Money Revolution Is Knocking at Your Door: Why You Should Be An Early Adopter
An astonishing startup found the perfect network to make the shift.
Blessed are the meek, for they will possess the earth.(Matthew 5:5)
How can the meek survive when technology disruption steals most jobs?
We want to believe life is going well, the economy is working smoothly until it doesn’t. Housing prices are going to the roof, cars are getting pricy, the stock market is at all times high, and the party goes on.
On the other hand, tech devices, clothes, and services are getting cheaper (especially online).
If technology is causing a deflationary movement, why are certain things getting more and more expensive?
It seems we have two worlds colliding with each other, and they actually are. Why?
Robots will take most jobs, and technology disruptions will move into just about every industry, and we should be watching a deflationary environment with the cost of everything going down.
Governments will do everything to stop deflation and control inflation at 2 percent a year, so they can keep money printing to increase spending. It’s much easier for politicians to manage a country with endless budgets.
So, central banks and governments fuel the economy with credit and debit to mask what is really happening underneath.
Meanwhile, to join the party, a new digital world is being born, full of financial innovation, within the blockchain, in a deflationary movement unparalleled in human history.
The next episodes may have dramatic scenes if politicians do not realize that deflation will bring abundance. The problem is that this abundance can only appear if they lose some control of their power. And there, by itself, is already a huge problem.
Lightning makes no sound until it strikes.
Several silent revolutions have been taking place while technology innovation thrives worldwide. Entire new networks have been built under new premises, like Facebook, Amazon, Apple, or Tesla.
The social network was dematerialized, and retail, mobile devices, and automobiles also entered into technological revolutions. Yet, money, wish is the most important one, has been left behind. Meanwhile, a new network surges to take control- the Bitcoin network.
It’s crucial to make the distinction between Bitcoin the asset and Bitcoin the network.
Bitcoin the asset is volatile, like any new safe-haven financial entity, and it’s hard to custody.
Bitcoin the network, when compared to the Visa or Paypal network, gives you identity out of the box, gives you payment specifications, and combined with the lightning network, gives you instant cash finality in real-time at no cost.
The Bitcoin lightning network is the most inclusive monetary network of all time. Why? Simple. Can a citizen of El Salvador or Venezuela use a Visa or Mastercard free of charge or without being subjected to such a violent exchange that it leaves them with no money to spend? No.
The Bitcoin lightning network works in El Salvador as well as in Chicago, Lisbon, or Sydney. That’s why it’s the most inclusive network.
So, what is the Bitcoin lightning network, after all?
The Bitcoin lightning network.
There is a big issue standing in the way of Bitcoin the asset, which is its scalability.
One example is Visa, which provides 4,000 transactions per second, and can scale to a maximum of 65,000 transactions per second.
On the other hand, Bitcoin can handle up to 7 transactions per second with the current blocksize of 1MB. This main blockchain isn’t very scalable, but it doesn’t have to be.
The blockchain community comes up with a new technique called the lightning network that solves the scalability issue.
Everyday transactions don’t have to be stored on the main blockchain. Transactions can be stored in an off-chain system.
Let’s make an example to simplify the lightning network.
Imagine that Martha is buying a cappuccino every day at Starbucks. Creating a transaction on the Bitcoin blockchain for a simple cappuccino is hard to do, and it’s costly. Yet, with the lightning network, Martha can set up a payment channel with Starbucks. Both have to deposit a certain amount of Bitcoin in a multi-signature address.
Imagine Martha is depositing 0.05 BTC, and Starbucks deposit nothing. The multi-signature address is like a safe that can only be opened when both parties agree.
When the open channel is produced, the two parties can create a balance sheet that says how the funds on the address should be distributed. All this process is in the blockchain, so it’s fully transparent.
Starbucks can see that the customer Martha deposited 0.05 BTC and by so, be rest assured that they will get their money once the channel closes.
Now, the cappuccino costs 0.001 BTC, and Martha has to change the balance sheet, subtracting the cost of the cappuccino from her balance and adds it to Starbucks.
When Martha and Starbucks sign the updated balance sheet with their private keys, each of them keeps a copy of it, and that’s it.
Martha can keep ordering stuff from Starbucks as long as she has sufficient BTC on her balance sheet. Martha can do thousands of transactions, and the system is cheaper and quicker than the main blockchain. The payment channel can be closed at any time by Martha or Starbucks. They just have to take their BTC from that specific address and brought it again to the Bitcoin network. Miners will validate the signatures of the balance sheet and, if everything checks out, release the funds according to the balance sheet.
The lightning network can significantly reduce the traffic on the main blockchain, and it’s safe because both parties have a signed copy of the balance sheet.
If Martha’s mother wants to buy a tea at Starbucks, she doesn’t have to create another payment channel. The lightning network has a highly efficient system. It looks for the quicker address and uses it with the two parties who agreed to play new transactions.
How young engineer Jack Mallers designed the future of Strike.
Kjell Inge Røkke, a Norwegian billionaire, recently wrote to his shareholders a letter about Jack Mallers that says:
In the past months, I have met many new people. One of them was Jack Mallers of Strike. He’s almost forty years younger than me. Experiencing his energy and enthusiasm was special. I felt old in his company but also very emboldened: I lost out on mobile communications. I didn’t invest in Internet companies. It was only recently that I started to invest in and build software companies (and I love it!) When I realized how much brainpower goes into Bitcoin, I saw the future in the making.
Mallers’ grandfather directed the Chicago board trade, and since a young age, Jack has been surrounded by all kinds of conversations between his grandfather, his father, and his family about stocks, bonds, derivatives, and financial tools.
In an innovative disruptive era, Jack emerges as this fantastic entrepreneur, with an extreme notion about the markets, but better than that, ultimately appeared in the ecosystem of blockchain and Bitcoin.
So, to explain what Strike does, let me explain monetary networks. Some of the most popular financial networks are the SWIFT, Visa, Paypal, Square, and Mastercard. As networks, what do all these known systems do? For example, Visa uses ACH (automated clearing house) plus the Visa network to move US dollars, implementing things like identity, payment protocols, credit, and debit.
We use Visa cards without realizing behind them is a network with protocols to protect our money.
The particular thing about these networks is that they are developed in private. Someone in the Paypal network cannot participate on the Square network. My Paypal account can’t pay to your CashApp account. You can’t because they are different networks.
The insight behind Strike is that the Bitcoin lightning network is the first and most efficient, cheapest, and fastest open monetary network ever created. It achieves all of these characteristics the previous networks do, like identity and payment specifications, but Strike was designed under the Bitcoin lightning network.
Jack Mallers thinks the Bitcoin lightning network plus the ACH network will outcompete the previous ones. Because it’s an open network, Jack feels it gives him a competitive advantage over the other Fiat networks.
How will it work with Strike? Let’s pick Martha again. Martha is in the USA, and she has a friend in the UK. She wants to send $100 to her friend.
Through Strike App, Martha will do the operation that will debit $100 from her account. Then, Strike will programmatically trade it into Bitcoin in real-time in the American lightning infrastructure to the English lightning network that converts it automatically into pounds to her friend. All of that, using Bitcoin as cash finality.
You have an asset and a monetary network that it’s able to achieve cash finality anywhere in the world, at any time, at no variable cost.- Jack Mallers in What Bitcoin Did podcast.
This technique may be the ultimate breakthrough into international transaction disruption. But more than that, it can disrupt an entire sector.
The notion that we have a decentralized and open-source network makes everything possible, and if other entrepreneurs follow this innovative technique, it can potentially be the end of Visa, Mastercard, Square, and Paypal business models.
Blessed are the meek, for they will possess the Earth.
What I think is extraordinary about Strike and Jack Mallers is his willingness to fight centralization. The way he talks in several podcasts about control and close sources made him a very libertarian entrepreneur. All he wants is to make money accessible to the entire world with the same rules.
Jack Mallers, a young bright entrepreneur from Chicago, may become one of the precursors of a unique revolution in human history.
Mallers has a pilot project in El Salvador, but with the enthusiasm, cunning, knowledge, and willpower that Jack shows, we can be in the presence of yet another powerful phenomenon of technological disruption.
It certainly has a unique flavor, as every citizen of the world will be able, for the first time, to trade money on a fundamental pillar — the Bitcoin lightning network.
Final Thought
In an open system, winners will be companies that offer the best experience and the most attractive brand.
One day you’ll go to Starbucks and find a QR code system where you can scan it with thousands of possible apps, but the winners will be the ones that treat you best, that gives you the best user experience and rewards, that are free, that over-invest in customers support, and that is most attractive.
Western nations are going to compete aggressively with each other to try to attract these technologies. If they over-regulate these companies, entrepreneurs will migrate to the best country that gives them the best choices. Why? Because this is a nomad technology.
You can create a new company using the Bitcoin lightning network in the US, but if they try to over-regulate, you can go to Portugal, the Caiman Islands, or Singapore and develop it there. It’s an open-source technology, and by that, you can go to places where people embrace abundance.
Jack Millers opened the Pandora Box. He made it possible to use the Bitcoin lightning network in a way citizens from all over the world can use it to fight their fragile monetary systems.
I believe that more of these technologies will be born soon, and we can see an emergence of competitive systems that can disrupt money and give people, especially from developing countries, the opportunity to have a decent life.
Senators and politicians from the US are starting to embrace Bitcoin. I believe the USA will lead this revolution and embrace abundance, and more than that, to see the dollar increase its power. And that is good because the dollar offers peace to the world. We still have oppressive risks in the international landscape, with Russia and China trying to fight the dollar.
So, if people from Nigeria or India have a system to shift their currencies to another international currency, of course, they will choose the strongest one.
We will assist in the following decades to a massive transformation in the way we use money. People like Jack Mallers will be one of the sorcerers who create the magic formulas. Money will be dematerialized, just as Facebook did with social networks, Amazon did with retail, Apple did with mobile devices, and Tesla did with automobiles.
It’s inevitable, and therefore, early adopters will undoubtedly be the winners. But above all, if the United States embraces this revolution, it will bring abundance to the entire world, that is the central premise.
Bitcoin was created to fight the disparity between rich and poor and to give equal opportunities to everyone on the planet. Many countries will try to corrupt Bitcoin.
Yet, no one will be able to defeat the code.
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.
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