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Comment by gregwebs | Hacker News Reader

Remittances with little fees or hassle.

That’s the purpose of the app; that doesn’t explain the role of crypto in this. TransferWise offers that without crypto.

It takes too long, it has significant fees, it can be censored and, as far as I know, requires a bank account, something 70% of the population in El Salvador don't have.

Strike is a fiat custodial wallet. They can also be censored in exactly the same way which is part of my confusion around the offering. In fact, it's not available in New York or Hawaii.

Further, Wise offers their multi-currency account, including in El Salvador (https://wise.com/us/multi-currency-account/) and allows you to store any of 56 currencies without conversion and offers banking details in 9 jurisdictions. It's kind of perfect for remittances because you can have your US parties ACH to your US routing and account number, and it appears in the multi-currency account, free, and very fast. Or $7.50 to receive a wire, instantly.

[edit] I'm not knocking crypto here, I'm trying to understand what they've built and why. I don't know why they're using crypto here at all. I'm seriously confused about their technical payments architecture. They seem to only use LN to move money, and between two of their own custodial accounts at that.

For what it's worth I've listened to over an hour of podcasts with Jack Mallers.

I am not well versed about the Strike wallet specifically, but I believe that it is a fiat wallet from the perspective of the sender and a lightning wallet from the perspective of the receiver.

This.

Ok but why. They have a custodial wallet on both sides, the sender sends dollars, the receiver gets dollars. Why not just use addition and subtraction instead of LN? I can't think of a reason they would do this except to shoehorn LN into the app or avoid regulations in some way. Is there something I'm missing?

They use bitcoin exchanges around the world that are connected through Bitcoin Lightning network. Your dollars are exchanged to bitcoin at your local exchange, transferred via Lightning Network to an exchange in El Salvador, exchanged to dollars, and the dollars are then available at a local bank or ATM (or just kept in the app to pay someone else). Strike itself doesn't provide the liquidity, they use available local exchanges.

If you pay someone in the same country with the same currency, then it works probably like Paypal. You can't do that between countries, because the actual dollars have to be in the local bank.

Wise charges $8 for $1000 transfer. Some of that is an ACH fee that is probably difficult to reduce.

Strike claims no fees are charged.

I'm talking about from a technical perspective.

ACH is roughly free - it costs about $0.0033 to the depository institution in bulk (citation available on request) - which makes sense as Strike also allows you to deposit via ACH in the US.

Their fees are likely dominated by risk, compliance and regulatory.

Obviously Strike's service isn't costless to operate so they're subsidizing their operations via investment.

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