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LN isn't actually used - the way it actually works is: Strike holds dollars for the user. The user wants to send dollars to someone. Strike buys btc using dolla

LN isn't actually used - the way it actually works is: Strike holds dollars for the user. The user wants to send dollars to someone. Strike buys btc using dollars (from itself), sends btc via ln - to itself - and then sells btc for the same amount of dollars, again to itself, and credits the receiver. What's actually happening is that Strike is a normal payment provider like Paypal, Venmo, Revolut that fakes the btc transfer process because pretending to be only a btc wallet means less regulation than a full payment provider. They don't actually spell it as directly - they just claim an absurdity that buying btc and then selling btc is somehow cheaper than a direct transfer, which of course is impossible because it means taking the ask and then selling into the bid, and the actual spread on most liquid btc markets can be observed on biggest exchanges like Coinbase or Binance, and that's ignoring the fact that one part of the exchange is supposed to happen in a local illiquid market in El Salvador. The whole thing would be less convoluted if stablecoin tokens were sent directly using a payment channel without a fake trade step - using btc is a completely pointless for anything but marketing (Strike to btc holders and marketing btc itself).

SV_BubbleTime 5y ago
I read that twice and now it makes less sense. What is the purpose of the fake transfer steps?
- axiosgunnar 5y ago
  > because pretending to be only a btc wallet means less regulation than a full payment provider.
xiphias2 5y ago
You are totally right in each step, but there's 1 thing that makes it different from most exchanges: you can already transfer money in/out of it using LN, which makes it much more practical than using a Coinbase exchange account. Also, while Coinbase Pro has a 0.1-0.3% fee for market order, if you want guaranteed execution, Coinbase and its competitors take 3-4%. If you listened to talks from Jack Mallers, he was tracking lnd head instead of waiting for the full releases, and picking and testing pull requests by hand, fixing bugs that come up in practice (or giving feedback to lightning devs), that's one of Strike's advantages over other exchanges. Also the ,,less regulation'' is just not true generally, people have to go through KYC to link with bank accounts, they are communicating with regulators: https://jimmymow.medium.com/announcing-strike-public-beta-325877a79f87 https://jimmymow.medium.com/announcing-strike-public-beta-32...

SV_BubbleTime 5y ago

I read that twice and now it makes less sense. What is the purpose of the fake transfer steps?

axiosgunnar 5y ago
> because pretending to be only a btc wallet means less regulation than a full payment provider.

xiphias2 5y ago

You are totally right in each step, but there's 1 thing that makes it different from most exchanges: you can already transfer money in/out of it using LN, which makes it much more practical than using a Coinbase exchange account. Also, while Coinbase Pro has a 0.1-0.3% fee for market order, if you want guaranteed execution, Coinbase and its competitors take 3-4%. If you listened to talks from Jack Mallers, he was tracking lnd head instead of waiting for the full releases, and picking and testing pull requests by hand, fixing bugs that come up in practice (or giving feedback to lightning devs), that's one of Strike's advantages over other exchanges. Also the ,,less regulation'' is just not true generally, people have to go through KYC to link with bank accounts, they are communicating with regulators: https://jimmymow.medium.com/announcing-strike-public-beta-325877a79f87 https://jimmymow.medium.com/announcing-strike-public-beta-32...