WBD401 Audio Transcription

Twitter Integrates Bitcoin with Jack Mallers

Interview date: Friday 24th September

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 Jack Mallers, CEO of Strike. We discuss the launch of the Strike API, integrating Bitcoin with Twitter, and the accelerating network effects of Lightning.

“I can send $10 from my house in the United States to my friend David in El Salvador instantly and at no cost over Twitter. Why would anyone ever use Western Union again?”

— Jack Mallers

Interview Transcription

Peter McCormack: Jack, how are you, man?

Jack Mallers: Yo, Pistol Pete, what's up?!

Peter McCormack: Jack Mallers, 'sup?  Kind of a big day, dude.  What the fuck?  Not only do you go an onboard a country, you've now gone and onboarded one of the biggest social networks in the world; what the hell, dude?  This is unbelievable.

Jack Mallers: I don't know what to say.  I'm pumped, I'm fired up.  It's unbelievable, but at the same time, it's what's supposed to happen.  I mean, this is the singular best monetary network in human history, and so I'd expect nothing less than a country that needs it most to hop on board, and an internet company who has a global audience that can communicate instantly, for free, globally, but can't send money instantly, for free and globally yet.  So, this is all according to plan as far as Bitcoin goes.  But it's a good day, it's a good day.

Peter McCormack: I'm trying to take it all in and realise how big a deal this is, and I've got so many questions, but let's start.  Give me the background, because it's quite a big deal that you've just integrated Strike with Twitter.  I just saw the video of you sending money via Twitter to a guy in El Salvador, who can now use that to buy coffee.  The synergy with the El Salvador project is very, very cool, but tell me how this all happened; what happened?  I'm so fascinated.

Jack Mallers: Yeah, well so, to highlight the announcement, we launched the Strike API.  So, up until now, Strike was known as predominantly a mobile application.  It's a mobile application that allowed you to interoperate with the Bitcoin and Lightning Network with fiat.  Now, that's a ton of fancy word salad.  

What that actually means is that we believe that the Bitcoin and Lightning Network is the best monetary network in the world to achieve instant, free, global cash finality; instant settlement of money.  And instead of making you use Bitcoin to spend, no one wants to spend their Bitcoin, right, you want to hodl your Bitcoin; it's the best savings technology of all time, the digital version of gold.  So, we let you link a debit card, link a chequing account, and make normal payments.  And under the hood, we used the Bitcoin Network to escrow those payments around the world to make it instant and free.

So predominantly, we've been known as a mobile app and you can download Strike, you can get this really novel experience, this disruptive experience; but today, we're announcing our API.  So, we're taking that infrastructure that enables that experience and we're letting anyone in the world make use of it; and the first partner of that API is Twitter.  So, that's the big announcement and there are broad, long-reaching implications of Twitter integrating this, and with our API being accessible in public to more and more companies, more and more entrepreneurs, more and more developers, businesses merchants. 

But that is the announcement and it's a huge deal, and over the coming weeks and months, we'll integrate with more businesses, both small and some of the largest companies in the world, and we will make it public eventually, after a few more tests.

Peter McCormack: So, just explain to people what finality means, because I'm sure some people listening don't truly understand what that is.  I've got a lot of new listeners.  They will think that if they're using a debit card or a credit card, that is achieving cash finality.  But explain what cash finality with Bitcoin actually means.

Jack Mallers: Yeah, so I'm actually talking about physical bearer instrument finality, so not finality according to Visa, who's managing a whole load of credit when they give you finality, in assessing counterparty risk and balance sheet float.  I'm talking about when I send $10 from here to El Salvador, does the 10 US paper dollars actually land in another country instantly and at no cost?  No, of course not.  Someone like Western Union is fronting the money to me that's sitting in Western Union so someone can pick it up.

In the legacy financial system, Peter, there's never been a physical bearer instrument that can achieve physical cash finality, physical settlement, physical bearer instrument clearance.  We're talking about paper, we're talking about a rock, we're talking about, what are the other forms of money in human history?  Shark teeth.  We're talking about coins.  How could a coin go from the USA to Japan?  It can't.

Now, what I'm saying for Bitcoin is the most innovative monetary network in human history.  Why?  Because, a precursor to having instant global cash finality is the physical bearer instrument has to be digital.  There's nothing that can travel across the world instantly and at no cost.  So now, you have a digital bearer instrument and the physical Bitcoin can actually go from the USA to Japan instantly and at no cost, and that's what I'm saying. 

It also requires no intermediaries; it also requires no trust; and so you're starting to see where a Visa, escrowing value from the USA to Japan, there's limits because of my credit score, there's counterparty risk for settlement, there's a fee to receive because of the fixed associated cost and all the intermediaries required for them that they get charged.  So for now, all of a sudden, all that's removed.  You can achieve that physical settlement globally, instantly, at no cost and for free with Bitcoin, for the first time in human history.

Peter McCormack: Amazing.  All right, so tell me how this works, because I haven't had a chance to play with it. I've seen your video, it looks pretty cool, but how does this all work; what's the deal with the integration?

Jack Mallers: It's super simple.  So, to enable it on your Twitter account, you go to your settings, you turn on "Tips" and you just enter your Strike username.  And then anyone in the world can go to your Twitter account, click "Tip", enter the amount and they're presented a global, interoperable, Lightning Network QR code, and you can pay that from any interoperable, any Lightning wallet, any service that interoperates from anywhere in the world, and the user on the receiving end just gets dollars.

So let's envision, for example, a user who has a Lightning interoperable wallet in Japan with Japanese yen and they want to tip me.  What's going to happen is they're going to generate a tip on my Twitter account and say, "I want to tip Jack $5, because he's the man", because I am the man!  So, what's going to happen is they're going to click "5", type in, "You're the man", and then hit, "Open wallet". 

It's going to open their Japanese interoperable Lightning wallet that's going to be presented in the equivalent amount of yen, and they're going to hit send.  That yen is going to be debited, converted into Bitcoin, zipped from Japan, across oceans, across borders, across countries, and land in Chicago, Illinois, USA in my Twitter account and be converted right back into dollars.  So, I just get instantly spendable dollars, non-reversible dollars.  That instant global payment was free, I didn't have to wait eight days, I didn't have to walk to a Western Union, and we're only interfacing with fiat currencies.

What we're actually doing is we're using the Bitcoin and Lightning monetary rail under the hood to make for more efficient global settlement, and that is so, so powerful and that's why it's such a massive deal too, as Twitter has 200 million active daily users.

Peter McCormack: Do you have to have a Strike account; do you have to connect your Strike wallet?

Jack Mallers: Today.  And I'm not going to speak on any of Twitter's future plans, both with us and outside of Strike.  But the very first version, you have to have a Strike account to receive, but you don't have to have a Strike account to send, because you can make a Lightning payment with any Lightning wallet that exists in the world, any interoperable service on the network.

Peter McCormack: How close are we to getting Strike in the UK then?

Jack Mallers: Extremely close.  So, as part of the announcement, I know we're working with many companies on rolling out into more and more regions, so we'll be in Europe and hopefully, the UK before this year's over, and then many other countries that I will not yet hint at.  But we're getting really aggressive with our global rollout.

Peter McCormack: Okay, but with Strike now, whilst you support dollars, you also support Bitcoin, right; you can have Bitcoin or dollars in your account?  So, can you choose to receive the Bitcoin, or does it have to convert to the dollars?

Jack Mallers: Not today.  You can in the future, but you can always just receive the dollars then just flip over to the Bitcoin tab and smash buy with them.  So, right now it's an extra manual step, but we plan on enabling it in the future.

At Strike, everyone knows we operate with waitlists, we operate with slow rollouts.  I care tremendously about the quality of the products we release, and so we're taking our time.  We're working in conjunction with Twitter; that's why 100% of the world on iOS right now can send, and soon to be Android, but only 1% right now about can receive and we're going to gradually roll that out.  We're in no rush.  I mean, we're talking about dematerialising all existing money functions onto a singular monetary standard, and that's a big deal.  And, we're not in too much of a rush to do that.  I'd rather get it right than get it fast.

Peter McCormack: That seems to be how Twitter has done things anyway, right?  I've also thought of Facebook as the hare and Twitter as the tortoise, and all sorts of people screaming for features they've always wanted with Twitter.  Twitter's always stayed relatively simple itself, has always felt like it's moved slowly.

Jack Mallers: Yeah, I mean they've been a pleasure to work with.  And, no, I think that speaks to the quality of their product and I have similar product visions and ambitions as well.  I think building the high-quality product takes time, it takes iterating and it takes patience; it takes being a good listener.  So, there's no such thing as rolling something perfect out all at once.  Perfect is actually no feasible destination.  Iterating constantly is the only viable way to build a product and service that's constantly improving.  So, I'm glad we're in line on that principle, and so that's the way we're going to do it.

Peter McCormack: And it's pretty cool that Jack Dorsey, being a bitcoiner, is heavily involved with Twitter.  I always feel like he's driven by the mission rather than the money.  I mean, I think he's got more money than he can ever spend anymore anyway.  He seems to be fully bought into the Bitcoin mission, so I think it's a fortunate place we're in where he is heavily connected to Twitter.

Jack Mallers: Yeah.  So, I mean, we can start to get into the broad-ranging impact that this has.  Because, on its face, it may seem like Twitter just added another tipping method.  You can also use Cash App.  There's a lot that is far-fetched that does not meet the eye initially.  So, one, the Bitcoin and Lightning Network is the only global, inherently global monetary network in the world, and it also achieves, like we've described, settlement instantly and at no cost.

Peter McCormack: What do you mean by that?  Look, I understand; I've spent a lot of time with you over the last few months, but it's good for you to explain what you mean by, "The only global monetary network", because there are plenty of other monetary networks out there.  What do you mean by the only global one?

Jack Mallers: It's the only natively global one, native.  So, to have a natively global monetary network requires first, as a precursor, a native global currency, a currency and an asset that works everywhere in the world, that's not issued by a nation state, that doesn't have oversight regulation.  So, that would require an asset that is resistant to central parties, resistant to government, resistant to governance, and that its consensus rules and monetary policy is enforced by code and by a distributed network.  I'm very hinting at Bitcoin.

So, Bitcoin is the only naturally global asset.  Bitcoin and the monetary network and monetary policy, it works the same in Japan as it does in Chicago as it does in Columbia as it does in El Salvador, right.  So, it's naturally global in that sense.  It knows no nation sense, it knows no governance.  And so, you have a bearer fiscal digital asset in that sense, and the monetary network that underpins it; all you need to do to interact with it is have an internet connection and be compliant with the monetary standard, be able to speak the Lightning Network invoice, that's it, right.

So, the Western Union Network is actually not naturally global; it's patched together in a global way, and they need to work with these banks and these regulators and these processors, and that's where you get all these fixed costs and expensive fees.  If Western Union could charge you 1%, they would.  They can't; they'd lose money if they charged you 1%, because the amount of intermediaries, fixed cost, credit risk, balance sheet float, forex currency exposure, cost of capital that they incur to pull off a global experience is tremendously expensive and outdated.

Now you have an open global native monetary network to the world that does all of that instant, for free and at no cost.

Peter McCormack: Well, we need to talk about the implications of this.

Jack Mallers: So, I'll take a sip of my beer first!  So, I like drawing this akin to the internet; let's talk about the internet first.  You know, there once was a world, Pete, where in order for me to send you a message, I would write it on a thinly carved slice of wood and have a pigeon fly it to where you are right now, and hope that you read it for me to ask, "How are you?  I miss you".  Now, I do that over the internet.  Now, pigeons flying with notes became email; my TV became YouTube; my social network became Facebook; the global conversation became Twitter.

Now, I'm describing the transformation and dematerialisation of the internet.  The internet dematerialised all existing bifurcated, segregated, independent, localised communications networks.  Maybe the newspaper in South Africa was published on Wednesday, the newspaper here in Chicago was published on Monday, the newspaper in San Francisco was published on Sunday.  Maybe pigeons fly in San Francisco year-round, because it rarely slows; but in the winter in Chicago, messages were delayed, because you were riding horse carriages through the snow and pigeons weren't flying, because they migrated south. 

All of a sudden, you took all these independent, segregated networks that were optimised to communicate, they were expensive, they were inefficient, they had fixed cost, they had legacy.  All of these things that you hear me describe on existing monetary networks today, and they all got crushed, and they all got dematerialised and they all migrated onto one singular, open communications protocol for the world, and that is the internet.  The internet, as an open communications protocol, worked naturally everywhere.  Didn't matter if you were in El Salvador; El Salvador people have internet and use Facebook; Japan has internet and uses Facebook; Australia has the internet and uses Facebook.

So, you saw an open network dematerialise closed networks, and everyone migrate onto one singular global open standard.  And the thesis of Strike and why I invented Strike in the first place, is the vision that Bitcoin and the Lightning Network will do the same for money that the internet did for communication, and that the pigeons and the horse carriages delivering messages, depending if San Francisco's sunny and Chicago's cold, it's the same thing that I have Venmo and Cash App, you have Revolut and Monzo. 

You have different bifurcated, segregated monetary networks that can't talk to each other, they're optimised around different regulation, around different governance, around different standards.  They have fixed costs, they have balance sheet float.  Western Union sending a remittance to El Salvador could take up to 50%.  Now all of a sudden, we have a natively digital bearer instrument, it physically settles anywhere in the world.  It's the same monetary policy and monetary standard in any continent, any place, any jurisdiction, any time; and we have a monetary network in Lightning and a monetary standard that can allow that digital fiscal instrument to achieve cash finality instantly.

So, what I'm saying is the Bitcoin and Lightning Network as a monetary network is the same what internet was for communications.  We're going to start to see the dematerialisation of all of these independent, segregated monetary networks that are going to get crushed and we're all going to migrate.  And so, sending communication to someone, like a Facebook post or a tweet, sending money to someone will be just as easy.  It will be free, instant and borderless, just like Twitter is today; sending money will be also.

Peter McCormack: Well, it's interesting because like you, I've been going to El Salvador for a while, and one of the things that stood out to me last time I went was -- the first time I went, I met Michael Peterson and he took me up to, I think it's Jorge's mum's pupuseria, and I bought some pupusas and I paid using my BlueWallet, and it was this cool kind of novelty, and I was like, "Yeah, this is great", left, didn't think too much about it.  I came back, spent some time there with you, used it a couple of times.

What happened was, on my last trip, I used my Lightning wallet 30 to 35 times.  I didn't arrive with dollars.  I got to Zonte; as you know, there's no cash machine for dollars.  What had changed was everywhere you go pretty much, I think there's one place that doesn't accept Bitcoin.  So, I didn't need dollars and I was happy to spend it.  So, I was spending it buying a coffee from Enzo, or buying dinner, or whatever I was doing, I was spending it.

Then, what happened, I was there when the Bitcoin law passed; I think that was 7 September.  Then I went into San Salvador and I bought a McDonald's with Bitcoin.  The screens there give you a QR code.  I went into Starbucks and I bought a coffee with Bitcoin.  No longer was it a novelty, it's now a convenience.  The really funny thing about this, Jack, which you'll appreciate, there's a couple of times where I've been here in the US now, I haven't been able to have what I want.  Here in the hotel, there was a cash machine, but it only issued $20 bills and I wanted to get a soda from a machine, and it wouldn't take the $20 bill and I didn't have any coins.  So, I didn't have any money and I was thinking, "I just need to be able to use my Lightning wallet".

There have been two or three instances like that here in the US where I was thinking, "If I could just use my Lightning wallet, life would be easier".  It's no longer a novelty; it's a convenience.

Jack Mallers: Yeah, well I have a lot of thoughts on that.  So firstly, seeing El Salvador expand Lightning Network interoperability on this singular global monetary standard, what's so powerful about that, Peter, is there's no specific standard to McDonald's, or if you're paying with a Visa card, you enter the chip; if you're paying with Apple Pay, you scan your fucking phone; if you're paying with cash, then you've got to have a vaccine.  There's none of that.  It's a singular QR code standard. 

The Lightning Network doesn't know if the payment's crossing borders, the Lightning Network doesn't know if you're getting a cheeseburger, the Lightning Network doesn't know of your credit score; in the same way that a TCP/IP request on the internet doesn't know if I'm fetching a picture of you, if I'm sending a tweet to you, if I'm texting you.  Internet communication is a singular standard.  There is a protocol to integrate to implement global communication to anyone in the world, and now there is a protocol to implement to integrate monetary settlement to anyone in the world; and so, that is so cool.

Sending a remittance payment to a contractor for you, Peter, is the same as buying a cheeseburger, is the same as buying a coffee in Zonte, is the same as sending a tip to someone on Twitter.  It's all the same singular monetary settlement standard for the world.  And so, that is so powerful.  So, as cool as it is for you to experience, it's what's expected.  We have a singular standard, a singular experience to achieve monetary settlement between us human beings.

The fact that it isn't in the US, I mean it cracks me up.  It would be the equivalent of El Salvador enabling the internet and you being, "Wow, this is so cool.  I can go to google.com and index the entire World Wide Web from my phone", and then you go home and in order to send a message, you call your pigeon over and send it to fly over to your mate down the block.  I mean, you're living in a disruptive time and some people are way behind others.  Unfortunately, the US is not as advanced as El Salvador, which is something I never thought I'd say, but here we are!

Peter McCormack: Well, it's the walled gardens that people put up and the interests that people have in certain businesses.  I'm hugely suspicious of the banking sector, even more so now than I was, I don't know, six months or a year ago, because of the reality of my experience down in El Salvador.  I do wonder where all these kinds of hit pieces from the MSM, Mainstream Media, come from, because look at it right now.

You know my experience.  I had a bank account with Lloyds Bank, a High Street branch.  I was with them 25 years; they shut me down at six weeks' notice, because I wouldn't tell them what I was spending money on.  And do you know what?  When I moved from them, I got a neobank service, and now I operate my business and personal accounts with the neobank and with Bitcoin; I use both of them. 

I use the neobank, because I need to pay for certain things in pounds, I need some stable currency, and then I store everything else in Bitcoin, because I don't trust anyone else holding my money.  Also, there are people I pay or get paid by in Bitcoin, and that in transition is only going to become more Bitcoin-based, and perhaps maybe it's an account with something like Strike, where my pounds are actually stored and sent across the Lighting Network.  To be seen, when I get my Strike account, Jack!

But the point being is that, I think these banks are absolutely fucked, and the reason I think they're fucked is like Blockbuster, their asset was the High Street branch; now it's their liability.  It's expensive to run.  In some ways, they've decentralised to their harm, because they have all these branches everywhere.  I mean, hundreds are closing down in the UK, so I think they're absolutely fucked.  But I think they're going to do everything they can to get in the way first, which is why in the UK, it's very hard to use banks to buy Bitcoin on exchanges; they make life difficult.

So, I think that sector is ripe for disrupting, but in a way that not everyone else thinks.

Jack Mallers: Of course, right.  So, let's break this apart.  The legacy banks, like Wells Fargo, for example, I mean their technology is 40 years old.  They can't build a neobank, they don't know what my exact balance is at any given second.  They're dealing with technology that was written by people that are now dead.  I mean, their technology is older than my dad.

So, I mean they're already being disrupted, right.  You're seeing this giant neobank market emerge.  Cash App's worth over $100 billion, Chime's worth over $30 billion, Venmo and PayPal are worth $300 billion.  I mean, there's a tremendous amount of value transfer going from legacy financial experience to a more modernised mobile-first financial experience, that's been built on new technology.  And so, that's exclusive of Bitcoin, right.  Banks just suck.  Okay, fair point.

Now, I want to talk about, so yes, Revolut's cool, but exclusive of Bitcoin, everyone has an opinion on Bitcoin, it threatens people, it gets Steve Hanke-Panke all wound up sometimes, but the monetary network of Bitcoin and Lightning, Peter, it just offers such clear efficiencies.  It's an option that you have, "Do you want to achieve physical bearer instrument settlement instantly and at no cost anywhere in the world or not?"  And you don't have to touch Bitcoin, the asset.

So for example, Peter, a remittance payment between you and I in a not-so-distant future could be my Strike account sending $100.  So, Strike's going to take $100 out of my Strike account, live convert it under the hood to Bitcoin, zip it over the Lightning Network to the UK, where it physically lands in the UK.  That's not a credit, that's not balance sheet float, there were no pounds sitting waiting for me.  This is a physical Bitcoin that crossed an ocean and went into a new country, a new border, a new jurisdiction in less than a second and at no cost. 

Then, you take that physical bearer instrument, that physical commodity, and you change it right back into pounds, and it gets into your Revolut wallet.  So, Strike and Revolut become interoperable.  How?  The Revolut Network and the Strike Network?  No, we're all on the same open standard to achieve finality between each other, and that does not mean that we need to be holding Bitcoin, that does not mean we all need to think Bitcoin's going to the moon, although everyone knows I do; that's not a requirement to operating on top of a singular standard for instant, free finality of money, anywhere in the world.

So, it will be the equivalent, Peter, of nowadays, any NBA team, any newscasting service, I was just on CNBC, you all upload your videos to YouTube.  You upload your videos to the communications protocol where you have instant, free, global connectivity to communicate.  Can you imagine if a TV section didn't upload all their content to the internet?  All of a sudden, it would be bifurcated, it would be independent, it would be segregated, it wouldn't be global, it would be expensive and people wouldn't have access to it.

So, not operating on the singular open network, whether it's communication and now, whether it's money, is doing a disservice to your customers and to your ambitions.  So for me, it's a no-brainer, and Twitter realising that, El Salvador realising that, you're starting to see the inherent network effects that come with open systems, and the clear disruption.  And again, what the internet did for communications, the Bitcoin and Lightning Network will do for money; I firmly believe that.

Peter McCormack: Yeah, I firmly believe that.  I agree with everything you've said, but there are interested parties who aren't going to make life easy for Bitcoin or bitcoiners, or people who are trying to build on this open monetary network, because they're powerful companies worth billions of dollars.  And you know what, the weird thing is, it's companies like this, the first one, the first Chase or Wells Fargo, one of those companies who actually realises this and adopts Bitcoin, they're going to be light years ahead of the other banks which sit on the high streets.  But they're all scared, they're all pushing it away, and I do wonder if they've got their tentacles elsewhere to try and prevent this, try to make it a bit more difficult.  But listen, bitcoiners are quite wealthy now; we can fight back.

Jack Mallers: It's not about wealth.  So listen, markets are binary --

Peter McCormack: Well, what I mean is the recent work done by, I think it's David Bailey and CJ Wilson, looking at creating SPACs, Super PACs, so they can actually finance people to run against those who are anti-Bitcoin, which I think is interesting and money talks in politics.

Jack Mallers: Sure.  But I think, I really do, I firmly believe that this should live exclusive of politics.  I mean, I'm not surprised that people are upset.  Markets are binary, right, in the sense that for every winner, there's a loser.  There's no tying in markets, there's no draw in markets.  And so, when you see disruption and you see innovation happening and people creating wealth, and there's a net benefit to someone, that means someone lost wealth and there's a net loss to someone.

So, I do expect independent, bifurcated, legacy, financial, closed monetary networks to be disrupted and dematerialised onto a singular monetary network, so I do expect that.  But I also think it should be thought of as the world moving forward in the right direction.  I mean, think of the absolute disruption, innovation that the internet did; but not only that, but also how it improved the quality of lives all over the world, how it improved the quality of lives in the emerging markets and the Third World and for people that needed it most.

I mean, the world is not only a different place, Peter, but a better place, because communication went from closed, independent networks that were localised, to an open, singular, global standard for everyone to prosper.  And to draw that akin to money, money is a more viral product than communication.  Money is one of the most viral products of all time.  If we can move money onto a singular, global, open standard like we did for the internet, not only will the world change, but it will be a tremendously better place, and we'll be able to help re-instil basic human freedoms and increase the quality of life for all 8 billion people on the planet.

So, I can understand as a businessman why someone would be upset, but as a morally, principled human being, we're doing right by our species and we're making the world a better place, and I think that's what this should be about.  And the last thing that I'll say, Pete, is that in an open network, and in a truly free market, competition is inherent and needed and required.  Open networks don't care who was first.  If open networks cared who was first, then the first social network to hop onto the communications protocol, the internet, dubbed Myspace, would still be here; they're not.  Open networks care about the experience and the brand.  Those are the winners over the long test of time.

What then we'll start to see is true, free market, open-network competition for money, which we've never seen.  We saw it for communication and TV networks that were legacy and old and slow and suited lost to YouTube entrepreneurs, right?  Huge.  The old legacy newspaper publishers that would trash people that they didn't like, and media's a rigged game; they lost to Twitter, right?  And so, what I'm saying, and you can see where I'm going with this, the old nasty Visa oligarchs that when I walk into a coffee shop right now, Pete, "How am I paying for this coffee?" is a dumb question.  I mean, they're using the Visa Network, the Mastercard Network; that's it.  It is a monopoly.  It is a closed-loop system where they're dominant.

All of a sudden, if that coffee shop is on the singular global, interoperable, value transfer protocol for money, I can use Twitter to checkout at Dunkin' Donuts; I could use Facebook to buy my Costco groceries; I could use Instagram to checkout at Walmart, right.  So, all of a sudden, competition for the monetary experience of the world is going to be open.  It's going to be competitive and people are going to migrate towards the best experience and the best brand.  And so, I think that that's a tremendously powerful concept, and what a more liberated world.  Now the consumer can interoperate with monetary settlement on their own standard. 

In the same way that I could enter the web, Peter, I could enter the communications protocol dubbed "the Internet", through Google Chrome, that's going to track everything about me, but deliver a great experience; or I could enter it through Tor, which is a lesser experience, not as sweet and clean, but enhances my privacy.  Soon, in a world, or if you live in El Salvador already, or if you want to tip me on Twitter, you can use Strike.  We don't have to comply with regulators, we KYC you; or, you could use Muun wallet; or, you could use Lightning over Tor, right; a free market that's going to drive innovation.  It's going to disrupt, it's going to allow people to have to adapt and optimise around the best experience and the best brand, and it's going to ultimately put the power in the consumer when the protocol lives external of localised regulation, localised limitations, geographic limitations, right. 

So, I think that internet to Bitcoin and Lightning, it's a really, really powerful thing, and that's what's so cool about the Twitter integration.  It's because you're taking a native internet network that optimises around the experience for communication, and now they're bleeding into the optimising around the experience for money; because for the first time, the communications protocol has a counterparty for money.

Peter McCormack: Let's look at this on a micro level and a macro level.  Okay, on the micro level now, one of the most interesting things is if you look at the Twitter product roadmap recently, they've been providing amazing tools for content creators, email newsletters and Spaces and Twitter itself has just got better and better.  Adding in to that the ability to have Bitcoin tips, it means that anyone in the world with a mobile phone, and internet connection and a Twitter account can now create content and get paid for it; and I'm assuming, at some point, will also be able to add commerce facilities to be able to sell products around the world.  But that is huge, that anybody around the world can now…

We've got people out there who can create content on various other platforms, closed platforms like Patreon, but they're not interoperable and also, you've got to think that I can't imagine someone in El Salvador, in the middle of nowhere, could be able to receive payments through that.  So, you've now, working along with Twitter, you've made it so that any content creator or any commerce provider can now get paid by anyone in the world.  That's huge at a micro level.

Then, at a macro level, I'm thinking it's going to be very obvious to the likes of Starbucks and Walmart and McDonald's, that they're actually saving on fees from the Visa Network, from the Mastercard Network, by having people getting paid and paying using this open monetary network.  So, at a macro level, there's a reason now for these super large companies around the world to actually start considering this as another option, alongside Visa and Mastercard.  So, micro and macro levels, Jack?

Jack Mallers: Yeah, okay.  Ton of comments on that; you're absolutely correct.

Peter McCormack: Yeah, sorry.

Jack Mallers: No, don't be sorry; I mean I have so many thoughts.  Firstly, with Twitter's integration with the Bitcoin and Lightning Network, all of a sudden, Twitter becomes one of the best remitting experiences in the world.  I can send $10 from my house in the United States to my friend, David, in El Salvador, instantly and at no cost over Twitter.  Why would anyone ever use Western Union again?  All of a sudden, Twitter becomes one of the better payment methods in the world.  My friend, David, receives the $10 over Twitter instantly, for free and at no cost, a cross-border payment, that traditionally with Western Union would have taken days and upwards of 50% to settle; and, he can then turn around and buy a cup of coffee at Starbucks in El Salvador with his Twitter account, let's say.

By integrating the Bitcoin and Lightning Network, Twitter also becomes one of the best acquiring solutions for content creators in the world.  All of a sudden, Peter, I can post content, I can post a picture of my sexy sixpack abs on Twitter and anyone in the world, make no mistake, I shouldn't joke about this; anyone in the world, for the first time in human history could tip me any amount.  It's going to get there instantly, it's going to cost me nothing, and I'm going to just get dollars in my bank account.  I don't care if the person tipping me is in Japan with Japanese yen, if they're in Frankfurt and they're using euro, they're in London and they're using pounds, they're in Nigeria and using the naira, it doesn't matter.  There's now an open network standard that can escrow that value to me sitting in this women's closet, instantly and at no cost.  It's magical.

So, Twitter becomes a remitting experience, Twitter becomes a payment experience, Twitter becomes an acquiring experience.  All of a sudden, Twitter becomes one of the most power financial global experiences in the world.  They've achieved what all of the Visas, the Western Unions, the Shopifys have been working towards for decades; they achieved with one integration.  And, what does that tell you?  That tells you that on this open, global monetary network standard, there's no difference between a remitting Western Union payment and a payment for Starbucks and a payment for an online service or for content, there's no difference. 

They're all just BOLT 11 Lightning Network payments.  It knows no borders, it knows no rates, it knows no gender, it knows no governance.  It doesn't know that Joe Biden is my President, it doesn't know any of that.  And so, just by being interoperable with this standard, you achieve all monetary functions out of the box; out of the box.  So, it's an insanely cool concept.

Then, four, I mean saving on fees to process payments, I actually think that this, and I think I've told you this story before, but I think that this is very akin to the Linux story.  What happened, for those unfamiliar with Linux, Microsoft had similar monopoly on OS that card processors have today on processing payments.  They were the singular dominant Godzilla in the room, arguably charged way too much, wasn't improving their product, customer service was terrible.

So, what companies would do is "integrate" Linux, flirt with it, entertain it a little bit, "Hey, this thing is open, this thing doesn't have any one ruler or one master; everyone in the world is contributing to this Linux thing and it's free.  And, we're going to integrate it".  And, they used it as leverage to negotiate with Microsoft as a potential threat and said, "Hey, you know how you guys are charging us X?  Bring that pricing down to Y, because look at this free thing we're flirting and playing with.  You may want to be nicer.  Your customer support is taking two weeks to reply; you may want to make sure they reply in two days.  You guys haven't released a new feature in two years; you may want to start releasing product enhancements every two months".

It was initially just a leverage play.  People thought it was cute, Linux wasn't widely distributed, but then all of a sudden, it was open and it had network effects, it took on a mind of its own and Linux became the dominant OS.  And, I think the same is happening for Lightning, "Oh, Lightning is cute, not many people are on it, look how many locked Bitcoin, what's the capacity on the Lightning Network?" which is an inaccurate metric and shouldn't ever be referenced ever.  But, "Yeah, let's use it, it's free". 

If I'm an acquirer, if I'm McDonald's in El Salvador, all of a sudden the Visa Network's charging me 2.9% to receive a payment from Peter; but if Peter scans an open, interoperable QR code with any of the existing services, including maybe his Twitter account, to escrow me value, I don't pay anything, that payment's not reversible, that payment settles instantly, the money I get I can spend right away, I don't have to wait for Visa to clear it for my account, yeah, let's integrate that.  "Hey, Visa, are you sure that's how much it cost; 2.9%?  Are you sure it's not 1.9%?  Are you sure you don't want to be a little nicer?"

Then, all of a sudden, it's McDonald's in El Salvador turns to the entire country of El Salvador, turns to one of the largest social networks in Twitter, and before you know it is the Lightning Network, the singular monetary standard for instant, physical and free clearance going to become the predominant monetary standard for the entire world and usurp these Godzilla-like aliens and old heads that have a monopoly today.

I think history doesn't repeat itself, but it may just rhyme, Peter.  I'm not a rapper, but it may rhyme just a little bit.

Peter McCormack: I'm sure you could rap if you wanted to; you'd figure it out.  Listen, we spent a lot of time together this year and you told me about being in a Paris hotel room and drawing up the sketch for what was originally Zap -- no, sorry, it was for Strike, wasn't it?  You already had Zap, you had the Zap wallet, you'd had some issues with raising funds and then you drew up what Strike was on a piece of paper, and I'm sure I've seen it online.  By the way, do you have that piece of paper, or has somebody got that artwork?

Jack Mallers: Yeah, it's in my room.  I mean, I was working on Zap's open-source Lightning Network wallet, and it was then when I realised, "Oh, my gosh.  The Lightning Network isn't a way to make my withdrawals from Kraken cheaper and faster, the Lightning Network is a unified standard for the world to achieve instant, global, free monetary settlement, in a way that the internet was a way for the world to achieve instant, global, free communication".  And I drew it on a piece of paper, and my girlfriend at the time was like, "Why aren't we going to dinner?" and I was like, "I think I just figured out a vision for an open standard for money, like the internet is for communication".  She was like, "That's it, you're single", and that's how it was!

Peter McCormack: Fail!  Oh, whatever man, you did it though.  But the story itself is fascinating, but this thinking of it and then seeing it happen, I'm sure many people have had visionary ideas before that haven't come to fruition.  And then here we are, years later, and we have a country which has nationwide adoption of Bitcoin.  You can go to any town in El Salvador and if they've got a major chain, if they've got a Pizza Hut, a Starbucks, a McDonald's, a Walmart, they accept Bitcoin.  You've got El Zonte where the entire town has it.  Other people are considering it.  This has now happened.

You've also now got Twitter integrating it so you can send money all around the world.  There's thinking of it, Jack, and then it's happening, and then the next two things it makes me think of are, how far does this go now, or how quickly does it go, because it feels like that Gradually, Then Suddenly moment; and secondly, a bit of a shout-out to all of the Lightning devs who've worked on this in advance, because I was one of those morons, because I am; I take a long time to learn things.  I'm not as quick as you, Jack; I'm older and I've got an older brain.  But I take a lot longer to see the vision that people have.

I didn't use Lightning.  Like I said before, it was a novelty.  But really, what it was is all the hard work was done in advance, when people didn't want to spend it, ready for a time like now, ready for when companies can integrate.  So, two completely different points, but I'll leave those with you.

Jack Mallers: Yeah, I have a few thoughts.  I mean the first, yeah, is it crazy that I drew in a notebook in a hotel in Paris and I founded Strike officially 18 months ago, and to see Twitter integrate our software and make it accessible to 200 million people?  Yeah, of course it is.  I mean, I'd be a liar if I said otherwise.  But you know, I have an amazing team around me, and amazing people around me, amazing friends, amazing family and to be honest, my life hasn't really changed much.  And I think a lot of the credit goes to everyone that's been a part of this.  And as it may seem crazy from the outside to watch me go from a YouTube show with Vortex I used to do, the first time I ever talked about Lightning Network on the internet, to CNBC, but I don't care.

I've been working on Bitcoin for close to a decade at this point.  I think it's the best way I can deliver the most outside impact to the world while I'm on this planet; I really, truly, firmly believe that.  And so, nothing has changed for me.  I just keep working on Bitcoin and I'm just really proud of my team and proud of everyone has been part of something.  This is a credit to the community, it's a credit to the devs, to the plebs, to the people that fought off the Blocksize War, the angry, malicious, hostile maxis that defended this monetary network and this monetary policy to enable it to rise humanity and re-instil human freedoms, and give a Third World country hope and give an open internetwork business a new form of life and way to communicate and relate and integrate with their users.  This is because all those people that didn't let Roger Ver come in and walk over us, all the Bitcoin Core developers.  I share in all of that and I feel like I'm playing a small part, just doing the best I can.

For the network effects, is what I think you're talking about, for Zonte turns to El Salvador turns to Twitter, what I don't think people appreciate about this, Peter, is yes, there's a very material difference in fiscal settlement between the Visa Network and the Lightning Network.  Lightning Network is instant, free and global; Visa Network takes time, is expensive and is not global, okay, so that's a material difference.  One of the more important differences also is the Lightning Network is open, the Visa Network is closed.  This is hugely important.  Open networks come with network effects and economies of scale, Peter, that are unprecedented that you've never seen before.  Let's again draw it akin to the internet; Google. 

Google's value prop as a company was to be the indexing system for the internet.  Anything you wanted to find on the internet, that you wanted to search, that you wanted to connect to, you go through Google.  So, in a weird way, Google, for example, today cannot build another feature this year; fire all the employees, tell everyone to go home, until the year 2022, "Go to the beach".  Google will be a better company 1 January 2022 than it is today.  How?  Because everyone else in the world is still making the internet better.  There are new websites coming onto the internet.  Every new website that joins the internet protocol makes Google a more valuable company.  It allows Google to index one more potential search.  That is a network effect and economy of scale that is unprecedented.

So, when Twitter came onto the internet protocol and the internet network, Google wasn't mad; Google was happy.  And this is the same for the open monetary network and the open standard for monetary settlement that is Bitcoin and Lightning.  All of a sudden, Peter, Nayib, the President of El Salvador, looks like a genius.  All of a sudden, he has merchants that are accepting physical payment at his McDonald's and people can check out with their Twitter.  All of a sudden, Peter, his population can not use Western Union that is slow, dangerous and expensive, and they can use their Twitter account to remit any size of payment from anyone in the world.

Peter, does El Salvador have the resources to engineer the most advanced monetary infrastructure of any country in the world?  Peter, the population of El Salvador is smaller than Manhattan.  Peter, El Salvador doesn't have a Stamford University.  Peter, El Salvador doesn't have Jack Dorsey in San Francisco HQ of Square.  Peter, I work out of Chicago, but we're all making the Bitcoin and Lightning Network better.  So, El Salvador doesn't have to do anything.  They could not focus on Bitcoin ever again and their monetary infrastructure is going to improve and remain on the forefront of innovation, no matter what, because of open network network effects. 

All of a sudden, Nayib went from his citizens getting bullied by legacy financial systems upwards to the price tag of $400 million using Western Union, to free, instant, any size, anywhere in the world, over Twitter, and he didn't do anything.  He just interoperated with the network.  Reversely, Twitter cares about engagement.  Peter, Twitter's not taking a fee on any of these tips.  Twitter cares if more people come to the service, that more people engage, that more people converse and more people use the application.  All of a sudden, people are opening their Twitter app, not to tweet, not to read the news; to remit money.  Are you kidding me?!  Talk about engagement!

Twitter went from a communications platform on the internet to a financial service that just disrupted Western Union.  They took over an entire industry.  Why would anyone send money to El Salvador with any other service besides Twitter ever again?  And so, Twitter didn't converse with Nayib, Twitter didn't ensure the El Salvador bill got passed first; all they did was interoperate.  That's it, and they benefitted from the network effects of El Salvador.  And so, these peers that come onto an open system, they're all additive, they all benefit from each other.  And as the network gets bigger and bigger, everybody wins.  So, people don't appreciate the network effects. 

The last thing I'll say is that early participants to an open network gain the most, and so I think you made this point as well.  The ones that join first win, right, and so it ends up becoming a race.  So, once you see Twitter join, if I am another social media company, or once you see Starbucks in El Salvador, if I'm another retailer, it becomes more of a risk not to join than it does to join.  So, anyway, rant over.  I think all of that's tremendously important.

Peter McCormack: Love the rant!

Jack Mallers: Yeah, that's all I am; I'm a walking rant nowadays!

Peter McCormack: That video's going to end up on YouTube -- Twitter, sorry.  So, listen, I'm going to talk a little bit about Bukele, because I got the chance to sit down with him again.  And whatever you think of him, let's separate the politics from the policy right now.  There are people out there who want this project to fail, and I find that morally highly questionable, because as successful a project is a success for the people of El Salvador, a country that has had a chequered history, is a Third World country, is relatively poor, we know 70% of the people do not have access to banking services; success for this country is that everybody gets access to bank in countries, everyone can send money to and from each other, close to free. 

Its success is the 3 million Salvadorans who are in the US over there earning money to send back to their family, can send money back for free.  People want this to fail, but actually if you want that to fail, you want to bring pain and suffering onto people who don't deserve it.  You should want this to be a success, so separate the politics from the policy; I think it's a brave move.  I'm sure a lot companies are looking at MicroStrategy and thinking, "Shit, I wish I had done that.  I wish we were you.  I wish I had the bollocks of Michael Saylor", but they didn't.  Apple didn't; Microsoft didn't; and now, what I think's going to happen is other countries are going to be looking at El Salvador in a few years thinking, "Shit, I wish I'd done it first".

So, I don't really know where I'm going with this; this is more of a Jack Mallers rant.  What I will say is that, I don't know what I'm saying, I'm just going to rant; that's it!  I think it's fucking brilliant, Jack.  Honestly, dude, I've just got to spend so much time with you this year and really watch this as a little window into what you're doing, and I think it's incredible.  I'm very proud of you, I feel very lucky to have the opportunity to talk to you like this, and I'm going to sit down with you soon in the next few weeks; we're going to have a beer and we're going to maybe snort some caviar!

Jack Mallers: No, I can say for the comment on -- you know, exclusive of Nayib, I'm not a politician, I don't want to speak on politics, but what he's doing for Bitcoin I think is tremendously brave and inspiring.  And the people who want it to fail I think are absolutely disgusting.  I think access to sound money and ability to save and grow your wealth is a fundamental human right, and having access to a monetary network that acts in your best interest and that doesn't gatekeep access to high quality and charge you large fees and put you in danger; I think having access to a free, fair monetary payment standard is also a fundamental human right.

So, I think Nayib is not only acting in the best interests of his country, but he's acting in the best interests of humanity in his efforts with Bitcoin.  And people like Steve Hanke honestly reminds me of a sour ex-girlfriend.  It's like having your ex find a happy life somewhere else and being pissed off about it.  Get over yourself; it's insecurity, it's disgusting.  Bitcoin is an opt-in system, it's not required or mandated.  It's an open network and the fact that it's improving people's lives and that makes you upset in a way in which you have to maliciously act against it is absolutely disgusting. 

As a principled man, people like that should be ashamed, they should be ashamed.  As a businessman, fine; but as a principled man, don't get in the way of people improving the quality of their life in such a way that hasn't been done in over 200 years.  It's absolutely disgusting and shameful, so I wanted to make sure I said that.

But, yeah man, I love you and we've been through a hell of a journey, and I appreciate everything you've done for me and I think this is only the beginning, by the way.

Peter McCormack: Of course, man.

Jack Mallers: I don't look at things like El Salvador and Twitter as a finish line.  I think of it as a starting point.

Peter McCormack: Dude, I love you too, I think you're amazing.  Hanke can eat a bag of dicks.  Congratulations on today; it's fucking incredible news.  I'm just waiting to see what you top it with next, but I'm sure you will.  I'm sure I'm going to get a call from you in a couple of months or a few weeks to say, "Pete, I need to make another show, I've done this, I've done that, let's talk about it"!

But, listen, very proud of you, man.  Keep crushing it, look after your health, keep crushing it, keep just doing what you do and I will see you very soon, brother.

Jack Mallers: Yeah, appreciate it, man.