It’s easy to think that the problem of moving value around has been solved. After all, many of us have payment credentials in our wallets or on our devices that allow us to pay in-person or online in a single tap or click.
But looking outside our bubble of personal experience, all is not well. For one, the World Bank estimates that roughly a quarter of all adults, or about 1.5 billion people, do not have access to a bank account.
These individuals often turn to expensive nonbank methods for sending value such as remittance providers, who charge a stomach-churning 6.65% of the payment amount on average.
Having worked previously at Mastercard in the Middle East & Africa region, I can tell you first-hand that current banking and payment infrastructure is simply incapable of solving these problems.
Even in a highly developed market like the US, there are about 5.9 million people, or roughly 4.5% of all households, who are unbanked.
Add in households that are “underbanked,” or those who have bank accounts but nonetheless need to rely on nonbank methods for basic financial services, and the number jumps to 14.1%.
To add insult to injury, there is an increasing number of individuals who are cut off from their money without warning by banks who algorithmically flag accounts for any number of “suspicious” activities or even for daring to speak out against certain government policies in the case of the Canadian trucker convoy.
Even for those who do have access to traditional financial services, doing something as simple as sending value across borders is anything but easy.
If you’ve ever run a company with employees in other jurisdictions, for example, you know how ludicrously slow, difficult, and expensive it can be to get value from A to B.
Those in the Bitcoin community reading this are probably vigorously nodding their heads by now, and indeed there are great examples of companies making significant progress against these issues.
Strike is a Bitcoin financial services company enabling the movement of value across an increasing number of payment corridors nearly instantly and, in many cases, for free.
Strike pulls this off by integrating with local banking systems at the origin and destination of a payment and then uses the Bitcoin Lightning Network — a “Layer 2” network on top of the Bitcoin blockchain — for everything in between.
But even here we can see the issue. Strike users in most cases still need a bank account to onboard and send payments.
While Visa or Mastercard pre-paid debit cards can be used, the user must still go through rigorous account verification processes and trust Strike both as their custodian and with their data.
Strike’s approach of interoperating fiat currencies with the Bitcoin Lightning Network is clever, but what if we could achieve the same end natively on Bitcoin without the need for trusted 3rd parties? Well, now we can.
Taproot Assets, a protocol developed by Lightning Labs, enables stablecoins, or tokenized representations of fiat currencies, to ride on Bitcoin Lightning Network rails with nearly infinite payment scalability.
Now individuals and businesses can denominate their payments in the fiat currency of their choosing while benefitting from the permissionless, borderless, censorship-resistant settlement network that is Bitcoin.
At Joltz, we’re building the critical tooling and infrastructure to make this cutting-edge protocol accessible to all, including the first self-custodial Taproot Assets wallet that gives full control to end users.
Now anyone with an internet connection can instantly, and with fractions of a penny, send or receive value to anyone else on earth. Companies like Strike will still be crucial to bring these technologies to more people; onboarding will always be a challenge in these early days.
But we shouldn’t abandon people entirely to custodians either. Taproot Assets gives us clever new ways to solve some of the problems that have historically made self-custodial Lightning usage challenging.
In his book “The Rational Optimist,” Matt Ridley argues that the single most important driver of human prosperity is our ability to freely trade and exchange.
With the combination of Bitcoin, Lightning Network, and Taproot Assets, we finally have money that can truly connect us all and expand the universe of possible trades and exchanges. If you’d like to participate in the next generation of payments, get in touch with us here.
