billions of people that need help. And, this innovation carries much more weight than the better version of TransferWise.
Peter McCormack: Yeah, man.
Jack Mallers: And it's important, the Lightning Network, as much shit as it got, it's only possible with Bitcoin and the Lightning Network. So, it's well worth the wait and all the hard work people have given. I'm so proud of this community, because we're finally able to deliver on a user story and a killer app that makes sense, and it delivers value to billions of people. We'll have a million users when we onboard all the Bittrex users within the first quarter. I mean, this is legitimate and I'm so proud of that, so I want to make that statement.
Peter McCormack: Dude, honestly, you're blowing my mind right now. This is awesome. Okay, I've got so many more questions. Who are you fucking with; who are you putting out of business?!
Jack Mallers: So, let me tell you a story quickly. I think that this is really important to answer your question. So, in India, there's what's known as UPI, Unified Payments Interface. What that is, in India, the government mandated this singular QR code, this singular payment standard for how payments will need to be made, digital payments in India.
So, there was a company that predated UPI, okay; it was called Paytm, an absolutely massive company, one of the biggest fintech companies of all time at one point. Even Berkshire Hathaway was a lead investor at one point. They were valued at God knows how many billions of dollars. They had 320 million registered users. For reference, Cash App has 50 million. Cash App's the greatest thing since sliced bread right? 350 million compared to 50 million, to give you scale of how absolutely massive. This thing was going to take over the world.
What were they? They were the same as Cash App; they were the same as PayPal. They were a private network, they were the Paytm Network. They created identity within their network, a way to make and receive payments; they were just there first. India introduces UPI, the Unified Payments Standard, right. All of a sudden, this company that was walking on water went from number one market leader by a long mile, to the fourth. And, why was that?
If they were to integrate the UPI standard, it would sacrifice the value of the Paytm Network they had built up for so long. If their merchants all of a sudden also accepted the UPI, well then who's to say I need Paytm to pay that; I can use this other wallet or this other wallet. It was a unified standard that was globally accepted and everyone was interoperable with. UPI became an open network. India went from the Paytm closed monopoly to the UPI open network and it absolutely destroyed the Paytm business.
Now, I'm saying all this to draw an equivalent. When I walk into Starbucks today and I tap the guy on the shoulder next to me and say, "Hey, how are you paying for your coffee?", he'd look at me and be like, "What type of fucking arsehole are you? With my Visa card. How are you paying for it, you idiot?" Of course. We live in the Visa monopoly; we live in the Square, the PayPal, the Visa, these private networks.
Now, what if there was a singular standard where Starbucks was accepting these new Bitcoin monetary, Lightning monetary networks, like these QR codes; and they're never touching Bitcoin, the asset. As the money comes in, Strike, or someone else, automatically converts it and creds them dollars, right. But then, when I ask you, "Hey, how are you paying for this?" "Oh, I've got Cash App, I've got Coinbase, I've got Strike, I have BlueWallet. My nephew built a wallet for his fucking science fair project".
All of a sudden, market share is absolutely sacrificed by all of these monetary networks. All of a sudden, there's an open, unified standard. So, I say all that to say, when PayPal integrates Bitcoin, they allow you to speculate on the price; they don't even allow you to withdraw to an address; why? If they allow PayPal users to be interoperable with the Bitcoin Network, this new open standard, the Bitcoin and Lightning Network is what UPI was for India; Bitcoin and Lightning is for the whole world. They're going to dematerialise all of these monetary networks that exist today.
The public market valuation of PayPal is a proxy to the valuation of the monetary network that they've built; all the merchants, all the users, all the features that they've built within their own network. If they start to remain interoperable with all this new Lightning Bitcoin monetary network, they're going to sacrifice share. When I go to check out at a PayPal merchant, who's to say I want to use PayPal to pay it? I'll use Strike, I'll use BlueWallet, I'll use Wallet of Satoshi, I'll use the command line; fuck you.
So, Square and PayPal and all these companies are in a predicament. I mean, I'm able to do international money transfer at no cost, any time of the day, in real time. So, they know that there are serious advantages to this monetary network, but adopting it is going to come at a huge cost of market share and sacrifice of the value of their own network. If the PayPal Network gets degraded and is worth less, the company's going down fast.
The whole thesis behind Strike is there's going to be this type of Flippening and if you're not interoperable natively to these new monetary networks, you're lost.
Peter McCormack: You're fucking everyone?
Jack Mallers: Yeah, but at this point it's on you. I'm a Trojan Horse; I give no fucks. I'm here to help Bitcoin to push this through. I've been working on the Lightning Network for years, I've been working on this vision for so long and I'm calling everyone's bluff. Yeah, I'm going to allow anyone in the United States to send money to Central America and bank the unbanked because I'm using an open network. How do they have -- did I install Strike ATMs all throughout El Salvador; do I need to do that in 200 other countries? Nope. I'm on an open network.
There are millions of people working on the network that I'm working on. How many people are working on the PayPal Network; more than are working on the Bitcoin Network? Bullshit. You can't compete with me. I built this company out of my bedroom and you can't compete with me. Why; because my network is open. Everyone's building on it at the same time. Someone already put ATMs all throughout El Salvador; I didn't have to do it. You just simply cannot compete. You have to succumb to the open network. The open network is going to swallow you whole, whether it was UTI and Paytm, or Bitcoin and Lightning and Square and Paypal.
Before I end this rant, Square, I know these companies are brilliant; I love them and they're aware of this and I think they're making best efforts about this. But, it's very interesting. If Jack Dorsey were to enable Lightning QR codes at all the Square merchants, who's to say I would use Visa or Square to pay at Starbucks; fuck you guys. So, these companies with these private networks, we'll see how it plays out.
Peter McCormack: Jack, you fucking baller, man; I love that! Okay, so I'm now thinking about when I went out to Venezuela, right, and I went to Venezuela, went to check it out, and there's been all this talk about how Bitcoin can help people in Venezuela. I got there and I came out and I was like, "No, it fucking can't!" If you're middle class, it can help you, because you can hold Bitcoin and then every other week, you can transfer whatever bolívars you need out of your Bitcoin, and you can survive.
But, it was absolutely no use for all the people who were living in the slums who live on $4, $5, $6 a month. They have a couple of issues. Firstly, people want notes. The problem is, people are buying things that are worth less than the dollar, so most of the poor people can't actually use the dollar because, even if they have $5, they get their change in the bolívar, which is inflating away. So, you solve that problem for them, because they can accept amounts less than a dollar, right?
Jack Mallers: Yeah. So, I want to quickly make a distinction between Bitcoin, the asset, and Bitcoin, the network. The asset, you're assumption was, can't really help them; it's extremely volatile; it's hard to custody; all of these things. Bitcoin, the network, let's talk about Bitcoin, the network, when compared to the Visa Network or the PayPal Network.
Bitcoin, the network, gives you identity out of the box, gives you payment specifications out of the box. And, combined with the Lightning Network, gives you instant cash finality in real time at no cost. That network; let me tell you something else about this network. The Bitcoin and Lightning Network is the most inclusive monetary network of all time. How well does the PayPal Network work in El Salvador?
Peter McCormack: I don't even know if it's there; is it there?
Jack Mallers: I don't think so. How well does the Bitcoin and Lightning Network work in El Salvador? I think it works the same as Chicago; I think it works the same as London; I think it works the same as New York. It is the most inclusive network. So, yeah, if you're in Venezuela, what's extremely valuable to you is the Bitcoin and Lightning Network.
The asset's also valuable. The asset, you should use as your savings account. The asset, you should protect your wealth and ensure that inflation and the assets around you don't run away from you in expense. But, the network can help your everyday life in making and receiving remittance payments, and essentially banking yourself through your stablecoins and this new monetary network. I mean, it's remarkable. So, there needs to be a distinction between the asset and the network; they're two different things.
Peter McCormack: Okay, so if I've got my wallet, I've got my Strike wallet, and you sent me your $1,000, I get my £750; if I just want to hold Bitcoin, can I flip that in the app to Bitcoin and hold Bitcoin?
Jack Mallers: Yeah.
Peter McCormack: Can I hold both balances?
Jack Mallers: Yeah. So right now, the way that you buy Bitcoin with Strike is you scan a QR code; you'd then scan a QR code to your cold storage. So let's say, I know Casa's a sponsor of yours, right? Let's say you want to send these £750 and put it all into your Casa cold storage? You'd scan a QR code to your Casa cold storage, click send. Strike's going to take the £750, convert it to the little satoshis, and the little satoshis are going to run to your Casa wallet and park themselves there. So, it's essentially buying Bitcoin.
We have gotten a ton of demand to just be able to flip within the app so you don't have to have your own custody solution and such; and so, we'll add that, no problem. I mean, all of these things are super trivial. I think the main innovation is what I've been describing.
Peter McCormack: Of course. But, does it flip those -- because, that's the Lightning Network and my Casa's not Lightning Network; it's the Bitcoin main chain. So, does it flip into --
Jack Mallers: We're interoperable with both the Bitcoin Network and the Lightning Network. So actually, the majority of Strike's volume today in the United States is on chain, believe it or not. I think it's because Lightning has no killer app. I mean, you're either doing gift cards, or it's more of a toy. I think with this international monetary transfer product, I think it will be Lightning's first killer app and delivering its value on a global stage. But yeah, we do millions of dollars' worth of on chain volume a month today; it works well.
Peter McCormack: Okay. The next thing I'm thinking about is that you say about using the Lightning Network to move value around the world; but, I've also been told there are limitations with liquidity in the Lightning Network. Is that not a problem you're having at all?
Jack Mallers: No, not at all. I mean, we have so many nodes all over the world. It's easy again; I mean, this is money that is software. If there's something that's missing, we just build it. I mean, you really want to bet against engineering? Betting against engineering is betting against humanity and human life itself. So, no, we just build it.
Peter McCormack: I don't want to bet against Jack Mallers!
Jack Mallers: Yeah! And, here's the other cool thing. We have our own Lightning setup; but there's a company, Bottlepay, that seems to be operating a similar service. If a user wants to send money from Strike to Bottlepay, they can. Why? Did we come up with some way to communicate that PayPal and Cash App didn't; no. We're on the same open monetary network, right.
So, no, there are no liquidity issues, there are no security issues; I believe my team is one of the best engineering teams in the world, best business teams in the world. We're actually crushing it and no issues on our end. And, every other Bitcoin and Lightning service that pops up, there are users that have Cash App and are like, "Can you pay me to my Strike?" and the user's like, "No, I don't have Strike, I only have Cash App". And they're like, "Okay, buy Bitcoin on Cash App and send an on-chain payment to my Strike account, and then Strike will convert that to dollars.
People are kind of hacking making Strike interoperable with Cash App; how is that possible? I've never met Jack Dorsey in my life. It's because we're interoperable with the same monetary network; it's fascinating.
Peter McCormack: I think he's going to want to talk to you at some point. All right, talk me through the Okung thing; what's going on with the Okung thing?
Jack Mallers: Yeah, so Russell firstly is just an awesome friend of mine. I look up to him as a mentor, as a leader. I think he's a fantastic human being. And, he reached out to me and said, "Hey, I've been wanting to get paid in Bitcoin, haven't been able to figure out a way how. Strike is, as I understand it, this new Bitcoin native neobank. So, in the same way that I can use Strike that people are today, can Strike process my payroll and puke it out to my cold storage? I bust my arse, I risk my health for my family; for my profession; for my labour. I want to get home from practice to see new Bitcoins in my cold storage on payday, because I believe that's the best and most efficient way to protect my wealth, and it's in the best interests of myself and my family".
I looked him in the eye and said, "You've got it; done". And that's what we did. From a high level, it's really that simple. I mean, there's a lot of stuff with the NFL, and all that stuff has been fun. But, at the simplest level, you're talking about a citizen who performs labour for their family; and, they're interested in protecting themselves from asset inflation and securing their wealth for decades and centuries and generations to come. He said, "Can you help me get my payroll in an asset that protects me?" That is Bitcoin. I said yes.
Peter McCormack: Right. I've got seven people who work for me now in Australia, US, UK. Can I put my whole payroll on Strike?
Jack Mallers: Yeah. We're going to take the British pounds, they're going to zip over to the Lightning Network and we're either going to give them Aussie dollars, or it can go to their cold storage. I mean, Strike is the most flexible neobank that's ever existed. We can do anything.
Peter McCormack: When can I start this, dude; when can I start this? I want to use it now.
Jack Mallers: So, right now, Strike is in this testing beta. We're in the UK; there are users in the EU, obviously Central America and El Salvador. We're going to continue to widen it pretty much every single day and eventually, pour on the 1 million plus Bittrex users and just blow the roof off this thing, call it in a month or two.
Just for context, this company was built out of my bedroom. We're growing very fast, obviously, but the responsible thing would be to not allow a billion people to sign up today. So, you can go to -- I should have mentioned this earlier -- global.strike.me and just request early access. So for you, Peter, I will give you early access just because you're a good friend of mine. Everyone else, sign up. It's actually really important that you sign up, refer friends, because we're going to take a look at the countries that are signing up and the individuals that are signing up, and we're going to prioritise the rollout accordingly.
We've got demand from Central America, Africa, South America, Europe, UK, Canada, Australia. My company's balance sheet right now, I mean we're going to need to do a capital raise to scale to a billion people, so there's just a lot to test and a lot to do over the next two months. So, you've got my word for it that we're going to roll this out responsibly in the right way. So, if you go to global.strike.me, just enter your email address; as you refer friends, you move up in the list. I want to know which countries need this first.
Call it Q1, so the next one to two months or so, this will be publicly available in well over 100 countries; probably over 200. We'll see how quickly the world changes after that.
Peter McCormack: Dude. You're going to piss your capital raise; that's going to be a breeze. I've got literally no worries for you about that. I'm sure you've got people knocking at your doors already. So, what else is coming up; is there any other cool stuff? I want to know, man, or anything you can tell me?
Jack Mallers: So obviously, the international funds transfer is a really cool innovation, but we've got our Visa cards, we have merchant services. The new laws here in the US are making things interesting, proposed by FinCEN, but yeah, we think we can help pretty much everyone that acts in a monetary fashion and uses finance. So, I think 2021 will be a big year for Bitcoin, will be a big year for Lightning, will be a big year for Strike and myself, and I'm really excited. I'm trying to give you some headlines to bite!
Peter McCormack: You've given me loads, dude.
Jack Mallers: Well, I'll tell you this. There's a ton of celebrities and professional athletes that everyone knows that are in my inbox looking to do what Russell did, so that's really fun too. I think the amount of not only buying power, but brand association demand for Bitcoin is really cool. I think 2021 could be the year that Bitcoin totally erases its demons and brand association of the past with drugs and the black market, and it's where the cool kids hang out. The cool kids have sats now.
Peter McCormack: We're about to hit $33k again.
Jack Mallers: Unbelievable.
Peter McCormack: It's at $33,280. It's unbelievable, dude. That dip; I laughed at that dip. It was funny, I phoned my dad up and I was talking to him about it. I said, "Look, dad, I'm going to buy you some golf clubs", because he needs some new golf clubs. And, he saw the dip the next day and he was like, "No, Pete, you can't do it; you can't buy me some new golf clubs. I saw the price has dropped $5,000". I was like, "Look, firstly, that's going to get eaten up; and secondly, dad, look where we've come this year". It's incredible; I think it's going to be an incredible year.
Just a couple more things just before we close out, man; I appreciate your time. Firstly, dude, proud of you, man; not in a patronising, condescending, arsehole way, but I just know how hard you work and I know how much you've put into this. I love your attitude and I love everything you're doing. You're going to be hugely successful and it's amazing and it's been great to get to know you.
But, when you look at this now and you look at what's happening with Bitcoin and you see all the people coming in and you see all the interest, is there anything that's worrying you; have you got anything where you're like, "Oh, shit, we need to work on this, we need to work on that", whether it's messaging or working with trying to keep the regulators off our back; is there anything that's just kind of niggling at you?
Jack Mallers: To be quite honest, no. In my typical Jack Mallers fashion --
Peter McCormack: Fuck everything; fuck everyone; fuck you; fuck this!
Jack Mallers: Right, exactly. More practically, I do think there is going to have to be a transition phase from what exists to this new monetary network, and this new premier asset that is Bitcoin. How that happens could be rough and there could be a lot of fights, regulations, government reaction, or a lot of these big money public companies that are going to be facing disruption to their face, I think, is going to be…
I sit and worry sometimes; I do. I wear my hoodies, I wear my hat and I brand myself on purpose. I brand myself in this way that, you know, the guys in hoodies that are contributing to Bitcoin Core, we are the new C-suites at private banks. We are the people that are impacting the way the world works and I over-market that on purpose. I think, in some ways, we invite some controversy and some fighting in this inevitable transition that's going to happen over the next century.
So I would say, in that respect, it's something I'm not necessarily looking forward to, like Secretary Mnuchin coming after my business, or going to war with ‑‑
Peter McCormack: Fuck you, Mnuchin.
Jack Mallers: Yeah. I mean, at the same time, fuck you! But, I know that that's not going to go over gracefully, but someone's got to do it and I'm not afraid of anybody, so we'll see. I think that's the only thing. Outside of that, I'm just really proud of this community and this whole industry. There's so much work to be done, but sometimes you really do have to look in the mirror and just be really proud of the sacrifice and the work that it's taken to get here.
I mean, what we're achieving, even if it were all to fail today, just the mere education vehicle that is Bitcoin and that is this community, it's advanced the world enough on its own, despite even delivering on this asset and this network; it's going to change it for centuries to come. So, really proud and feeling pretty wholesome nowadays.
Peter McCormack: Should do, man. Well, we're memeing this into existence, right; we're memeing this to $1 million. Everyone's just going to crush it. I love the battle now on Twitter, anyone who's trying to dismiss; some of the arguments as well. They're the same ones that came round in 2013 and 2017, and people just memeing them out; they're swallowing people up.
Seeing someone like Ray Dalio flip and say, "You know what, I may have this wrong. Tell me about it. Educate me on Bitcoin", we've got people changing their mind. People are understanding it. And, the only issues I ever have with people is they always say, "It's too expensive; I'm too late and it's too volatile", but I think even that's going now.
All right, just to close out, bro, anything I can ever do, you just shout me; anything I can do to help promote you, you know you can reach to me. Just tell people what you want them to do again, remind them where to go, what to look up?
Jack Mallers: Yeah, so this is recorded on Tuesday, what is it; 5 January?
Peter McCormack: Yeah, I'm getting this out on Friday.
Jack Mallers: Yeah. So, I'll be coming out with an announcement Wednesday, 6 January, tomorrow. If you read it, go to global.strike.me, sign up. Just let me know where you live so I can get it to your country first. And as always, I always get so emotional, I love the support that Peter, people like you give, and my family and this community. It's so cool, man.
I was on fucking TV and I got so many people cheering me on in a hoodie. I had COVID this month, or in December I had COVID; I was battling Mnuchin and regulations; I was fighting for everything I'm talking about today. I call my parents once a week just crying like, "I'm out of gas, I've got nothing left in the tank. I don't think I'm going to make it". But it is, like, logging onto Twitter and seeing all the support and love that I get, it means the world to me, it really does.
So, I just want to say thank you. I feel like we're achieving something really remarkable with Bitcoin, the asset, and the price and how it's helping people protect and preserve their wealth. And now the network that we're using is changing the world too and I feel like we're all accomplishing it together. And, I'm so thankful for that and the relationship I have with everybody; it means a lot.
Peter McCormack: Well, dude, your crushing it, man. I love to see the support you're getting. And, look, it's been shit this year not being able to travel. Usually, I'd be out to the States at least a couple of times a year to see you, or if not see you, see your stepmum and see your dad, and your mum cook me dinner. But, look, you're crushing it, man; you're absolutely crushing it. Just keep doing it.
Anything I can ever do, you reach out to me, you let me know and look, I've got your back and fingers crossed this is all going to continue to be successful and I've got absolute confidence in you, bro. Keep doing it, keep smashing it and hopefully, we're going to get a beer in at some point this year.
Jack Mallers: Absolutely, no doubt in my mind, and I appreciate it, buddy. You too, congratulations on everything.
Peter McCormack: All right, man. Take care, see you soon.
Jack Mallers: Cheers.
