Jack Maller is a huge proponent of Bitcoin, and the CEO of Strike, a multi-million valuation money transfer applicationwhich is a payment system, similar to PayPal, CashApp or Venmo.
Introduction
- Strike is a payment transfer company, which utilizes Bitcoin and the Lightening Network, as the infrastructure for transferring money, outside all current money transfer systems. According to Strikes CEO, Jack Maller, BItcoin is the most modern set of money transfer rails available, and it is better than all existing transfer rails, because it is the only one that transfers money, all the rest transfer promises. In order to understand the significance of this statement, you have to understand the how the current predominant global payment system operates.
First the current system is based on debt and credit
- Jack Maller's basic premise is that the current payment system goes through four entities Visa, Mastercard American Express and Chase bank. All other payment systems like Cash APP, ApplePay, GooglePay, AndroidPay, etc, etc are built on top of the rails those four entities represent.
- Those rails are built to send non-digital assets like U.S. Dollars or other Fiat mediums of exchange digitally, and this can't be done.
- So they actually transfer information, and that information is a "Promise to Pay later" which is otherwise known as a Debt. #
- So that's is why any non-cash transaction for the purchase of goods and services is not really a payment transfer transaction, but instead is a debt assumption transaction.
- And the merchant and banks base their willingness to take on this debt, based on the creditworthiness of the consumer buying the thing, at the point of sale.
- Which is why so much personal information is stored on those magnetic strips on your credit cards, and why each transaction exposes so much of your personal information, and why banks and merchants lose so much money each year to credit card fraud, charge offs and no pays.
- Pause to think this over.
- So this is why ...every non-cash transaction isn't a settlement, it's a debt assumption. So banks and merchants need to know you are worthy, as in credit worthy, of them taking on this debt, on your behalf.
- So when a bank gives you a credit card, or a merchant accepts your credit card, they are actually agreeing to take on a debt, for you, based on your credit worthiness.
- So this is why, the current payment system, is said to be based of debt and credit. You are allowed to go into debt, based on your credit worthiness, and every transaction is you incurring another debt.
Second concept, is that the reason this payment system is a "debt and credit" system is because it lacks finality or settlement.
- The current payment system lacks finality or settlement of cash transfers immediately, it settles later.
- When you buy something with a credit card or even a debit card, cash doesn't flow from you to the merchant.
- Instead the merchant receives a message, which represents a promise of payment from the credit card issuer, not cash, not payment, but a promise to pay, or SETTLE the debt later.
- Once again, the bank promises to pay the merchant, the bank takes on this debt, based on your credit worthiness. And your promise to pay the bank later. But most importantly this debt is not settled immediately between the bank and the merchant, and not between you and the bank.
- The merchant may not be paid for upto 30 days, and the bank doesn;t usually get paid by you for 30 days.
- So the current system, even though it's digital, isn;t a digital payment system, it is a digital messaging system. And the bank is messaging the merchant a promise to pay.
Third concept, contrast this with Bitcoin.
- Now compare this with Bitcoin: the current global banking payment system, and I use the term payments system in an in-exact manner because the system is not a payment system, it is a message system, and the message is a promise to pay. This is because dollars or other fiat are not digital instruments, so they cannot be transmitted digitally. Only the promise to pay them can be sent digitally.
- In contrast Bitcoin is a digital instrument, which has value, so it can be used in a digital value transfer system, which is another name for a money transfer system.
- Because Bitcoin is the value, when you send people Bitcoin digitally you are not sending them a message promising to pay, you are sending them a message which contains the payment. Now because you don't need establish credit worthiness because noone is taking on debt on your behalf, you dont need to provide a lot of personal information to the vendotr or the bank. It becomes like a cash transaction, and it also represents finality to the transaction with immediate settlement.
- That is the whole concept in it's entirety.
- What do you think??
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About me.
I am a writer who has focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance for over six years. But I also like to write about life, my garden, my island home and other stuff.
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