Zap, a Lightning Network payments startup supported by Visa through the Fintech Fast Track program, which on January 6 announced the rollout of Strike Global, an app for payments and transfers using the Bitcoin (BTC) Layer two technology.
A Announcement by CEO Jack Mallers takes a closer look at the differences between standard fiat transfer mechanisms and the Lightning-powered mechanism in Strike Global. Mallers focused on remittances, a multi-billion dollar business that is still largely passed through expensive middlemen.
Strike Global is very similar to traditional fintech apps, but uses the Lightning Network for settlement. This means that payments can be made essentially instantaneously and at a fraction of the cost of traditional payment rails.
Strike Global has two types of transfers, depending on the location of the recipient. For countries with a developed banking system, Strike allows users to send payments without going through Bitcoin themselves. Strike automatically withdraws money from user’s bank account, converts it to BTC, then returns it back to recipient’s fiat currency and banking system.
The system largely piggybacks on the existing Bitcoin exchange infrastructure, which already allows for much cheaper and easier transfers if users are willing to go through them manually. Since national exchanges are usually integrated with the local banking system, using Bitcoin or other cryptocurrencies allows for much cheaper conversion rates compared to cross-border banking.
For countries without developed banking systems, Strike allows users to deposit their money in Bitcoin or Tether (USDT). The cryptocurrency can then be exchanged for local cash or fiat through ad hoc solutions such as Bitcoin ATMs, LocalBitcoins and others. Strike simplifies many of the backend exchange processes to make the experience comparable to other fintech apps.
The startup partnered with Bittrex to integrate the exchange’s users on Strike and the Lightning Network. In the first quarter of 2021, it expects to complete private and public beta testing, as well as issue Strike Visa cards in the US. In Q2, it expects to launch cards in the European Union and the United Kingdom.
The rollout comes as companies begin to increase adoption of newer Bitcoin technologies. Kraken has promised to introduce a Lightning integration in 2021, while Binance recently added SegWit address support for Bitcoin.