WBD460 Audio Transcription
Orange Pilling the IMF with Jack Mallers
Interview date: Wednesday 9th February
Note: the following is a transcription of my interview with Jack Mallers. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In this interview, I talk to Jack Mallers, CEO of Strike. We discuss his interactions with the IMF, Facebook, Jeff Bezos, and Argentina, and the global implications of the Bitcoin network.
“Western Union can’t allow me to pay for my coffee, Visa won’t allow me to remit money? Lightning does both and better and open and global, and so you guys come play on my court, and let’s see who can develop the best experience for the consumer, because I bet all my life I can build a better experience on the Lightning Network than Jamie Dimon.”
— Jack Mallers
Interview Transcription
Peter McCormack: What up, Jack.
Jack Mallers: Yo, Pete, how are you?
Peter McCormack: I'm all right, man, how are you?
Jack Mallers: I'm good.
Peter McCormack: Good to see you.
Jack Mallers: I feel I love your set up and I don't know what to do with my hands.
Peter McCormack: Just don't hammer the table, because it vibrates all the way through. We've got an audience.
Jack Mallers: We do.
Peter McCormack: Shall we say hello to Cookie?
Jack Mallers: Yeah, we've got my step-mum, the Bitcoin mum, we got my dad, we got my best friend, Strike employee, Dylan.
Peter McCormack: Jack, love talking to you, man.
Jack Mallers: Peter, yeah. Well first of all, we go way back.
Peter McCormack: We do.
Jack Mallers: I haven't spoken to you since you bought the football club, so congratulations, I'm very proud of you, man.
Peter McCormack: Thank you. We started selling merchandise today. £10,000 of merchandise sold in three hours.
Jack Mallers: Amazing.
Peter McCormack: We just need to sell another £500,000.
Jack Mallers: Congratulations, man.
Peter McCormack: Yeah, but we lost today, we played fucking terrible. I don't think any of the players listen to this, but we didn't play well. But yeah, thank you. I mean, you've known for a long time I wanted to do this, I told you about this, and now it's a thing.
Jack Mallers: I know, I'm very, very proud of you. I think sometimes in the Bitcoin sphere, time goes really fast, a lot of things happen in a short period, and just so you know, I'm very proud of you and seeing it all come together was really cool, inspiring for me.
Peter McCormack: Shut up, man. Fuck off!
Jack Mallers: You fuck off, what the fuck! Just be a good guy!
Peter McCormack: Hey listen, I'm really proud of you though as well. You've been through a lot this last year or so. You are a global Bitcoin superstar, you're crushing it, love every performance from the closet in the Crocs, in the hoodie, talking to national TV stations. There's a lot to talk about, man. I don't even know where to start. I think we have to start with the IMF, just because that's funny as fuck that you're dealing with the IMF!
Jack Mallers: Yeah.
Peter McCormack: What's the background.
Jack Mallers: Well, the IMF reached out to my press team and they're just like, "Hey, we're really interested to hear Jack talk to us about Bitcoin and the Lightning Network. Supposedly, there's this 27-year-old that's disrupting cross-border payments and we need to know about that. My general counsel was very nervous and was like, "I don't know if we should do this, this is the IMF". She used to work at the World Bank. And my immediate response was, "Fuck yeah, I'm doing this"!
Peter McCormack: Yeah, of course you are!
Jack Mallers: Of course I am. It doesn't matter. And so, they were just super interested to have a seminar. I think it was over 100 in attendance from the IMF and it was just about Lightning and the future of cross-border payments. There's a very famed, I think it went viral on Twitter, the tortilla chip and the peanut and the raisins. But yeah, initially the Bitcoin community was a little hesitant to me speaking to them and stuff, but I orange pilled the fuck out of them. I had an email, I asked my lawyer if I could publish it, and she said no. But I didn't ask her if I could read it on your podcast, so she hasn't said no yet.
Peter McCormack: She hasn't said no? That's pretty much a yes in my books.
Jack Mallers: That's what I thought as well. Let me find it. Oh, I got it.
Peter McCormack: Okay.
Jack Mallers: So, a lot of these stories I'll tell today, I can't mention too many names for obvious reasons, but this is an executive at the IMF after my presentation emailed, "Dear Jack, I just wanted to thank you again very much for yesterday's seminar. You were extremely clear with a welcome touch of humour", referencing the tortilla chips and the peanuts, "and the seminar was a huge success. Your insistence on leveraging Bitcoin as a network, rather than purely an asset, was a novel idea and for many of us, extremely appreciated. I think it was also refreshing for people to see such a talented and passionate young entrepreneur", skip that part.
This is the cool part though, from the IMF, "Personally, I'm convinced you're onto something essential, that is leveraging a global settlement asset and monetary network. In short, Bitcoin has replicated the arrangements that make payments very difficult within countries, across borders and between legacy institutions, and your mission with Strike is to deliver an experience and drive that mission forward on top of Bitcoin".
Then it goes on for a very long time; the email's very long. But there's an executive at the IMF that now understands that Bitcoin and Lightning allow for a superior cross-border payment experience, which is remarkable. So, I feel like the world should know that. If I get in trouble for reading that, we'll see. Not sure I care anyway.
Peter McCormack: Well, listen, they only recently came out and told Bukele to sell his Bitcoin, so what do you think's going on with those guys?
Jack Mallers: With the IMF?
Peter McCormack: Yeah. Do you think they're realising this is something they can use, or…?
Jack Mallers: No. So, the language with me was supposedly, "You're making cross-border payments instant and free. Do you mind explaining that, Mr Tough Guy?"! So, I explained it. Now, their relationship with countries, with lesser-developed countries, with emerging markets is pretty known, and Bitcoin poses a pretty serious threat to the business that they do. So, I don't think it needs to be analysed much more than that.
Peter McCormack: But I wonder, is it something they will be considering promoting, pursuing, using, talking to other countries about saying, "You should consider adopting this technology"?
Jack Mallers: I think so. A large part of my presentation was not only about the efficiencies when it comes to speed and cost, which is kind of the headline, "Western Union is a week and 20%, and Lightning is free and instant". But there's also potentially a more important undertone, which is the inclusion that's involved. So, a lot of the IMF's relationships with these smaller, lesser-developed markets, there's a massive financial inclusion problem. When I went through the tortilla chips and the peanuts and the raisins, it was very clear to see the inclusion that this monetary network allows for, which benefits everyone.
So, I'm hopeful. I mean, we're talking about a legacy institution that has a reputation and existing relationships that outdate my life by a long mile. And so, I don't think that a presentation by me is going to change things overnight. But in my opinion, some of the feedback I got is, "You're going to give the IMF our secrets. Don't tell them the secret ingredient. Don't tell them where grandma hides the sauce". It's like, "Get the fuck out of here, guys". We're not going to change the world, because we're able to obfuscate a secret from the IMF. I'll sit across from anyone and tell them why Bitcoin is the biggest thing that will happen while they're alive, I don't care who you are. And the best outcome for me is for them to understand it, if I did a good job at that. And I feel like I did.
I feel like they now know why Bitcoin and Lightning is important, and what I told them, I was very persistent on, "You don't have to think Bitcoin's going to the Moon. If you think Bitcoin poses a threat to the dollar and you don't like it for that reason, I disagree with you, but that's fine. Bitcoin and Lightning, as a monetary network, there's no better way to escrow and settle value, period, any monetary network in the world. It is the best monetary network at allowing for physical cash finality globally, period. Whether you want to interface that over dollars, over Starbuck's points, or use Bitcoin, the native asset within the network, it's up to you", and they got that. And that, to me, was huge.
So, I don't know when that would materialise in a way where we would see them encourage Bukele. I don't even know if it's helpful to speculate on that, but I feel like Bitcoin made tremendous progress now that the IMF understands that Lightning is better than Western Union.
Peter McCormack: Do you know what the two most important factors are that go into making this show a success?
Jack Mallers: What?
Peter McCormack: The table, that's number one, and sometimes the show title. You know what this show title's going to be, don't you? How Jack Orange Pilled the IMF! You get a show title wrong, you get 20% listeners less.
Jack Mallers: Well, yeah, so I also have come into the show, I was talking to Dylan on the way here, a little bit of a calmer demeanour. I'm usually, "Fuck, fuck!"
Peter McCormack: "Fuck this, fuck them!"
Jack Mallers: Yeah, I've learnt a lot in the last -- being CEO of a company teaches you a lot of things. But I have crazier stories.
Peter McCormack: Well, let's go back a step. Firstly, this IMF one, was this the one where you changed the front cover to the presentation?
Jack Mallers: Oh my God, yeah. So, they titled my own presentation, and it was, "Strike: Disrupting Cross-Border Payments?" So, they got two things wrong, in my opinion. First of all, it's Bitcoin that's disrupting cross-border payments, and I have these long-tailed theses on how the world's going to evolve and why that's accurate, and stuff; but I changed "Strike" to "Bitcoin" which, as the CEO of Strike, may sound strange, but it's not. It's also just me being honest and true.
Peter McCormack: And you removed the motherfucking question mark?
Jack Mallers: I removed the question mark, yeah, of course.
Peter McCormack: Fuck the question mark.
Jack Mallers: Well, I mean at this point for me, it's a science. There's no other monetary network that can escrow value across borders more efficiently and cheaper, faster, better. By the way, Peter, in order to accomplish this, it is implied that the asset within the monetary asset is natively digital. In order for it to be natively digital, and I'm describing Bitcoin, it has to be censorship resistant, it has to be resilient to any oversight or regulation, it has to know no borders, it has to have a base layer that optimises around security and robustness, and then a standard on top of it that allows for instant and relatively free cash finality. It has to have all those things.
So, to me, I'm comparing it to Western Union, it's only me trying to be relatable to the general public. But to anyone knowledgeable, it's not even close; it's a waste of time to compare the two.
Peter McCormack: What was this wider thesis that you had that you just mentioned a moment ago?
Jack Mallers: It's really what grounds Strike. And people have heard me before refer to Bitcoin and the internet, I think there are a lot of similarities. I think that Bitcoin as a monetary network is going to dematerialise all existing monetary networks, and we're going to see a renaissance of innovation for the consumer experience, and there's going to be one of the greater value transfers away from legacy financial institutions onto those that build the best experience on top of the Bitcoin and Lightning Network.
So, let me demystify that for a second. Think about it this way. When I go into Starbuck's -- where's the camera?
Peter McCormack: Salut!
Jack Mallers: I cannot pay for this with my Western Union account. When I remit money to El Salvador, I cannot do it with my Visa card. Western Union is a monetary network that's comprised of a lot of brick-and-mortar physical locations and relationships with correspondent banks across the 190 to 200 countries that are here, and it facilitates cross-border payments. Visa, contrary, is a monetary network that consists of 70 million to 80 million merchants, and it helps facilitate commerce between the issuing side, the one paying, and the acquiring side, the one receiving the payment.
But Western Union does not allow me to buy coffee, and Visa does not allow me to remit money. What does that say? That says that building monetary networks for these paper dollars, it's so expensive and difficult to solve one particular problem, and it prices out your ability to do more than that. If Western Union could compete with Visa on payments, they would. If Visa could be the biggest remitting company in the world, they probably would. They can't, it's too expensive, too much fixed cost, too much local regulatory framework, all these things.
Peter, have you used the Lightning Network to buy coffee?
Peter McCormack: Plenty of times, man.
Jack Mallers: Have you used the Lightning Network to remit money?
Peter McCormack: I have, man.
Jack Mallers: Effortlessly?
Peter McCormack: Easy.
Jack Mallers: Somehow, there is a monetary network that does both effortlessly.
Peter McCormack: Well, after our trip to El Salvador, usually on all my previous trips, I would have dollars on me, I usually always came from the US first. And this is the first time I went direct, I didn't have any dollars on me, and I didn't need dollars the whole time I was there, because the whole time we were in El Zonte, everywhere accepted Bitcoin.
But the point on this was, the key point I was trying to make is that, it was more convenient to use the Lightning Network, that was the flip, that experience there.
Jack Mallers: It was more convenient for the consumer, but the net takeaway is it's a superior monetary network. It's a monetary network that can do what Visa does, it can do what Western Union does, it can do what TransferWise does, it can do what every monetary network does, effortlessly, all in one. And, what's the difference, Peter, when you buy a coffee on the Lightning Network, or when you remit money? Is there an extra form you've got to fill out; is there a licence you've got to go get; or, is it the same QR code you scan?
Peter McCormack: It's the same.
Jack Mallers: It's the same. What does that remind you of? It reminds you of the early internet. You've heard of these very early relay chats on the internet, right, very passionate technologists. They were on the internet creating IRC-like chats in the very early days of the web. Now, what was the difference from me sending a message to someone in the very early versions of the web from Chicago to someone in Japan; what's the difference between that communication being a tweet or a news publication or an Instagram post or a YouTube video?
The internet was a superior communications network that was accomplishing the job of all existing communication networks that were regionalised, local. In Chicago, they published the newspaper on Sunday; in San Francisco, they do it on Tuesday; in Germany, newspapers are illegal and so you send messages with pigeons. The internet gave you a communications protocol that dematerialised all of them onto one. And in the early days, it was hard to see that sending data between each other could be pictures, it could be news, it could be social networks, it could be all of these things. But it was a superior communications standard that was open and global. And open networks win for the network effects and the economies of scale, I've talked about this before.
So, what I'm saying is that Bitcoin and Lightning is the same for money. Me scanning a QR code to buy a coffee, to remit money, to pay for an allowance, to stream to a podcaster, it's all the same standard, it's all BOLT 11, it's all HTLCs, it's all Bitcoin addresses, it's all one. It knows no relative network to the specific job at hand. So, here's what's really, really powerful.
What did the internet do to the communications industry? It dematerialised it. What I mean by that is it took the value in these local, bifurcated, closed communication networks, like publishers, newspaper paper boys, the pigeon networks that were flying the notes that the pigeons would spit out at your windowsill, and that value that lived, like here's the pigeon network, here's the newspaper network, it leaked all onto one standard, one network; all that value came onto one. Then the winners on top of the new standard were those that developed the best experience.
The change in that is really strange, because all of a sudden, on top of this one giant global standard for the world to communicate, it was about who gave the consumer the best experience. If Twitter required me to do 25 push-ups before I could tweet, someone should just create one that doesn't, and then I'd go there. So, you're always optimising for the consumer experience. Whereas before, that's not true. It was really hard to compete with the local newspaper. They already had distribution and the licensing and all the fixed costs that had them build the factories. The Chicago Tribune building in Chicago is one of the biggest buildings ever, right.
But then all of a sudden, that wasn't what it was about. It wasn't about who got there first, it wasn't about who got had the licensing, it wasn't about who had the distribution and who had the lobbyists in Washington DC. It was about who builds a better consumer experience, which is amazing for the world, because now business is optimised around you and I and our experience. And what I'm saying is the Chicago Tribune of today is Chase Bank. Nobody uses Chase Bank, because of the experience and the brand. I don't know anybody that's like, "Fuck, I love that experience. That's why I'm a Chase customer". You're a Chase customer because you have to be.
But if we have an open, global monetary standard like we have an open, global communications standard, then all of a sudden, anyone can compete. I would build a better Chase if I could. I'm not a federally-chartered bank, and I could spend the rest of my life in DC trying to become one, and Jamie Dimon won't let me. It's impossible to compete, so I have to be a Chase customer, because I can't compete with Chase.
Peter McCormack: Why; why can't you compete?
Jack Mallers: It's impossible to get all of the necessary licensing and all of the relationships. I mean, Chase and Citibank, it's all legacy financial institutions that are protected by the moat and the cost and the licensing and the relationships in DC. If I wanted to walk into a Starbuck's and say, "I'd rather pay a different way, I'm going to come up with something else…"
What Chase does in escrowing it, on the issuing side of payments, Chase and Visa together, I can't compete with that, I was never allowed to, until now. Now that there's an open, global monetary standard for the world, I can remit money better than Western Union, and I don't have to do dick. They couldn't stop me. Bitcoin's an open standard for the planet to escrow physical value, nothing you can do about it, in the same way that it was impossible to compete with the Chicago Tribune until the internet, nothing you could do. I'm going to build something that allows people to publish communication on the web, and people are going to prefer to sit on their couch and read the news, instead of go to your physical branch and pick up a newspaper; there's nothing you can do about that.
But Chase has never had to compete for the consumer experience. No one uses Chase because they love the experience and the brand. And what I'm hopeful for is that what Bitcoin and Lightning will do is usher in this renaissance of value transfer from the legacy institutions onto this one singular standard, for whoever has the best experience and the best brand. So, Peter, there's no one internet company. That would be defeatist of the fact that it's a network. The whole point is there's one global standard, there's one global network, that will dematerialise all existing communications. Then it will be home to many participants on the network.
So, Google, Snapchat, Facebook, they are all optimising and competing for a particular experience. Even at the social media level, the difference between Instagram and Facebook is very apparent, and Twitter is very apparent. So, when you have all these companies hypercompetitive over a particular experience, it does great for the world, because our lives are being improved every single day. Facebook can't afford to not factor in what I care about, they'd go out of business.
Today, Chase can afford to not give a fuck about me. Soon they won't be able to, because in the same way that the communication networks all dribbled and leaked and the value leaked onto one singular global standard and it was up for grabs; whoever can deliver the best experience and the best brand was going to be the winners, and we know who they are: Google, Facebook, Snapchat, Instagram, email services. I'm saying the same is going to happen for money.
Now we have an open, global standard for money where anyone can compete, and it's better than all the legacy monetary networks. Western Union can't allow me to pay for my coffee; Visa won't allow me to remit my money; Lightning does both and better and open and global. So you guys come play on my court, and let's see who can develop the best experience for the consumer, because I bet all my life I can build a better experience on the Lightning Network than Jamie Dimon, right.
It used to be, you're not federally chartered, you can't be a bank, Jamie Dimon lives in his own world. You federally charter his nuts now. You've got to come compete, but Peter, it makes the world an amazingly better place, because then all of a sudden, the consumer experience is constantly optimised for. Maybe someone builds a Lightning experience that the background colour is pink, and someone does certain rewards, someone lets you spend Starbuck's points over Lightning and the consumer gets to select and choose.
So, in the same way that there's not one internet company, there's many, because what's implied is that there's one global standard and many people can compete for experiences. There's not going to be one Lightning Network company; that would be defeatist of the whole point. That would imply that I could do a better job of being Western Union and Visa just at Strike. No, what's implied is that there's one global monetary standard for the world, and that's going to be the home to infinite amounts of competition for the consumers' financial experience.
But this is the first time in human history that there's been an open global standard that allows for free market competition for the consumers' experience. And Jamie Dimon and Western Union and everyone have to compete, and that's the way it should be. And the consumer financial experience is going to get rapidly better like we've never seen before, and new services built like we've never seen before.
So, I'm of the belief, and I've spent my life so far, my adult life and career, pushing for this vision to where Cash App and Strike are rivalling to build the best consumer experience, and we're on the same team. Because, do you know what, it's implied that everyone comes on to the Lightning Network and plays with us, because there's tens of trillions of dollars that are going to leak out of Chase and Citibank and Visa and dribble down onto Lightning and they're all up for grabs. Does that make sense?
Peter McCormack: Dude, it all makes sense. I feel like not as many people are seeing this wider, bigger picture like you are. I feel like a lot of conversations happen at a more micro level. Bitcoin's a hedge against inflation; Bitcoin is cross-border payments; but nobody else, or not many people are stringing the whole thing together and seeing the big picture, and I think if some of them were, some of the bigger companies out there would be rethinking their product.
Jack Mallers: Yeah, I took a listen of some of our older podcasts back.
Peter McCormack: Word up, Brian Armstrong.
Jack Mallers: When I tried to explain Strike and using it for cross-border payments, I really tried to lean in and be very practical. There's this thing, it's like, "So, at Strike, we debit the dollars out of your account, we turn it over to the Lightning Network, we zip it in --"
Peter McCormack: "And little satoshis run along the line!"
Jack Mallers: No, but the thesis behind Strike and how I see the world panning out, and how I plan to make the world a better place has always been grounded in this idea. And that's what I mean by, Bitcoin and Lightning are for money what the internet was for communication. You take all the independent, closed, Washington DC-protected communication networks, you allow them to just dribble the value out onto one singular global standard, and you let the free market decide who develops the best experience on top of them, and it makes the world a better place, it makes consumer lives better, it rapidly increases the rate of innovation, and I think we're going to see that for money.
That's always been why I started Strike. So people are like, "Why does Strike even interface with dollars? Why would you let dollars be spendable over the Lightning Network and why would you let Lightning Network payments be received as dollars?" For me, it's about building one of what I assume to be the many experiences on top of Lightning. Think about it this way, Peter, is Google Chrome a piece of shit, or is Tor a piece of shit?
Peter McCormack: Tor's kind of a piece of shit. I want to like it more, I should use it more.
Jack Mallers: The correct answer is, neither. The correct answer is they're both experiences built on the world's global communication standard, and some people will use Chrome and some people will use Tor. And if you're a businessman, maybe there's one that you assessed to have a bigger market opportunity, maybe your target customers are wealthier, maybe there's a different business model for each other. But there is no correct answer to which one's better; they both exist on a free, open, global communication standard.
Peter McCormack: You tricked me.
Jack Mallers: I did trick you. So what I'm saying, with Strike, I think that being able to spend dollars over the Lightning Network and being able to receive Lightning Network payments as dollars is an experience that has a good market. But even as the freedom fighter that I consider myself to be, I have to somehow get Starbuck's interoperable with Lightning, I somehow have to get this onto the mainstream, and these bigger players are very interested in Strike.
But understand what that would do to the world and making it a better place. Right now, when I walk into Starbuck's, how do I pay for it? Visa and Mastercard, and the issuing bank behind that is what, Chase Bank, right? There's no competition. What if I was like, "I don't want to use that, I want to use Strike?" "Fuck off, we don't accept that". What if they're interoperable with the Lightning Network, what could I check out with? Anything I want, I could build my own, and Chase is going to have to compete for the experience that I have at Starbuck's in that way.
So, just by Strike getting Starbuck's interoperable, or any large acquiring merchant, it enables the consumer's preference to be valued. If I really like privacy, if I'm a Tor browser user and I run a Tor node in my basement and I want to buy my coffee that way, now I'd be able to. So, I'm trying to push for greater interoperability with this one standard and expedite the network effects, which in turn drives tremendous value to the consumer.
Really, our business thesis at Strike is, let's say the value does trickle out of Chase, trickle out of Visa, trickle out of Western Union and dribble down onto the Bitcoin and Lightning Network as the one singular standard for the world, where's the value going to go? I have the thesis, as the CEO of Strike, that it's going to go to the best consumer experience, so the best experience for making payments, and then the best acquirer relationships and those that empower those receiving. So, that's why we have two products.
We have a Bitcoin Lightning Network wallet, that allows you to send dollars over the Lightning Network and buy Bitcoin for free. If you have money to save, you can buy Bitcoin and save it in Strike for free. If you have dollars that you need to spend, you can spend them over the Lightning Network. Then, as a merchant, you have the API, and you can integrate and be interoperable with the Lightning Network and receive dollars or Bitcoin. That's what's grounded in our business thesis, and what drives the two products that we invest our time and money into is that very thesis, as their value will dematerialise the Chase Banks, the Citibanks, the Mastercard, the Visa, the Western Union. That value will dematerialise and be unleashed onto a singular global standard, and we plan on capturing some of it.
Hopefully Cash App takes a lot of it. It's implied that it's a network of many participants. The network is defeating all the existing legacy finance institutions, but in order for it to be a network, there has to be a lot of us on there.
Peter McCormack: How does that happen; how do we accelerate this?
Jack Mallers: The network effects of economies of scale do it for us. Strike, for example, so we're integrating our API into some huge merchants. I came to you, I was like, "I've got some massive fucking announcements over the next few months, but I don't have one for you today".
Peter McCormack: Tell me after the show.
Jack Mallers: I'll tell you after the show. But for those integrating the Strike API, when Cash App integrates Lightning, they've just got 70 million new potential customers. What did they or Strike do for that? Did we sign a secret deal that I cured cancer? I didn't do jack shit. I'm on an open network. And if PayPal comes on, or if Facebook comes on, how long until there are more active users that can pay Lightning Network invoices than there are Visa card holders? How would Visa add 70 million more users tomorrow? It's impossible, they can't.
So, the open network and economies of scale, here's the other thing too, Pete. The only people in the room that like Visa is Visa. Acquirers don't like paying them, and the issuing side doesn't -- I'm not loyal to Visa. If someone gives me a better consumer experience and gives me more rewards that lets me remit money for free, that integrates with Starbuck's better, I'll use them, but I'm not allowed to right now. That's the thing, that's my whole thesis, I'm not allowed to right now. We've never been allowed to, until we have an open global standard for the world to escrow money and then compete for the experience.
For people that think I'm an idiot for allowing you to spend dollars over Lightning, you should allow people to spend toenails over Lightning. And if you're right, because of some novel insight, then the free market will correct you and reward you for that, and that's the world we want to live in. We want to let the individual use their preference to drive market decisions, not Washington DC. So, money's still in pigeon land, money's still in Chicago Tribune newspaper land, and Bitcoin and Lightning is going to allow for this open network renaissance. And the way open networks work is if you don't join, or you're late to join, you have the most to lose. If you join early and you just interoperate, you have the most to gain.
Peter McCormack: Can Visa join?
Jack Mallers: Yes, I think they will, I think they have to. Visa doesn't actually touch any of the dollars themselves, they are just a network of issuing banks and merchant acquirers. So, I'll tell the story. If I were to say the company and the name of the CEO, you'd lose your shit.
So, one of the biggest financial companies in the world, very reputable CEO, I was having a one-on-one with him and I was describing these things, because from his words, he's like, "Everyone can smell blood in the water. If you're vaguely familiar with payments, you know it's ripe for disruption. And, hearing about the Lightning Network and its ability to escrow value anywhere in the world, instantly and for free, consumer to merchant, cross-border payment, it's very clear there's blood in the water, and my job is to not jump shit too early, but not get eaten by the shark". He's like, "There's an art to living through this disruption, and I'm trying to figure it out.
So, that was the first thing that I thought was really powerful, is that everyone knows and it's more just a matter of time. That's why I really respect Jack Dorsey; that's a different topic. But then the other thing he told me, which I took very seriously, is we were conversing and I'm like, "Lightning, and look at all the rewards we could do. Fuck Visa, man!" He took a second, he calmed me down, he looked me in the eye and he said, "Jack I need to tell you something super serious that I want you to take seriously. Jamie Dimon's not going to come compete with you on the Lightning Network, he's never going to win. He's going to compete with you in Washington DC, and you have to be careful".
Peter McCormack: Clearly.
Jack Mallers: He was like, "Take your life seriously. Don't give him any leverage, because as soon as you do get a few big merchants on board, and as soon as Cash App turns it on and stuff, he's not going to integrate the Lightning protocol. He can't build better software than you and Jack Dorsey, he's got no chance".
He was like, "You know how many days --", this is a stat, or this is what he told me, "You know how many days Jamie Dimon spends in Washington DC a year? 82". He was like, "He's going to go to DC and compete. So, when you guys are designing these protocols, when you guys are making decisions about your life, your business, how to operate, keep that in mind". I took it super, super seriously.
So, I think the most to lose are those that are protected the most by Washington DC and such, which is -- if Visa integrated the Lightning Network, then 70 million merchants would be interoperable, and when I say the value's going to leak to the best consumer experience and the best acquiring relationships, Visa has a lot to win. I may or may not have told them that. Chase, the only way for Chase to stay in business and continue to thrive at the top throne that they are is to compete for a better experience. And, everyone's going to have their own speculative opinion on their ability to achieve that, but I'm pretty confident they don't have a fucking chance. So, Jamie Dimon's going to have to throw me in jail, or else he's done.
Peter McCormack: So, we're in a fortunate position that we have Jack Dorsey as such a great ally and a friend of yours. I'm not going to answer or say anything for him, but him leaving Twitter to focus on this is a very good thing, as somebody who has got a lot of experience in the financial sector already with a well-established, large company. They've probably got a little bit more understanding, a little bit more protection than maybe Strike has now, because you're the early rebel; no?
Jack Mallers: Well, yes and no. There's nothing you said that's incorrect, but we have a lot of -- we benefit a lot from being the early rebel, we can do a lot of stuff.
Peter McCormack: But having both together?
Jack Mallers: Oh no, I'll leave the context out, but I got a DM from Jack one day that first message was, "Nice work", and then the second message was, "Same team", with a fist. Yeah, in my Forbes 30-for-30 profile, I put my dream mentor as Jack Dorsey. I've always looked up to him as an entrepreneur, so that was one of the coolest moments of my life, for sure. But my interpretation of what he meant by that was exactly what I'm describing. And I don't want to put words in his mouth, so I'll caveat this by saying this is just my own personal stance and vision and viewpoint. But my interpretation of what he meant by that was exactly that.
We both have a lot to gain as businesses, but also more importantly, the world and the quality of everyone's life has a lot to gain by if we pop the bubbles of these closed networks and let them spill out onto Lightning and let the free market and the world build amazing experiences to pick it all up. So, when people are like, "Why would Cash App do this?" I think he and Square/Block knows that and knows that if there's going to be many, many winners that get to split tons of trillions of dollars, if all the economic value and legacy financial institutions just popped and milked out and are up for grabs, those that get to win are those that are best at building products and experiences for the world.
Peter McCormack: How much attention are you now paying to Washington? You've mentioned it there, and is there an opportunity, or is there a chance that Bitcoin is also, in some ways, dematerialising the political class there, in that we have certainly a number of people within Congress and the Senate now who are big supporters of Bitcoin? I recently saw a great speech by Josh Mandel where he said, "If you're for big government and small people, then you should be against Bitcoin. But if you're for small government and big people, you should be for Bitcoin", debating Morgan Harper, who also is pro-Bitcoin.
We obviously have Cynthia Lummis, who is a big proponent, even Ted Cruz has put his foot forward. It feels like that the game theory within Washington is playing out, that some people have started to realise, "Actually, I'm better on Team Bitcoin than not Team Bitcoin". How much of that are you paying attention to, because some people say you should ignore the politicians, fuck politics; and there's other people who are trying to work with the politicians and engage with them?
Jack Mallers: I don't spend too much time on it, if I'm being honest. And it's because, again, I'm very grounded in this idea that, here's another -- sorry, I rant so much! Here's another very deep thought that I've developed over my life that I have very high conviction in. Legacy financial institutions were innovating in the early 2000s. There was an effort actually to modernise, to update their technology stack, to build newer experiences as the world evolves. And after 2008 and the economic collapse, it all died. There was too much overregulation, everyone's balance sheets got ripped up under them, some of them went under and innovation died in the legacy institution space.
What that allowed for was, in my opinion, a value-capture opportunity for start-ups to pick up the scraps and complete the last lap. So, when you look at Stripe, when you look at Square, when you look at --
Peter McCormack: Venmo.
Jack Mallers: Venmo, when you look at Robinhood, all of these companies were founded in the same time, and it was picking up where financial institutions dropped off. It was, "Why did they drop off?" It was effectively, they're tied to the fiat system, and the fiat system let them down, overregulation let them down, and there was a massive value capture. If you were able to create or invest in Robinhood and Venmo, in Square, in Stripe and all of these fintechs, is what we call them now, there was a tremendous opportunity to capture economic value there. And I think that that era of finance is over, and what's the new era? I like to describe to my team, "Where is my daughter going to bank in 30 years? Is it going to be at the Chase down the street?" Everyone's, "No".
Peter McCormack: There won't be a Chase down the street, there will be no high street banks.
Jack Mallers: Correct. But where I really drive the point home is I say, "Is it going to be at Chime, because Chime invented direct deposit in 2017? If the year is 2040, is my daughter going to bank at Chime, because in 2017 they came out first with two-day early direct deposit? Is it going to be Cash App, because Cash App came out with the cash card in 2015?" No, she's not going to give a fuck. What is she going to choose? In my opinion, it's the best experience and the best brand on the world's monetary network; that's it. Whoever is able to build the best experience for her, which is rewards, the best engineering, all of that and then the best brand. Which one does Saquon Barkley use?
That's who I think, that's the next value capture, is who can be first to the network effects and economies of scale, and who can build the best experience and best brand as the value in these closed, gatekeep, Washington DC protected systems leaks out onto one global open one. So, my time is spent optimising around the best experience and the best brand. And I'll say this about legal and regulatory and stuff. The first investor meeting I ever had about Strike, the guy looked at me, who's now actually my CBO and a tremendously smart guy, smartest guy I've ever met, if I'm being honest, and he looked at me and he was like, "I think you're visionary, and I think that you're right, but I'm nervous, because you're really young. How are you going to spend $3.5 million?"
I looked at him and I said, "If I'm going to build the best experience and the best brand, I need to overinvest in engineering and I need to overinvest in legal, because engineers are going to build the best experience and legal's going to allow us to launch it, and that's it", and he wrote me a cheque. So, that's what I spend legal time on, is just ensuring that we're investing in being able to release what we build, but that's all I do. Whether who gets elected, or whatever, I follow it as a bitcoiner, but as a CEO of Strike, it doesn't matter. I'm just optimising my time around Strike being an awesome experience and an awesome brand on top of Bitcoin.
Peter McCormack: How important was the innovation of allowing people to move dollars or fiat currency or fiat denomination across the network, because one of the things that will hold, or has held up Bitcoin adoption is volatility; it comes up again and again? If you haven't got a lot of money, it's a bit risky to suddenly buy something that might drop 30%. But if you're able to move dollars across this network, somebody could be using the network without even thinking about Bitcoin.
Jack Mallers: Yeah. Well, I can walk through again my evolution that ended up arriving me at Strike, but I think firstly, you have to appreciate Bitcoin as an asset. So here, okay, Bitcoin's the hardest money of all time, we agree on that. What do I mean by hard? Hard is a reference to how hard it is to create more of it. How hard is it to create more dollars?
Peter McCormack: It's not very hard.
Jack Mallers: Not very hard, seemingly.
Peter McCormack: If you're the right person.
Jack Mallers: How hard is it to create more penthouses in Central Park, New York?
Peter McCormack: Little bit harder.
Jack Mallers: Little bit harder, but not impossible. If I gave them $500 million, I bet you they'd find me one.
Peter McCormack: Of course they will.
Jack Mallers: Okay. So, Central Park penthouses should, in theory, appreciate against dollars. And this whole concept, Raoul Pal's like, "Well, Ethereum's going to appreciate because utility". Do you know the highest utility demand token of all time? The US dollar. It has more than a billion daily active users. Are you long that? No. So, utility does not inform value or the price of anything, so let's get rid of that nonsensical, scamming bullshit. So, Central Park penthouses should, in theory, appreciate against dollars. Why? Because they're harder. When my dad was my age, a Central Park penthouse was maybe $500,000. Now, it's probably $500 million. That's in reference to its hardness.
How hard is it to create another Bitcoin? It's a trick question. Bitcoin is the only monetary asset in the universe, in human history, where it is impossible. The only time ever, since the evolution of life itself. So, in theory, Bitcoin should appreciate against everything ever. People are like, "So, why is it going down?" I don't know. You know the beautiful closet I broadcast out of? The person below me is selling their unit. If that person sells the unit for $1, does it make my house worth $2? No. I have a beautiful view and a beautiful closet. It's not worth $2. Why would they sell for $1? I don't know. Maybe they're going through divorce, maybe they mismanaged their taxes. I'm sorry about that. Whatever you're going through, I feel bad.
So, if someone sells a Bitcoin for $30,000, does it make mine worth $30,000? No. For the only monetary asset in the universe's history since life itself existed, there's never going to be another? No. It's not worth $30,000. For those out there selling it for $30,000, I'm so sorry about that, I feel terrible. So, okay, that's Bitcoin the asset. So, the individual's personal preference to have exposure to Bitcoin the asset is up to them. Peter, all this mic equipment and shit could be Bitcoin if you want it to; you don't want it to. You can go all in on the Bitcoin standard; you can own none of it; it's up to you, doesn't matter. So that, for me, is Bitcoin the asset.
What about Bitcoin the Network? What about the fact that there's never been a monetary network that allows for free, instant, open, global value transfer that's cash final, instantly at no cost; what about that? So for me, there was actually an experience in the early days of the Lightning Network, there was someone that was testing it with me, this was February 2016. No, because mainnet wasn't -- 2017, where they were in London, and they were like, "Dude, we should do the pizza thing", you know, like the Bitcoin pizza story, "but we should do it for Lightning. I don't think anyone's ever bought anything material on the Lightning Network".
At the time, there was this coffee shop online that Async was running, but it was on testnet, it wasn't real physical goods. He was like, "You should send me a Lightning payment and send me your address and I'll order you a pizza, and it will be the first Lightning payment for something real".
Peter McCormack: Two Papa John's?
Jack Mallers: No!
Peter McCormack: For fuck's sake, come on, man!
Jack Mallers: And so, I sent a payment, it got to London instantly and for free, okay. We didn't sign any MSAs, there's no paperwork we had to exchange. The actual thing that was sent over that monetary network was as valuable in Chicago as it was in London. It carried so much value that he was confident to give me a physical good or service for it, which was pizza. So, we just did something out of my bedroom that Western Union, Visa, none of these people could do, and that's a cross-border commerce payment for a physical good or service, instantly and at no cost.
I said to myself, and I was like, "I'm either a fucking idiot, or I'm using something that's going to dematerialise all payments, period. This feels like magic to me", and I went through this mental exercise, "Why is no one using this? Why aren't merchants accepting payments for free? Why is anyone paying fees for cross-border payments?" I ended up working myself through.
The first and foremost is, nobody wants to spend Bitcoin, Peter. If it is that hardest asset ever that I just walked through, why would you ever spend it? So, your non-working capital, capital that you don't need to spend to live, should be saved. And according to what I just spelled out, there's nothing better to save it in. Sure it's volatile, doesn't matter. Everyone in college that's studying economics, drop out, it's over. Bitcoin, hardest money ever, there's nothing else to invest in, it's over. And whether it takes you ten more years to figure that out or you realise it now, whatever, it doesn't matter. So, don't ever spend it.
Also, it's volatile; also, there's tax consequences; also, it's complicated to use. So, I had this revelation of, "Do you know what Starbuck's wants?" They want to be able to accept these payments as dollars like they do Visa. And if Starbuck's wants to go then just go buy Bitcoin with it, they should, whatever. But if they're like, "Fuck Bitcoin, Jack's an arsehole, I'm never buying it", okay, I don't give a fuck. I'm just making the escrow of value better, so that transaction from Chicago to London for pizza could have been dollars, then turned to Bitcoin, got to London, turned back into pounds. I just fucking crushed Western Union and Visa instantly.
So, at Strike, that's our bread and butter. So, the non-working capital, capital that you want to save, we let you get paid in it, DCA into it and buy it for free. I think that you should be able to get into Bitcoin at no cost. And then, the working capital, the capital that you need to spend to live that you will not be saving, the dollars in your account that need to go elsewhere for goods and services, should be spendable over the Lightning Network. And as a merchant, to be able to receive payments from any interoperable service all over the world, you should be able to accept them as dollars.
If there's an Australian company that lets you spend Starbuck's points over Lightning, there's a company that lets you spend Bitcoin over Lightning, there's a company that lets you spend British pounds over Lightning, it comes in as clean dollars. Then, if you want to buy Bitcoin with it, do it, right. Then, all of a sudden, I've just outcompeted Western Union. So, that's how I walked myself to there. There's actually one more, sorry, it's an amazing story.
Peter McCormack: Tell me!
Jack Mallers: So, this took me months, like a long time. And the product of moving dollars and fiat currency over the Lightning Network is so fucking complicated, Peter. It involves really complicated accounting, compliance, legal, overall regulatory, very sophisticated engineering and a lot of sophisticated trading, and it took me a long time. And even getting to this idea took me years. So, Dylan, who's sitting over there, my best friend, I had a hunch about this.
So what I did, I went to a local bar that he introduced me to in Chicago and I said, "You guys are going to accept Lightning Network payments for drinks tonight", and I convinced them to do that. And they were like, "I don't want to touch the Bitcoin, we'd have to convince our CFO, and it's volatile", and all this stuff, and I was like, "No, no. The Bitcoin's going to go to my Lightning node and I'm going to give you dollars on the spot that it arrived to me. So, all you get is dollars, like you do Visa, I'm going to deal with all of that", and I did it all manually. And I built a website that allowed people from anywhere in the world to buy beers for the bar that night.
So, all of a sudden, everyone at the bar was like, "Drinks on the house". So, people from Australia, from UK, from Nigeria, buying beers online for this bar. How was that possible? I thought a Nigerian payment to the US takes a week. No, not on the Lightning Network. So, I was streaming these payments at the bar and it was coming in, from this wallet, from that wallet, from all over the world. And I was getting all the Bitcoin and I was giving the bar dollars manually.
That's when I realised, that is the most innovative thing of all time. They receive dollars, they never touch Bitcoin, they don't need to deal with the volatility, any of that shit, and I had a service that made them interoperable with the world. And, cross-border payments, vocal payments, big payments, small payments. That day, just me, myself, running around handing the bar tender the dollars as the Bitcoin comes in and stuff, I was better than Visa that day. So then, Strike was automating it and building it with software. But that day was the first day where I was going to test this out, and it was the craziest thing ever.
People were giving dollars to this bar from Australia instantly and for free. And you're like, "How the fuck? Dollars can't move that fast, it's a piece of paper". I'm like, "No". But it comes in as Bitcoin and I just handed them the dollars, you know what I mean?
Peter McCormack: Danny, we need more Bitcoin. We need more Bitcoin, stop it, Jack! Okay, man, I'm with you, I'm with you the whole way. Tell me the peanut story, we were meant to get to that!
Jack Mallers: Yeah, for those that don't know, in my presentation to the IMF, I simplified Lightning and explained it to the IMF. It's on YouTube, you should watch it, it's a public video. I explained to them Lightning with tortilla chips, raisins and peanuts, and I had referenced this real story that this actually happened in someone's house. So, it's easily probably the craziest 36 hours of my entire career. So, the only person, I don't know, I have to be very careful naming names, but the person I will name is Wences Casares; are you familiar?
Peter McCormack: Of course, yeah.
Jack Mallers: So Wences now is a super, super-close friend of mine, I have a lot of love for Wences. And actually, he's the only bitcoiner that I know of that publicly apologised about SegWit2x. So, Wences has done more for this industry, and he's done so much for my career already in our short history as friends, and I love that guy so much.
So, he reached out to me and said, "Hey, Jack, I think you're really onto something with your whole vision of Lightning and Bitcoin dematerialising Chase and Citi and stuff, and I want to host a dinner in San Francisco with some big names, because I want them to hear this. The best thing I think I can do is give you the audience to say what you've been saying to the people that need to hear it most". I said, "Okay, that sounds good to me". Like I said, I'll sit an explain to anyone, whether it's your fucking dying grandpa or the IMF or at dinner, I'll do it.
So, I went to San Francisco and at this dinner, no names, top executives at Facebook, top executives at Google, Niall Ferguson was there. Capital Group manages $2.5 trillion of assets, and yeah, I went with my CBO and he was like, "Hey, you know, this is a different audience than out of the closet. You think you're going to tone it down?" and I was like, "You know the answer to that. I'm not going to tone it down".
We go in, and it was a big dinner, it was awesome, and again, shoutout to Wences, and we just talked about exactly this, the dematerialisation, how people need to be interoperable with Lightning, how everyone has something to gain by integrating Lightning, by the way. The only people that don't have anything to gain are those that don't want to compete for the experience, which is Chase. Even if you're Visa, you have something to gain. And I was explaining to Google and Facebook and everything.
Someone asked me, this is just a tangent of the story, but this is a true story, asked me, "What about Diem and Facebook and Libra and all that they're doing?" I looked around the table and I looked at the Facebook executives, and I said, "You guys are just doing it wrong". I said, "You're competing with the Federal Reserve. Why are you doing that? You have the right energy and the wrong solution. Effectively, if you think of Facebook as a country, it's the biggest country in the world, it has a population of 4 billion. And Zuckerberg's effectively asking to be the central bank of that country and issue them money. No one's going to let him do that, or by the time he could do it, it's over, it's ten years from now.
"So, you guys, why are you competing against the Fed? You don't want to compete against the Fed. Why don't you compete against Western Union? You could kill Western Union tomorrow if you integrated the Lightning Network in remitting money with sending a text on WhatsApp. Dead. If it's about the best experience and the best brand, when I walk into Starbuck's, do you think Facebook can be competitive with all their talent and distribution and existing brand and people checking out at Starbuck's with Facebook? You just are mis-sizing up the opportunity, guys.
"The opportunity is that there's now an internet, but for money, and you already have everything in your power to build one of the best experiences and best brands on it, so stop competing with the Fed, you're wasting your time. All these legacy institutions are dead, if you buy into Bitcoin and Lightning".
And then, a week later, my CBO, who was at the dinner was like, "Dude, look at this", and it was news, "Facebook kills Diem", and all these people are leaving.
Peter McCormack: Sold the technology to Silvergate, right?
Jack Mallers: I don't know.
Peter McCormack: I saw that.
Jack Mallers: I don't know, whatever. Everyone was like, "Man, you really orange pilled Facebook, because they killed Diem a week after you told them to".
Peter McCormack: So, are we going to get the Lightning Network in the metaverse?
Jack Mallers: I'm not going to comment, I'll just tell this. So, we're at the dinner and Capital Group manage $2.5 trillion worth and I was like, "Shit, man, this guy's sitting across from me, $2.5 trillion". I was like, "Fuck, I don't know what to say to this guy, 'Fuck Western Union'?" you know what I mean. And he comes up to me and he's like -- not just me, and he's like, "Fuck Western Union, man". He's like, "Russell Okung, the GOAT, pay me in Bitcoin". I was like, "Oh, yeah, all right, this is my crowd!"
So, after the dinner, I get a text that was like, "Hey, someone at Capital Group really wants to meet you. He manages the biggest team there, and you've got to explain to him the Lightning Network. He has someone that he wants to introduce you to, and trust me you're going to want to take this". So, this is the next morning. My flight was later that night and I was like, "I've got to fly", and they're like, "Jack, if there's a meeting you've got to take, it's this one". So again, this dinner, Google, Facebook, all these bigwigs there. I sit and say, "Bitcoin and Lightning's the only thing. If you're into NFTs or you're into Diem, you're fucking wrong, and this is why", and they were like, "Damn, yeah okay, good point, you're right".
Then, the next morning, it's like, "You've got to get to this meeting. We totally get it, you orange pilled us, please show up". I called an Uber, this Uber driver named Lex, who recognised me, and I was really late. I was trying to rush, get my shit, got to make a flight, and he's like, "Are you Jack from Strike?" I'm like, "Yeah". He's like, "Dude, I'm a huge --" I was like, "Dude, I'm so down to do whatever after, but you've got to get me to this house as fast as possible. This is the biggest meeting of my life supposedly". This guy's just cutting corners and stuff, he gets me there, he drops me off and all I knew was that this Capital Group guy is just a bigwig.
So, I walk into the house, and he throws a beer at me as soon as I walk in. Never met this guy, I didn't even know if he knew my name. I'm dressed in sweats, by the way. If I had something nicer, I would have, I just wasn't packed for it. I walk in, he throws me a beer and he looks at me and the first thing he says is he goes, "Let me give you some advice, kid. Making money is awesome. It solves a lot of problems", and I'm sitting in this big house, this guy in a suit and I just didn't say anything. He's like, "You know what it doesn't solve? Renewing your daughter's fucking passport". I was like, "What?" He was like, "Dude, I've been trying to renew my daughter's passport. We have this trip and my wife said she was going to do it, she didn't fucking do it". I'm just like, "Shall I open this beer? What the fuck is going on? I've no idea where I am".
He's like, "Are you hungry; do you want any snacks?" I'm like, "I'm not really hungry", and he's like, "Well, I am". And he gets tortilla chips with salsa and trail mix. He's like, "All right, let's go in my living room, I heard you're a smart guy". We go in and he's like, "My name is [blank] and I manage a team that actively manages about $1 trillion within Capital Group. I've been there probably older than how old you are, since you've been alive". I was like, "I'm 27", he's like, "Yeah, I'm approaching 30-odd years at Capital Group".
Then he's like, "All right, so supposedly you're going to dematerialise payments and shit, or you have this crazy idea; go, you got the mic". I start trying to explain it and his wife comes from the stairs and is like, "[Blank] should I cancel dinner? Who's this guest; you didn't tell me you were having guests? 45 minutes!" and his daughter's, "Daddy, I'm going to dance", and I'm like, "What the fuck is going on?" and he's like, "Yeah, I'll be there", and then he pauses me and he's like, "One second. The guy who leads payment analysis lives down the street, can I invite him over?" I'm like, "Yeah, but supposedly we're cutting on time, dude. You can come and get fucking killed in this house!"
The guy comes over, so there's a couch here, I'm sitting on a couch and there's two suits and these snacks and I'm like, "Yeah, Lightning and dematerialisation and Bitcoin", and I'm looking at them and they're like, "This kid's lost it". So then I pause and I just think to myself for a second and I look at them and I'm like, "You guys will think I'm crazy, but just trust me on this one, okay, just follow". I take the tortilla chips and I just dump them all out on the table, and I take the trail mix and dump it all out on the table. So, God knows, there's art on the table, God knows how expensive this shit is.
I'm like, "This is the legacy financial system", and I look at the payments guy, I'm like, "You know this, right? This is Visa and this is Chase and this is the consumer making the payment and this is Starbuck's". And I'm like, "And a raisin is dollars. And the consumer wants to send a dollar and Starbuck's wants to receive the dollar, but in the middle are all these legacy tortilla chips", and I poured a shit ton of raisins on them all, "They've got all this rent to pay. Western Union, what do you think Western Union's rent is to have 500 locations in 200 countries? They've got rent, they've got fixed costs, they've got balance sheet float. How many dollars does Chase have sitting around, it's bleeding away and losing to inflation, all this muck and shit like that?" I'm like, "That's how someone buys coffee, or remit money to El Salvador; for the IMF, I did El Salvador.
I bring it down and I say, "That's legacy, okay. Now, I'm going to put a tortilla chip here that's me trying to send money to El Salvador, I'm going to put a tortilla chip here that's the El Salvador recipient", and I picked up a peanut. This thing, magic. I'm talking to a guy that manages $1 trillion with a fucking peanut in his face and I'm like, "This thing's magic, because let me tell you something. This peanut can get from this tortilla chip to this tortilla chip with nothing in the middle, fucking at the speed of light. This peanut is out of a movie, bro. This peanut fucks, this peanut's magic, this peanut does shit that raisins could never do". And they're like, "What is this kid talking about?"
I'm like, "This peanut can go from Chicago to El Salvador to Bitcoin Beach instantly for free, but nobody wants to use it, because everyone's allergic to peanuts, no one wants to touch the peanuts". So, I took a raisin and I put it on the tortilla chip, and I took a raisin and I put it on that tortilla chip. I was like, "What if the tortilla chips, all they did was interface with raisins, that's it? And we just use the peanuts to get rid of all the muck up there. You don't have to love peanuts or die hard for peanuts or libertarian as fuck for peanuts. It doesn't matter. The peanuts do the job of all the legacy muck of Chase and Western Union and the Visa that I've described up there.
"So, this tortilla chip can pledge to spend a dollar, it can turn to a peanut, zip anywhere in the world, zip to any merchant, do anything it wants, magic. Nothing before like it, and then we just turn it back into a raisin and give it to the end tortilla chip, and there's no muck in the middle. And then the winners are whoever provides the best experience for the tortilla chips". And they were like, "Holy shit!" And then he looked at me and he's like, "I have to introduce you to Jeff". I was like, I know that he wanted to introduce me to someone else or something, and I'm like, "Jeff?" and he's like, "Yeah, the one who founded Amazon". And I was like, "Fuck!"
He got his phone out and he texted Bezos right in my face and he's like, "You've got to talk to this kid", and that's my story. And now, this gentleman actually --
Peter McCormack: You can't stop there, fuck off!
Jack Mallers: No, actually this gentleman got permission to invest in Strike, and so now we're working with him on some pretty cool shit.
Peter McCormack: When do I get the post text message to Bezos story?
Jack Mallers: I don't know. I'm working really hard on integrating as many people onto this monetary network as I possibly can, because again I think for the people on Bitcoin --
Peter McCormack: Well played, Jack!
Jack Mallers: Yeah, so anyway, where's the camera? That's the tortilla chip, raisin and peanut story. The peanuts were Bitcoin and they just dismantle the legacy financial intermediaries. And if there is a market for people to live solely on peanuts, the Bitcoin standard, do it. If tortilla chips want to interface with raisins, if tortilla chips want to interface with Starbuck's points, the free market will decide that, and I think that's great.
But yeah, for Strike, a lot of big-time merchants and companies, they can't interface with peanuts yet, or they don't want to yet and such, so I'm working to get them interoperable with peanuts. And I think it's going to be an amazing thing for the world, because the day that I can walk into a coffee shop and I can use a Lightning node over Tor to pay it, and use whatever my consumer preference wants will be a really, really beautiful day for humanity. So, I'm just trying to work really hard on getting us to that point.
Peter McCormack: You're making my job very easy today, by the way, I'm not having to do much. Talk to me about Argentina?
Jack Mallers: Yeah, successful launch. I mean, from high level, one of the amazing things about the peanut network is it works everywhere in the world natively. It works the same in Argentina as it does right here in Malibu. So, one of the theses we hold at Strike is we should just be in as many markets as we possibly can. It's something that legacy institutions can't do. So, Argentina was next.
We actually have clearance to launch in a lot more countries, so we probably will over the coming weeks or months. I'm just a big fan of iterative product process and learning from launching. I don't think that there's a lot to gain from moving too fast. Clearly, I'm in this for the long haul; clearly, I'm in this to compete for the experience and the brand that my daughter will have in 2040. So, my daughter's not going to look back and be like, "You fucking idiot, why didn't you launch in a country on 5 February instead of 20 February?" So, we're just monitoring Argentina, seeing how it's going, and we're going to launch in hopefully 50 countries this year, 100 countries this year, I don't know.
But Argentina was wildly successful. I think within the first two weeks, we got over 100,000 downloads and registrations and users signed up. So, it's really, I don't know, it was awesome.
Peter McCormack: Is there any interesting data of people in El Salvador interfacing with people in Argentina?
Jack Mallers: There definitely is, not that I have off the top of my head. I mean, we're seeing a tremendous amount of success. I guess one of the interesting things, and I've heard Michael Saylor talk about this before, is these people have a high demand for dollars and it's interesting, because as a bitcoiner, I know Bitcoin is the hardest asset and what I say, "It's life itself!" and I know that. But these people are interesting, because they don't have the non-working capital to sustain the volatility of holding the hardest asset ever. These people live paycheque to paycheque, right, so they actually love dollars. It's actually Tether on Tron that's the most popular, because Tron isn't used for NFTs and shit, so the fees are low, like crazy shit.
But anyway, I've found it interesting, so what Strike does is, instead, I had to replicate a dollar balance in Argentina for them somehow. It does me no good to give them pesos. I wanted to give them a dollar balance that they could spend and receive over the Lightning Network, like I just described to you. So, the most effective way for us to do that is via stablecoins. So, what I've found really fascinating is, yes, the product is very successful, lots of people use it, we're on top of every Appstore we launch in, all that shit. But what I think, from a macro level, one of the more interesting insights is that stablecoins are a really interesting way to meet the demand that the dollar has in parts that aren't in the United States.
Silvergate acquiring Diem and what Facebook had, I think is really interesting. There's a market opportunity for someone regulated to create a stablecoin interoperable over Lightning and distribute it to parts of the world that are in high demand for dollars. So, that's one of the main takeaways I had that I thought was really interesting.
Peter McCormack: Well, I had a conversation with somebody recently talking about dollarised nations, and why some governments choose to dollarise. And also with Bitcoin, Bitcoin is decentralised, the Bitcoin standard, whereas gold failed because it was centralised. You can operate on a Bitcoin standard, I can, Cookie can, Danny can, we can all choose to and just live our lives that way.
With these stablecoins, there's an opportunity for countries to dollarise bottom up, in that if you're in Turkey right now, you don't want the Turkish lira, because it's fucked; you want dollars. Gladstein talks about this, in these challenging economic environments, in some ways Tether or stablecoins are, in some ways, far more important than Bitcoin.
Jack Mallers: Yeah, well they're just different. But I think what's interesting is traditionally, how does someone in Argentina get dollars, let's start there? You can get them from the government, but there's capital control restrictions. So, if you're lucky and if you're elite, you can get $200 a month, and that's it. And if you're not an elitist, you're not allowed to get dollars from the government. So, they're traded on the black market, and the black market values the dollar twice as much as the official rate.
So, what's interesting about a stablecoin, I was able to give hundreds of thousands of Argentine citizens dollars. How? Because, I distributed it through a consumer application via stablecoin.
Peter McCormack: But can they not block your app in the local Appstores; have they not?
Jack Mallers: No. So, like I said, we invest a lot in legal, not because I'm a legal maximalist, it's because I want to launch the shit that I build, I want my opinions to live in the free market and exist. So, no, we did everything that we were supposed to do to launch in Argentina. So, I just find that really interesting, that distribution of dollars.
Michael Saylor's talked about this all the time, that the US Government shouldn't fear Bitcoin, because Bitcoin over Lightning with a stablecoin gives max distribution to meet the global demand for dollars. And I'm not actually going to comment any more on that, unless you want me to, but that's Michael's idea and some people's idea, and in Argentina I just think it's interesting, because people that want to have spendable dollars over Lightning, they can hold it on Strike; and if they want to hold Bitcoin, they should just hold Bitcoin and never spend it and put it under their mattress in a Coldcard or something.
Peter McCormack: How are you managing the workload? I know you're busy, because I drop you a text and it's a little bit longer to get back, but you still do it, which I appreciate. But I know you're busy, dude. But how are you keeping on top of things? You're very important, Jack Mallers.
Jack Mallers: I just am. I try not to spend too much time thinking about -- because, the kids I grew up with in high school, they'll see me wishing Julia Chatterley Valentine's Day, right, or see an integration with Twitter and they're like, "Man, what does that feel like?" To be honest, it doesn't feel like shit, and I try not to really think about that stuff.
What I do hold myself accountable for that I will say, I think there's always been this overarching thesis about Bitcoin, where Bitcoin is a mass of wealth transfer from the old elitist to new money, and there's always been this thesis of, "Is that wealth going to be evenly distributed?" and, "The new elite, are they going to do good for the world?" I think the Bitcoin's community always been that these people want to change the world, they have the world's best interest at heart and stuff.
Peter McCormack: Agreed.
Jack Mallers: So, I'm not commenting on my monetary status as an individual, I'm just saying to have the privilege of what happened in El Salvador, or to sit across from executives at Facebook and Google and Capital Group, I take that responsibility very seriously. I think I need to do good by Bitcoin and by this community, because I'd like to think of myself, or at least what I strive to be, exactly that example.
As a kid who dropped out of college, who had no real direction and found a life in Bitcoin, and given Bitcoin succeeds and puts me in these types of positions, that I'm going to do best by our species and by the project. So, that's the only thing I keep in mind when I remind myself that, "Man, Jeff Bezos"; I just keep that in mind. But outside of that, it's business as usual. I mean, the best approach is the practical approach, and so I just take every single day, I try and do the best I can to win today and make sure I'm ready to compete tomorrow, that's it.
Peter McCormack: Well listen, you made my job very easy today.
Jack Mallers: Okay, good.
Peter McCormack: You've just got to keep these stories for me.
Jack Mallers: I got you.
Peter McCormack: Jack, I'm super-proud of you, man, and I'm very happy that you're my friend and we get to hang out every few months and talk shit and talk about Bitcoin. You're very important and I think you're doing important work. I just can't wait to see where this all goes. It's been a pleasure to be a part of that journey with you, in and out, here, Chicago, El Salvador and I enjoy just watching from a distance and seeing you crush it, and you've become quite the storyteller! Man, just keep crushing it, just keep crushing it.
Jack Mallers: Well likewise, man. I look at you the same way. I think it is one of the unique things about Bitcoin is the relationships you build, and just watching everyone else grow into their own businessman or husband or entrepreneur or whatever it is. So, you as well, Pete. Watching you buy the football club, I know that was a childhood dream of yours and the podcast. I mean, look at this studio, Malibu, I've got the sun beaming on my sexy face!
Peter McCormack: I know!
Jack Mallers: I mean, that's the universe's way of acknowledging how good looking I am!
Peter McCormack: It's its way of acknowledging how fat I am!
Jack Mallers: No.
Peter McCormack: Dude, listen, keep crushing it, love you, man, keep doing what you do and every few months we'll catch up and I'll find out whatever crazy --
Jack Mallers: I'll respond to your texts quicker!
Peter McCormack: Well, Dylan will get in touch, and you can tell me other crazy shit you've been up to, because it just gets wilder and wilder. But I love you, man. Keep doing it and see you soon, brother.
Jack Mallers: Love you too, peace.
