Leigh Cuen


Lightning developer and Zap, Inc. founder Jack Mallers announced Thursday his startup’s Strike product, which allows people to receive bitcoin as dollars via direct bank deposits, is finally entering public beta.

A Visa card is also in the works.

“Zap, Inc. has joined Visa’s Fast Track program,” Mallers said in an email about the startup’s plan for 2020. “Visa works with members of the Fast Track program to help them go to market in the most efficient way possible, providing them support and resources every step of the way.”

He said his primary focus this year is launching a Strike card for consumer app users and integrating Visa Direct into the consumer app, which is the program that makes Venmo payments so fast. There’s no date yet for the upcoming Strike card.

“They [Visa] are a partner for our consumer issuance offering and are not involved in our merchant offering at all,” Mallers added.

This year Visa appears to be doubling down on partnerships with crypto companies. For example, the shopping rewards app Fold (also a Fast Track member) and the exchange Coinbase both also offer corresponding Visa cards. These are generally used by crypto advocates who prefer to earn crypto rewards rather than other types of points. There are also crypto debit cards, which allow people to spend dollars. It remains to be seen what specific options will be available to Zap cardholders in 2020.

Visa confirmed the deal but did not offer any additional comment by press time.

Scrappy approach

Although Jack Dorsey’s Cash App and the exchange unicorn Coinbase are widely considered the most mainstream apps for buying and selling bitcoin, Mallers is looking to offer an app of the same caliber, at a fraction of the cost.

Mallers said his two-year-old startup, with several people on staff, will take a three-pronged approach to the recession. To start, Strike gives each user a unique, public website where people can send bitcoin just by scanning a QR code. This is comparable to what the Ethereum Name Service offers with .ETH public wallet addresses.

However, Zap’s Strike is not a crypto wallet. Instead, the startup does an exchange on the backend and sends dollars to the user’s account.

“Traditional tax rules would apply to the financial transaction, and the exchange would bear the taxable cost of the bitcoin sale, not the individual,” attorney Sasha Hodder of DLT Law Group said in an interview, describing one potential benefit of Strike’s setup.

Privacy perks

Anyone around the world can now anonymously send bitcoin to people with American bank accounts or credit cards.

Strike offers a public identifier that is not associated with one’s personal bitcoin address. Instead, the startup manages these wallet addresses. This means someone can pay content creators, for example, without revealing personal information to each other.

So far, the Strike setup is mostly used by small businesses and their customers. One such user, a coder and U.S. Army veteran named Rick in Colorado, uses Strike to purchase medicine to help with his seizures. Another user, who goes by Tyler, buys gift cards with Strike.

“It’s very responsive, there’s never lag time or anything like that. It’s like Twitter or something,” Rick said in a phone interview, describing how intuitive Strike was.

The startup offers two different services, the merchant offering for businesses, and the free mobile app for consumers. For users who prefer to receive bitcoin, they can use Zap’s namesake product, a Lightning-friendly bitcoin wallet. The Zap wallet offers self-custody for bitcoin while the custodial Strike wallet can only receive value in fiat.


Zap now offers two complementary wallet apps, plus it has a third trick up its sleeve.

Attorney Lisa Zarlenga of Steptoe & Johnson LLP said custodial services like Strike may reduce the hurdles for both shoppers and merchants during the economic lull by taking on “the burden” of channel management and reporting because “the person transferring the bitcoin has to keep track of the value.”

Bitcoin advocates often claim they would like to use bitcoin, especially with Lightning transactions, to anonymously pay for products and services like media content. There are e-commerce vendors that accept bitcoin, although few shoppers use these options. Now it’s possible for creators and merchants with almost any technical skill level. Beyond computer literacy, the tax requirements are another major hurdle that bitcoin users might face.

Over the past three years, the nonprofit Coin Center repeatedly proposed changing the tax regulations to reduce paperwork requirements for small purchases made directly with crypto, but Hodder said lawmakers aren’t prioritizing such tax issues during the COVID-19 crisis.

Omri Marian, a professor of law at the University of California, Irvine, pointed out that most exchange services like Coinbase “would calculate your taxable income” anyway, so Strike may not solve any “administrative issue” for some users.

“Why not just pay in dollars?” Marian asked.

Someone can easily pay rent or buy groceries with value derived from bitcoin, using these free apps and a Visa card. The question remains whether bitcoiners will use the system enough to fuel the startup’s behind-the-scenes exchange earnings. If so, Zap doesn’t need to become a unicorn in order to make a healthy profit.

Strike user Tyler said he hopes the service will “allow merchants to accept and use bitcoin with Lightning without their customers knowing or spending bitcoin.”

“This app allows me to interface with Lightning so easily,” Tyler said, noting how the scaling solution operates quietly in the background.

Author: Leigh Cuen

Source: Coindesk: Bitcoin Startup Zap Is Working With Visa

Jack Dorsey’s latest foray into decentralized technology could be a harbinger of a radical shift in social media infrastructure. It all depends on the execution.

On Wednesday, the Twitter and Square CEO announced plans to support an independent team “of up to five open source architects, engineers, and designers to develop an open and decentralized standard for social media.”

“The goal is for Twitter to ultimately be a client of this standard,” Dorsey said.

The new team would follow a model similar to Square Crypto, a bitcoin-focused entity separate from Dorsey’s fintech unicorn Square. Likewise, the new Twitter entity would focus on open standards for decentralized processes across social platforms, rather than proprietary structures. Although Dorsey didn’t directly associate the disparate efforts, he hinted that the “fundamentals” of blockchain technology might offer some tools for “open and durable hosting, governance, and even monetization.”

Twitter’s head of legal and policy, Vijaya Gadde tweeted that this new project, called Blue Sky, is part of the company’s broader push to “support and foster the values of a free and open internet.”

Plus, Dorsey tweeted this team would help address “abuse and misleading information,” since global policy enforcement strategies are proving difficult to scale. He also mentioned the propensity for social media to amplify outrage rather than healthy discourse. Since this dynamic has been proven in countless psychology studies, Kaliya Young, co-founder of the Internet Identity Workshop and the startup HumanFirst.Tech, said the Blue Sky team should support “experts who have been in the trenches working for years” instead of starting from scratch.

“Social threat modeling should be done to understand how [social media] is impacting people,” Young said. “Technical protocols for content interoperability doesn’t solve content moderation or community management problems.”

Young said she was even a little offended by the “arrogance” of this announcement, which failed to acknowledge groups have already been working on open standards for social media for a decade. Security researcher and Open Privacy nonprofit founder Sarah Jamie Lewis echoed this point with a tweet likening decentralized social media standards to the “next generation of Pokémon.”

For example, the Social Web Working Group has already published guidelines for activity streams through the World Wide Web Consortium. There’s also been considerable open-source work on decentralized identifiers, basically social profile data that belongs to the user and can be used across the internet rather than being tied to a platform like Facebook. The head of affiliated projects at Microsoft, Daniel Buchner, promptly tweeted to say he’d love to collaborate with Blue Sky.

Pie in the sky?

This Blue Sky team will have such a lofty directive that it’s hard to imagine which issues they’ll tackle first.

To be fair, Square Crypto had a similarly ambitious model when it was first announced by Dorsey in March, promptly filling only the technical positions mentioned in subsequent tweets.

“If he’s serious, he’ll hire people who have really done this before,” Young said, referencing incumbent experts like Shireen Mitchell, Sydette Harry and Ben Werdmuller.

Another decentralized social network veteran, Tim Pastoor, founder of the Netherlands-based digital identity startup, said he believes personal identity management is one of the keys to promoting healthy social networks.

“If you filter information only to trusted sources, you can listen to their friends and their friends, because the chances of there being trolls and sock pockets is fairly small,” he said.

Pastoor also supports the open-source project Iris, which is a peer-to-peer platform similar to Twitter that leverages mesh grids for when the internet goes down.

Whoever joins the Blue Sky team, it’s already clear that blockchain technology will play a significant role in the project. Twitter CTO Parag Agrawal tweeted the ideal candidates for this team should be “curious across disciplines” and have “experience working in the open on the blockchain.”

Pastoor said he’s not sure how blockchain is relevant to any of the issues Dorsey identified, but he’s curious to see how Twitter will sponsor innovation. Pastoor likened support for this independent team to how AT&T’s research contributed to the invention of the transistor at Bell Labs in 1947.

“It led them to invest in the invention of the transistor, which led to automatic switching of information so you could punch in a number and be connected to anybody on the network, anywhere,” Pastoor said. “That’s basically what [Twitter] is looking to do as well, to automate the job these moderators are doing.”

From his perspective, Pastoor says decentralized protocols will enable even more intermediaries and companies facilitating activity across social networks, which is fine as long as users have some level of control and independence. To be sure, the Blue Sky team’s work will need to think beyond both Twitter’s business model and the general open-source process to “business models for the various entities participating around a decentralized standard,” Argawal tweeted.

Although Dorsey isn’t unique in his goal of supporting healthy and decentralized social networks, the announcement was generally received by Twitter audiences as a positive step.

Neha Narula, director of research at MIT’s Digital Currency Initiative, responded to Dorsey’s announcement by tweeting a 100-page report on the hurdles of trying to build a decentralized web.

“Welcome to the party,” Young concluded.

Author: Leigh Cuen

Source: Coindesk: Jack Dorsey Announces New Twitter Team: Square Crypto, but for Social Media

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