Strike CEO Jack Mallers joins Yahoo Finance Live to discuss the company’s Shopify integration launch, bitcoin, and plans to disrupt the traditional finance system.
BRIAN CHEUNG: In Bitcoin, digital payments platform STRIKE is integrating with online shopping platform Shopify to allow US merchants to receive Bitcoin payments from customers globally as US dollars. For a deeper dive into the expansion of crypto payments and its future, let's bring in Strike CEO Jack Mallers, as well as Yahoo Finance's David Hollerith for this conversation.
It's great to have you on the program. I wanted to ask you, Jack, just kind of to give us a little bit more detail on this partnership that you have with Shopify, the idea being able to go on to these many marketplaces and then use Bitcoin to transact. Why did you decide to go with this partnership?
JACK MALLERS: I actually would rephrase that a little bit. It's not necessarily spending Bitcoin is the idea. It's that using Bitcoin as a payments network is superior to card processing networks or bank networks or remitting networks like Western Union.
If you think of what a payment network is, it's a network that facilitates the transition of value from point A to point B. And the Bitcoin network just does that a lot better. And we can interface it with dollars just like Visa interfaces dollars over debt-based payments in credit card payments.
And so I think it's just superior. It's cheaper. It's faster. It's more global. It's more inclusive. It's more innovative. And it's just the new way we should be conducting payments and transfers of value.
DAVID HOLLERITH: Jack, David Hollerith here. Thanks for coming on the show.
Yeah, I was just curious. You know, when I talk with people about using cryptocurrencies to innovate the payments industry, typically they'll mention something like, you know, a US dollar-pegged stablecoin. So I was curious, why have you sort of thought to go with Bitcoin as a payments network?
JACK MALLERS: Yeah, so I really want to divide Bitcoin as an asset-- this is an asset that has a fixed supply, a known issuance, a known monetary policy, and a sufficiently distributed network where it will never change. I'm not advocating for people to spend Bitcoin. I'm advocating that, how do you actually transport value at the speed of light? I mean, this is a payments network that could move value anywhere in the world at no cost, in real time, and anyone can build on top of it. It's more inclusive, more innovative.
And so I'm just saying, if I wanted to, for example, move dollars to euros, I could take dollars out of your Chase account, turn it into Bitcoin, zip it across the planet in real time-- it's the only physical bearer instrument that can move and settle at the speed of light-- and then convert it back into euros. To the consumer that's remitting money, or to the consumer that's buying Chipotle, they don't know Bitcoin is involved.
So whether you want to have a stablecoin on one end, whether you want to have a euro, whether you want to have Starbucks points, it's the payment network that facilitates the settlement of value is the disrupter here. It's not necessarily what the consumer or the merchant or the remitting payment or the B2B-- what they want to hold and interface with. It's the rails under the hood.
AKIKO FUJITA: So that's an interesting proposition, Jack, because it sounds like you're saying that you still believe Bitcoin is a store of value, but this allows for a quicker payment system. Shopify being the partnership that we're talking about today, but how do you see this expanding beyond that? What is that system that you're aiming for look like?
JACK MALLERS: I mean, think about it like this way. When the world got a global communications network-- we call it the internet. When I open an email, nowhere in that email do I have to specify, oh, this is a cross-border email. This is an email to flirt with a chick. This is an email that's going to fire my employee.
No, it's just a message, and I can click send. And whether it goes to the person to my left or whether it goes to a person in Japan, it's going to get there in less than a second and at no cost because the message is the value. It is all encompassed in one global network.
It's the same thing for a Bitcoin payment. It's fascinating in that way. Whether I'm buying coffee, whether I'm remitting money, whether I'm tipping someone on Twitter, whether I'm unlocking a blog post, it's going to settle in less than a second and at no cost, and that's fascinating.
Now, I don't advocate spending Bitcoin because it's an asset that's designed to be held and appreciate and store wealth across space and time. What I'm advocating for is interfacing it with dollars. We can move dollars over it. We can move euros over it. We can move game points over it.
It's replacing the bifurcated independent payment networks that we know today-- Western Union, card networks, transfer. I mean, we can all consolidate onto one open global standard to move value from point A to point B. It's just, plain speak, better.
DAVID HOLLERITH: Yeah, Jack, and I caught your Bitcoin 2022 keynote speech. And you sort of talked about how-- you gave, you know, a pretty clear example of how a sender-- if they didn't want to spend their Bitcoin, a customer could sort of use your app-- send US dollars. Your app, on the back end, would convert it to Bitcoin, send it, and then convert it back into US dollars for the merchant.
And you sort of-- you know, the highlight of your talk was about how, you know, the credit card industry hasn't really seen innovation for the merchant since-- I think you said 1949. Now can you explain that a little bit more? How does the merchant benefit in this scenario?
JACK MALLERS: Yeah, so payments as we know it today are what I describe as debt promises. It's a concept from Mike Brock. What that means is that paper dollars-- the US dollar cannot settle and move at the speed of light. When I walk into a Chipotle, when I swipe my card, dollars aren't hopping out of my pocket and into the register.
What's actually happening is the banks are promising each other, Jack's good for it. Jack's good for it. Let him eat the burrito. We'll settle later.
And who bears the cost of the debt? It's the merchant. They tax the merchant to fund this revolving door of credit, and that's why.
So what have banks been doing in the last 60 years that they haven't been innovating? They've been building very sophisticated revolving doors of credit.
Now the innovation, the boom, a-ha moment is, when you message to a merchant that Jack wants to pay for something, you actually now can send along with it a digital bearer instrument that actually is money in a physical form, but it's digital, and it's called Bitcoin. And it can actually hop out of my pocket and into Chipotle's cash register.
And that's the innovation-- is that the merchant now does not need to trust banks and build credit in debt associations to please give me Jack's money in 30 days because he said he was good for it when he bought this burrito. Now you have a physical bearer instrument that's inherently digital that can settle and move at the speed of light.
And so when the merchant gets that message, they also get the money. And that means that you don't have to call the banks and plead them and negotiate them with the concept of interchange and such.
And that's why this is such a big deal, because the message is the money, and anyone can build on top of it. The reason that I can't go to Chipotle and check out with my Twitter or my CashApp or whatever-- I need a card issued by a bank-- is because they've built such sophistication-- the regulatory compliance-- to give unbacked consumer credit loans. And now that's not a requirement anymore to facilitate commerce because we have a digital bearer instrument that could settle instantly.
DAVID HOLLERITH: Right.
JACK MALLERS: And so I hope we're making sense. That's just a fascinating revolution that's just taken commodities 65 years.
BRIAN CHEUNG: Yeah, Jack. I mean, it speaks to how antiquated the American payment system is. I want to shift to another country, El Salvador, where they've actually started taking Bitcoin as legal tender. Strike, the mobile payments app-- it has a presence in El Salvador. Tell us about where you're seeing on that front and kind of how that compares to the American system that we have here?
JACK MALLERS: Well, think about it. It's the same thing where the internet is so vastly important for things like freedom of speech. Let's exclude my maybe corporate incentive as a businessman.
The internet-- can you imagine trying to follow what's going on in war today if I had to trust "The New York Times" to publish someone's opinion that was credit-worthy? No, I can go on the web. It's inclusive. It involves everybody. It's inherently innovative because anyone can join and build on top of it.
And that's what Bitcoin is as a monetary network. It's the same principle. And so when you see emerging markets subscribe to, one, the asset, which is an asset that can preserve and store their wealth over time, it relieves them of the reliance of trust within government and within their own nation state currency or lack thereof.
And then a payment system that brings them to the digital age that's ultimately inclusive, and that you don't need to be creditworthy to join this payment system. All you need is internet access and a mobile application that you prefer because you like the experience.
And so with El Salvador, I see an emerging market. I see a developing country that may have been hundreds of years behind go to 100 years ahead. It's like they took a steroid. It's like they leapt into the future.
How did they do that-- is they jumped on the Bitcoin rail. It's just the most beautiful thing I've seen, right?
DAVID HOLLERITH: Jack, really quickly, I mean, how widely is the app used? Are there any numbers you can share with us?
JACK MALLERS: There's no numbers I can share. We're in the middle of some pretty big deals. But very widely.
And the other thing I would mention, too, is it's opt-in. And so the notion that it-- think of it like a free gift. It's like, whoa, what's in the box, is like an asset that has never acted more in my best interest and a payments network that has never been easier to innovate and include all.
And so the fact that there are people around the world that want to subscribe to that and reap benefits from it is fascinating. And anyone that objects to that-- I would really question their morals because if they didn't want to do it, they don't have to use it.
DAVID HOLLERITH: Well, Jack, we're going to have to have you back on the show once you're ready to share some of those numbers with us. Really do appreciate the time. Jack Mallers, Strike CEO and our very own David Hollerith joining in on the conversation.