Strike announced yesterday that it has raised $80 million to revolutionize payments for merchants and consumers through Bitcoin and Lightning Network.
Strike raises $80 to enhance Lightning Network infrastructure
Strike is a US-based company that became famous for playing a significant role in the adoption of Bitcoin as legal tender in El Salvador last year.
The company has developed a Bitcoin wallet based on Lightning Network that is easy for anyone to use in order to bring as many people as possible into this world.
It is worth mentioning that Lightning Network is Bitcoin’s Layer 2, which allows for immediate BTC payments at a negligible cost.
The fact is that the Lightning Network could potentially support a virtually infinite number of transactions because these do not go through any bottleneck. They are not recorded on the Bitcoin blockchain, in which only the opening and closing of LN channels are recorded, and in theory they do not even go through any gateway or central management service.
LN allows truly P2P transactions involving only the sender, the receiver, and a single LN node among the tens of thousands that exist in the world. In this way, the transaction turns out to be lightning fast, because the sender’s wallet forwards it to the most readily available and cost-effective node, and that node immediately redirects it to the recipient’s wallet.
Strike leverages LN to revolutionize the payments world
With more than 17,000 nodes already in existence worldwide, and a cost per transaction of a few cents or even thousandths of a dollar, the Lightning Network could easily compete even with Visa and Mastercard, which, being centralized, have greater limitations in this respect.
Strike is now a leader in this specific area, and will use the $80 million raised to offer its users instant global BTC payments at a fraction of the cost of legacy payment networks such as Visa and Mastercard.
This is why Strike was long ago called the “Lightning Network’s killer app.”
The Series B funding round was led by Ten31 and joined by Washington University in St. Louis, the University of Wyoming, and other investors.
Ten31 is a platform that invests in companies building infrastructure and technology within the Bitcoin ecosystem. It has a presence in New York, Austin, and Nashville, US, and seeks to support the most promising founders and companies in the ecosystem by leveraging its knowledge of Bitcoin and experience in the field.
So far, he has already allocated more than $100 million in equity to Bitcoin and Lightning Network-based companies.
Among them now is Strike, which has developed a Bitcoin network-based payments platform to make them cheaper, faster and more global for both businesses and consumers.
Strike’s partners include some of the world’s largest e-commerce and point-of-sale platforms, such as Shopify, NCR and Blackhawk.
Against such a backdrop, Strike’s ambition to truly come to revolutionize payments on a global level, especially with regard to transaction costs, may seem entirely unprecedented.
Typically with legacy payment systems, the costs are not borne by the sender, i.e., the buyer, but by the recipient, i.e., the merchant, and are almost never really low.
The consumer does not even notice them, but for the retailer they are a significant expense. With an LN-based payment system the costs are negligible, and borne by the sender (i.e., the consumer), and so it is more than fair to imagine that many merchants might be interested in being paid in this way, so as to cut down on costs.
In addition, it is worth noting that fees several orders of magnitude lower than those of legacy systems also allow for micropayments, the costs for which are too high with classic systems to the point of making them uneconomical. With LN, even payments of a few cents do not turn out to be particularly inconvenient if the transaction cost is only a few thousandths.
Strike will use the capital raised to grow further and continue to expand partnerships.
It also plans to release new product lines for entirely new types of customers, such as large financial institutions and corporations.
Comments from Ten31 and Strike founders
Ten31 co-founder and managing partner Grant Gilliam said:
“Strike and Ten31 have a shared vision for the positive impact bitcoin can have on the world and are mutually aligned on accelerating its adoption. It was therefore a natural fit to partner with Strike as its lead investor. We believe Strike is poised to disrupt the financial services and payments landscape, enabling a more efficient, innovative, and inclusive financial experience for everyone. We are excited about supporting Strike’s next phase and strengthening our partnership together.”
Strike’s celebrated founder and CEO Jack Mallers added:
“We’re moving full speed ahead not just to integrate Strike’s revolutionary payments with leading merchants, but globally, with a variety of businesses and partners to innovate and deliver on more financial inclusion. We appreciate the continued support of investors who’ve backed Strike since our founding and are excited to welcome new partners to support our mission, disrupt the industry, and define the future of payments with a truly global, open, secure, instantaneous, virtually free network.”
Mallers revealed that creating a cheaper, faster and more open payment network with some of the world’s largest financial institutions is by no means quick or easy, but nevertheless they are doing it. In theory, every money transfer company is interested in higher-quality payments.
Moreover, he pointed out that businesses and institutions would also desire “a groundbreaking experience” in sending payments, saying that Strike can enable companies to move money in ways that traditional networks such as credit/debit card networks and the SWIFT network cannot.
Probably the biggest obstacle to Strike’s ambitions is the volatility of BTC’s value, but it is important not to forget that through the Lightning Network it is also possible to create stablecoin tokens. Strike already supports USD, and in Argentina it already supports USDT.
Another obstacle is regulations, and indeed Strike’s app is still only available in some countries, and in some of those countries only USDT is available.
Thanks to the funding round just concluded, it is to be expected that expansion will also cover new countries where the app is not yet available, although such an expansion may be neither easy nor fast.