To investors,
Western Union is one of those businesses that the average American has heard of, but doesn’t pay attention to on a daily basis. The approximately $9 billion market cap company is essential for the people of more than 200 countries and territories that rely on their transfer rails to send money back and forth to family and loved ones.
One of the countries that no longer has access to Western Union is Afghanistan. This is because the company decided to suspend all services to the embattled country until the current situation is better understood. Yes, you read that right. The money transmitter that is one of the two most popular services in the country has decided to shut down operations at the exact time that the average citizen needs help the most.
Afghanistan receives just under $800 million a year in remittances and it makes up approximately 4% of GDP. These aren’t massive numbers from a global perspective, but they are incredibly meaningful to the people on the ground that rely on Western Union for financial access.
It was infuriating to see this statement from the business. Rather than capitulate and shut down operations, they didn’t even attempt to increase agent capacity to deal with an increase in demand for their services. But it is useless to get mad. There is nothing that you or I can do about these types of situations.
Instead, the only solution is to build a better system. That is exactly what Jack Mallers and Strike are doing, which is interesting because Jack released a video today that shows how valuable his product has become.
You can click here to read his entire Twitter thread that explains how the technology works. To the untrained eye, this transaction may look like any other financial payment on your favorite fintech app. But let’s unpack exactly what is happening.
Jack’s technology and users are able to immediately transact with Bitnob users, although the two companies don’t know each other, nor do they have any formal relationship. This is like Cash App allowing you to send money to Venmo. It would never happen in the legacy world. The systems aren’t built on open standards. They are walled gardens. Which brings us to the next point.
Jack was able to immediately connect to Bitnob’s node right after they connected to the Lightning Network. He now has the cheapest, most instantaneous remittance option between the US and Nigeria. Strike didn’t build that. Bitnob didn’t build that. It was built by bitcoin and the Lightning Network over the last decade. Absolutely incredible.
The Lightning Network is an open system that anyone can plug into. No one can censor you. No one can shut you down. You don’t need millions of dollars in venture capital to build your own network. You don’t need to strike business development deals. You don’t need to hire thousands of employees.
You can simply set up a Lightning node and immediately have access to a global payments system that offers superior functionality to any legacy platform. Now compare the two different systems — Western Union vs Bitcoin and Lightning.
You can’t. One is a thing of the past and the other is a peek into the future. They are headed in two different directions. But guess what the best part is? That regardless of the technical superiority of the Lightning Network, the critical component is that it is censorship resistant. No one can decide to cut off a country’s access. No one can stop you from sending or receiving value on the network.
Bitcoin doesn’t solve every problem in the world. However, it does solve the remittance problems that many Afghan citizens are experiencing right now. That doesn’t begin to address all of the challenges that these people are dealing with right now, but it at least addresses the money issue.
It is no secret that I believe Jack Mallers is building one of the most valuable technology companies in the world. Strike is innovating in a place where the average entrepreneur and operator doesn’t yet understand how to play. That is the best time to be building. Make sure you don’t blink — this is going to happen very fast :)
Have a great weekend. I’ll talk to everyone on Monday.
-Pomp
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THE RUNDOWN:
A16z Leads $4.6M Investment in Yield Guild Games: Decentralized gaming startup Yield Guild Games has raised $4.6 million in a funding round led by venture capital firm Andreessen Horowitz, YGG announced Thursday. Other participating investors included venture capital firm Kingsway Capital, Infinity Ventures Crypto, Atelier Ventures and the gaming entrepreneur Gabriel Leydon. Read more.
Wells Fargo Launches Passive Bitcoin Fund for Wealthy Clients: Wells Fargo on Thursday registered a private bitcoin fund with U.S. regulators, becoming the latest mega-bank with an indirect crypto investment vehicle for its wealthiest clients. A source familiar with the matter told CoinDesk the new fund is passive, a break from earlier reports that Wells Fargo would pitch wealthy investors with an actively managed offering.Read more.
Coinbase to Add Over $500M in Crypto to Current Holdings: Coinbase will be purchasing more than $500 million in cryptocurrency to add to its holdings, the exchange giant’s CEO and co-founder Brian Armstrong tweeted on Thursday. Armstrong wrote that the firm had "received board approval" to add these assets to its balance sheet. He also wrote that Coinbase would invest 10% "of all profit going forward in crypto." He added that he expected "this percentage to keep growing over time as the cryptoeconomy matures," and that he hoped to "operate more of our business in crypto."Read more.
Binance US Taps Joshua Sroge to Be Interim CEO: Joshua Sroge has become Binance.US’s interim CEO, replacing Brian Brooks, who resigned unexpectedly earlier this month from the U.S. arm of crypto exchange Binance. Sroge joined Binance.US in January 2020, serving as its CFO. Read more.
Galaxy Digital Launches DeFi Index Tracker Fund: Galaxy Digital, the listed cryptocurrency trading firm run by Mike Novogratz, has launched a decentralized finance (DeFi) index fund, a passively managed vehicle that tracks the performance of the newly launched Bloomberg Galaxy DeFi Index. Announced Thursday, the Galaxy DeFi Index Fund seeks to provide institutional investors access to returns based on the performance of DeFi tokens. It offers exposure to major decentralized lending and exchange platforms like Uniswap, Aave, Maker, Yearn and others. Read more.
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