Contributed by Barry Kagan
April 6th-9th saw 2022’s installment of the Miami-based Bitcoin conference, with a record attendance of around 35 000 bitcoin maxis and crypto enthusiasts. The conference has become home to many of the blockchain industry’s most hyped product releases and project announcements, and this year was no different.
Over the past year, DeFi (decentralized finance) has fast become a household term in the lingo of crypto enthusiasts, alongside terms like “metaverse”, “NFT”, “GameFi” and many more. This is evidence of the exponential growth of crypto use-cases and the plethora of industries that blockchain is starting to disrupt.
But those blockchain sectors are all based on other crypto protocols, tokens and coins, known as the “alt coin market” and Bitcoin Miami is for Bitcoin purists, also known as maximalists! It’s no wonder then that the Bitcoin Miami conference was the chosen event at which arguably the BIGGEST EVER announcement regarding Bitcoin real-world use-case was made. And in the most befitting way imaginable, it was all to do with what Bitcoin was invented for in the first place- fast, cheap, decentralized currency. The payment mechanism of the 21st Century!
Enter Jack Mallers- no ordinary 27-year-old Bitcoin Maxi. As founder and CEO of Strike, Jack has earned his place on the prestigious Forbes 30 Under 30 list and he came to Miami to drop bombs! After days of teasers and cryptic tweets leading up to his presentation, the moment finally arrived where Jack took center stage and in no uncertain terms dealt the global payments industry a blow that could eventually unhinge payment giants Visa, MasterCard, Amex and Diner’s Club.
Jack began his presentation by taking the audience on a journey back in time to the origins of the card payments networks. In a charming, cheeky and entertaining display of the processes involved in Card payment flows, Jack made it damn clear that he thinks it’s “bullshit” and “not the American way” that there’s been zero innovation in the card payments industry for more than 40 years!
As his American spirit of patriotism and ambition shon through, Jack went on to highlight the actual pitfalls and problems with this current “boomer bucks” payment system, and this is what’s super important because what he goes on to reveal is a SOLUTION to these problems.
The problems are dead simple: on average (assuming an American model), retail Merchants lose a solid 3% of the sale amount to card payment processing fees. By example, for every $100 sale a retailer makes, $3 goes to the consortium involved in making the sale possible via our handy Credit/Debit Cards. This consortium is made up of the customer’s Bank, the Merchant’s Bank, and 1 of either VISA, MasterCard, Amex, or Diner’s/Discover. And further to the cost the Merchant pays, is also the issue of it taking days for the funds to clear in the Merchant’s Bank Account.
After spending perhaps a little too much time harping on about the existing crappy payments network, Jack finally moves on to the big announcements and the unleashing of his 21st Century Bitcoin Lightning Network based solution. What was demonstrated was a super impressive ecosystem whereby consumers can make use of a number of digital wallet apps including Strike, and can have them loaded with any currency they want whether fiat or Bitcoin, and a supported Merchant can be paid using it and have the funds received in any currency that they themselves want. The transaction takes seconds and settlement into the Merchant’s digital wallet is instant! The process to do so requires the simple scanning of a QR Code and the confirmation of a PIN code for security. And whilst this is all pretty impressive, what’s arguably the most impressive aspect is the partnerships and supported Merchants that are already in place. Online- Shopify integration is live already, and in the brick-and-mortar real world, Jack blew the audience’s minds in revealing that this ecosystem has been incorporated into NCR point-of-sale systems in-store, and displayed a list including tens of the USA’s biggest retail chains such as Walmart, Target, Best Buy, McDonald’s just to name a few.
So what does this mean for the Merchant and for the consumer? The Merchant is by far the one to benefit most in the picture as this system totally removes card payment processing fees and also makes settlement instant. This is revolutionary and a huge “F U” to the decades-old banking system that has profited way too long from the act of simply passing along funds from consumer to shop owner.
In my opinion, the benefit for the consumer (shopper) is where this gets a bit more tricky. Consumer adoption is what’s going to be the huge challenge here. Firstly, credit cards are credit cards and a very large portion of the population rely on the credit facility and payment terms they provide. Secondly, most banks in partnership with a Card issuer give the user some form of loyalty rewards/points/miles which are generated by their card payment fees charged to the Merchants. So no Merchant fees, no rewards and loyalty programs. So while this system is cheaper for the Merchant, it’s more expensive for the consumer, and it doesn’t matter if Jack manages to get the system installed on every POS system on earth, if the consumer chooses not to use it…well then it doesn’t mean ummmm… “jack”.
So unless there’s motivation and reward for consumers to hop over to this ecosystem, it might get nowhere fast. Let’s see if in time a reward system of sorts can be adopted within and consumers can find real benefit in transacting via the Strike ecosystem.
One thing’s for sure regardless and that’s that the 27-year-old Jack Mallers has proven that the tech and protocols do exist practically to use Bitcoin as a daily means of currency and payment. He has furthermore showed an off-the-chart level of balls in taking this fight straight to VISA/MASTERCARD and co, and he has solidly taken his place and planted his flag high on the hills of innovation and progression, and I for one am damn excited to see what comes of this new payment ecosystem and from Jack Mallers in the years to come!
Watch Jack Maller’s Bitcoin 2022 Conference talk here.