Jack Maller’s Strike Service, Send Globally, Tackles Bitcoin-Fiat Remittances

Featured SpeakerAlex Thorn

Head of Firmwide ResearchGalaxy

The problem

Dismissals of the real-world utility of cryptocurrency are often based on the assumption that money works the same way around the globe as it does in the United States.

Critics – including powerful U.S. legislators – often cite the convenience of services like PayPal or even credit cards as proof that cryptocurrency has no utility. But that ignores the very real differences between nations’ financial infrastructures – and how many places PayPal or other services simply don’t reach.

Those barriers are much more obvious to people who do a lot of small-dollar international transactions, such as immigrants sending money back home. Using traditional financial infrastructure for these so-called “remittances” often relies on complex and high-trust relationships among banks. That complexity has made it easier for conventional remittance services to charge sometimes extremely high fees.

For example, according to the World Bank, the cost of remittances to Nigeria has averaged close to 8% over the past decade. That adds up dramatically: In 2020 and 2021, nearly $3 billion was spent on remittance fees to Nigeria alone. Given Nigeria’s roughly $440 billion GDP, that’s enough missing money to amount to a drag on the national economy.

And while Nigeria is a major recipient of remittances, it’s just a tiny slice of the pie: Global remittances in 2022 added up to $626 billion. Cutting just 1% from the fees on those remittances would mean an additional $60 billion in the pockets of people who need it.

The idea: Send Globally

As crypto winter set in over the course of 2022, the crypto industry talked a lot about the “pivot to BUIDLing” that often follows when the most degenerate forces in the industry get blown up and quiet down for a bit. Strike’s new Send Globally service, launched in December 2022, embodies some of the greatest promises of that bear-market urge.

Send Globally solves a real problem in the world using cryptocurrency. It leverages the Bitcoin blockchain and the Lightning Network to offer international cash transfers that are faster, more flexible and often less expensive than what’s offered by traditional financial services. It’s designed to be easy to use and understand for people who know nothing about crypto.

Most important for the direction of the crypto industry, Send Globally has an honest-to-god business model: a sustainable approach to generating revenue in exchange for real services, instead of through selling speculative tokens or lunatic financial engineering. Given the ongoing regulatory crackdown and post-bubble skepticism facing crypto, it’s more important than ever for projects to focus on real, paying end users.

“You send money that you see as dollars from the United States, and it’s received on the other side. They receive it in their local currency, either in a bank or in a mobile account,” explains Manuela Rios, Strike’s vice president of product. Rios, who joined Strike from Robinhood Markets in December 2021, knows the challenge of remittances intimately. Her grandmother lives in Colombia, and Rios describes having to jump through expensive or complex hoops every year to send her abuela a simple gift of birthday cash.

Bitcoin in and of itself is already a meaningful solution to that problem, given transaction fees of around $2 to send any amount of BTC. But it still presents challenges to trust and usability for many.

“If I’m going to send money to my Grandma,” as Rios puts it, “I’m going to have a hard time convincing her to use bitcoin.”

Send Globally is designed to split the difference, giving people who know nothing about crypto access to some of its benefits in speed, cost and flexibility. Strike has partnered with a series of local businesses that connect Bitcoin’s Lightning Network to local banking services, including Pouch in the Philippines and GetBit in Vietnam.

By plugging directly into local financial services, Send Globally makes its Bitcoin transactions feel, to the end user, largely identical to a conventional wire transfer. In particular, it vastly reduces the volatility risk of bitcoin because the BTC is held for a very short amount of time on both ends.

Send Globally began operating in December with service to Ghana, Kenya, and Nigeria. In a great example of its seamless local integration, Send Globally in those regions can direct funds not only to conventional bank accounts but to “mobile money” services, particularly M-Pesa. Started in 2007, M-Pesa lets users access money through even simple flip phones, and has become a huge part of financial life across large swathes of Africa.

Strike has since added service to the Philippines and, most recently, Vietnam. In total, Rios says, roughly 500 million people outside the U.S. have access to Send Globally. For now, the service is one-way – you can send dollars from the U.S. to receiving countries, but not in the other direction.

Using Bitcoin’s Lightning Network as the payment rail dramatically cuts the already-low cost of a Bitcoin transaction: Sending over Lightning costs pennies or less. But the added convenience of local bank connections and automatic bitcoin-to-fiat conversion does add some costs of its own. So Strike is careful not to claim that Send Globally is cheaper than existing options in all cases, particularly citing temporary “teaser rates” for conventional remittance services as sometimes cheaper. Strike’s revenue from Send Globally comes in the form of an exchange-rate spread.

Rios says Send Globally’s basic design was influenced by Strike’s involvement in El Salvador’s bitcoin push since 2021. That year, Strike released its Lightning-based payments app in El Salvador in conjunction with the adoption of bitcoin as legal tender there. (Strike’s app is distinct from the troubled “Chivo” app released by the Salvadoran government.)

“The way that Send Globally differs,” says Rios, “is that in El Salvador, [funds are sent] to a Strike app. Send Globally goes to their bank account, so it’s a much different experience. What we’ve found is that it’s a much lower barrier to entry.”

There are other advantages to Send Globally that make it distinct from standard remittance services. Perhaps most compelling, because it runs on Lightning and uses a spread-based revenue model Send Globally can be used for very small transactions. That’s simply not possible with services like Western Union that often charge flat fees for remittances, making smaller sends economically impractical.

“You can send as little as a dollar,” says Rios. “That makes it so easy to try out, and it opens up a lot of new use cases.”

Rios describes casually pitching Send Globally to a U.S.-based Nigerian influencer. “He tried it, and in, like, two minutes he messaged back in disbelief. He was mind-blown about how simple it was.” For now, Strike says it’s relying more on word of mouth than on paid marketing to promote the service.

That “two minutes” might not be an exaggeration, thanks to Send Globally’s other major advantage over conventional remittances: speed. “It gets to the recipient instantly,” says Rios, meaning between a few seconds and a few minutes. In most jurisdictions that includes fiat settlement even outside of normal banking hours and on weekends.

Rios says Send Globally is poised for rapid expansion, in part because of the plethora of companies around the world already working with the Lightning Network.

“We thought that there weren’t that many. As soon as we launched in those three African countries we started getting messages – ‘We’re a lightning company in Columbia, in Mexico, in Ukraine.’ They’re everywhere. Because Lightning is open source. We almost can’t build fast enough.”

While Strike CEO Jack Mallers has generated headlines as a fervent bitcoiner, Rios says Strike isn’t interested in explicitly leveraging Send Globally to create new bitcoin converts.

“Overall our mission is better money,” she says. “Inside the app we make the differences between the cash and bitcoin balances clear,” and the interface doesn’t try to nudge people to cross that gap.

Long term, of course, that aligns with a crypto future that even many diehards support: a world where crypto and its benefits are widespread, but many users have no idea they’re using crypto at all.