Bitcoin App Strike In Argentina: Under The Hood

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The launch of Lightning payments in the South American country was met with some confusion.

The launch of the Lightning Payments Strike app in Argentina caused a lot of confusion on Twitter after customers started downloading and using it in Discover They didn’t get an actual Bitcoin wallet. Muddy though, launching Strike there resembles the same dynamic that the company resorted to in its first iteration in El Salvador, where it also uses the USDT stablecoin to represent the US dollar and interacts with Bitcoin and Lightning without holding a BTC balance.

Strike founder and CEO Jack Mallers traveled to El Salvador early last year to help the Bitcoin Beach community take advantage of the Bitcoin and Lightning networks to achieve financial freedom, only to discover that it was illegal for his app to hold US dollars on behalf of a user. . He explained to “What Bitcoin Did” host Peter McCormack that Strike, which leverages dollars, Bitcoin and Lightning to allow instant and cheap payment transfers around the world without intermediaries, had to resort to using Tether’s USDT to achieve basic functionality with minimally scalable products. For application in El Salvador. Only after El Salvador passed the Bitcoin law was Strike able to move away from using a stablecoin.

“Tether was originally part of the plan because it had to be, because I had no choice,” Mallers said on the podcast.

Similarly, financial institutions in Argentina are also facing increased regulatory scrutiny regarding maintaining US dollar balances as the country attempts to curb the flow of dollars. In November, Bloomberg You reported that the Argentine Central Bank has imposed new restrictions and banned banks from holding net dollar positions at the end of the trading day.

The US dollar is the basis for Strike’s business model because the platform differentiates between parent bitcoin and bitcoin on the network. The payments app seeks to leverage Bitcoin, the network, to enable instant, near-free cash transactions across borders in a world plagued by ineffective international payment bars.

“I think there has to be a conceptual division between the origin of Bitcoin… and the Bitcoin network,” Mallers said. CNBC in August, adding that “we can… use the Bitcoin cash network under the hood to do everything cheaper, better, and faster.”

“So at Strike, we allow you to use this infrastructure barrier with your Chase checking account or your Visa debit card without making you use and spend bitcoin, the asset,” he said. CNBC. “We are going to see a lot of turmoil with Bitcoin, the cash network.”

In Argentina, Strike is doing just that – leveraging the Bitcoin network, and USDT, to enable cheaper and faster payments locally and internationally without requiring users to spend their bitcoins.

Strike enables Bitcoin transactions and Lightning payments without requiring users (or allowing them) to directly touch Bitcoin by purchasing BTC and transacting through Lightning on their behalf. It stands to reason that any strike levers on the USDT balance in Argentina would be similarly managed by Strike or a trustee that interacts with it.

On the other hand, US customers received a host of new features, including the ability to buy bitcoin and get paid with bitcoin. It is not clear when these functions will be available to users outside the United States.

Strike did not respond to a request for comment.

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