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After inspiring El Salvador’s government to adopt a Bitcoin standard, Strike is expanding its operations to another central American country. Yesterday, CEO Jack Mallers announced Strike’s launch in Argentina and were set to act as a cost-effective remittance service using Bitcoin. However, it would seem that in-wallet assets are stored in neither dollars nor BTC, using Tether instead.
Strike’s Significance In Argentina
Mallers revealed his company’s expansion in a tweet on Tuesday, alongside a thread explaining its significance.
“Today, we launch a superior financial experience to a country that faces hyperinflation, predatory payment networks, and unusable cross-border transfers,” he said. “Today, we use the world’s open monetary network, #Bitcoin, to give hope to the people of Argentina.”
The CEO explained that Argentina is plagued by economic turmoil, bank failure, and egregious inflation. As a result, the country’s economy has become dollarized, using USD as the primary unit of account.
However, as this has caused the nation’s reserves to shrink, it has placed high restrictions on its citizen’s ability to use and receive dollars. This includes having censored Visa’s dollar network from operating in the country.
The economy is forced to use cash to exchange dollars, which hurts economic efficiency.
“Strike is offering them a convenient cash collateral,” Mallers said in an interview on the matter with CNBC. “They like their daily spending cash-collateral to be in dollars, but interfacing that cash-collateral over the Bitcoin and lightning networks, making it seamless to make instant, free cross-border payments.”
When asked about Bitcoin’s future price forecast, the 27-year-old replied, “up”.
Tether On Strike?
To be precise, the “dollars” within Strike are USDT – the most popular US dollar-pegged stablecoin.
While Strike uses the Bitcoin network to facilitate remittances on the back end, all assets within the wallet interface are denominated in Tether. As a result, dollars cannot be withdrawn directly – just USDT, using a private Ethereum address.
Thankfully for Bitcoiners, Argentinian wallet users can still withdraw their USDT as Bitcoin using Twitter’s lightning network integration. Furthermore, they can send their USDT tokens within Strike while avoiding Ethereum’s high fees. The Tether integration may ultimately be a work-around to Argentina’s restrictions on physical dollar usage.
Strike’s first international launch was in El Salvador, where Mallers advertised the wallet as a cheap remittance tool compared to fiat alternatives. El Salvador’s GDP is 23% comprised of these cross-border payments.