Let’s walk through a user story. I want to send $1,000 to a friend of mine in El Salvador:
* When I initiate the $1,000 payment, Strike debits my existing USD balance.
* Strike then automatically converts my $1,000 to bitcoins ready for use in its infrastructure using its real-time automated risk management and trading infrastructure.
* Strike then moves the bitcoins across the Gulf of Mexico where it arrives in our Central American infrastructure in less than a second and for no cost.
* Strike then takes the bitcoins and automatically converts them back into USDT (synthetic digital dollar known as Tether) using its real-time automated risk management and trading infrastructure.
* Strike then credits the existing user with the USDT to their Strike account.
[1] https://jimmymow.medium.com/announcing-strike-global-2392b90...
* This guy starts talking about sending USD, but ends up talking about receiving USDT. USD != USDT. And while there are problems with sending USD across the border, there're absolutely no problem with sending USDT. And there's absolutely no problem buying USDT wherever you are. (But, what's important, there might be problems actually converting your USDT into USD.)
* Since we end up buying USDT with USD, the word "Bitcoin" in the middle of the story seems redundant and actually confusing.
* There's nothing about Lightning here. I mean, you can talk about how you use Lightning to transfer BTC inside Strike as much as you want, but if BTC is irrelevant to the user story, so is Lightning.
* I'm not sure how Strike and this user story are relevant at all. It started out about El Salvador accepting BTC as a legal tender, and how using it in actual transactions w/o lightning is problematic due to low TPS. How sending USD to El Salvador is relevant here at all?
edit: looked it up, still looks like a total scam. I hope El Salvador is able to get through this without getting screwed and I guess I'll assume Strike (first time I've heard of it) is just as shady until I hear otherwise:
https://coingeek.com/crypto-crime-cartel-tether-using-its-st...
https://finance.yahoo.com/news/strike-phasing-usdt-bitcoin-b...
Both sides are Strike entities all this does is use bitcoin as a bridge for USD to USD which is completely pointless as both sides are USD.
You could just buy USDT (or another stabelcoin) and send it there.
Its a different story if there is actually a switch in currency needed. There is this famous and from bitcoin people often hated company called Ripple that specializes on cross-border settlement using crypto as a bridge currency. For that however the crypto must be actually moved and be sold locally for the local currency. And for that to work without risk due to volatility it must be fast. Hence they use XRP (4 sec) instead of bitcoin (10+ min). They call it ODL (On-Demand Liquidity).
>No BTC involvement required.
Totally correct. Remittance over a bridge currency only make sense under very specific conditions, which include that the input currency and the output currency are different. And a direct exchange is not possible or not cheap.
The traditional banking system does this as well, they usually use USD as bridge. To pair every currency with every currency simply isn't feasible and the low volume pairs would have no liquidity anyway. Its basically the same as with goods if you have wood but want metal you use a currency as bridge because there is no market to sell wood for metal. Now if you also have a location difference between the market where you want to sell and the mark where you want to buy then you actually can use the bridge currency to move from one market (location) to another market (location).
In the case of merchant/customer interactions, the LN channel blocks customer funds from their balance, but they will never receive money from the merchant. So that balance will be sent to the merchant, payment by payment.
Not only does that block funds for the customer (which wants to reduce those, to avoid blocking too much, but that reduces the number of payments that can be made off-chain), but it also blocks the merchant’s reception of those payments: the merchant wants to be able to spend it soon, but it can only spend it on-chain.
That is compounded by the fact that most merchant/customer interactions are rare one-offs in the real world. I just don’t buy stamps every day.
LN channels are only most useful when the two parties exchange money bidirectionally on average.
It’s very common on lightning to pay liquidity providers to balance your channels to you. Lightning Labs has a service called loop where you can pay them an onchain transaction and it will make a lightning network payment to your channel for that amount, thus giving you more spend liquidity. Loop is sweet cause it does this in a non custodial way, look into it.