# Strike ## VaccuumLabs Article https://vacuumlabs.com/blog/lifevacuum/strike-disrupting-remittance-payments ### Description of how it works Under the hood, Strike works as follows: 1) User connects his conventional bank account to the Strike app 2) User initiates a transaction of $10 from the US to Europe, where the recipient would like to receive €8.2 3) Strike debits the $10 from the sender’s bank account 4) Strike converts the $10 to bitcoin on the Lightning Network 5) Strike sends the bitcoin instantly via Lightning Network to its European branch (or partner institution) 6) Strike converts the bitcoin to €8.2 7) Recipient’s account on Strike is debited €8.2 In the given example, neither the sender nor the recipient came into contact with bitcoin the asset. Still, they were utilizing Bitcoin the network (or rather the Lightning Network built on top of Bitcoin). ==There is no taxable event.== - If you bought and sold the Bitcoin yourself, there'd be a taxable event, but the realized gains would be 0 (assuming you used HIFO to calculate gains) The interesting part is how the USD gets converted to EUR. There is no Forex market involved. Instead, USD is first converted to bitcoin, and bitcoin is then converted to EUR. Since bitcoin has large liquidity in USD/BTC and EUR/BTC pairs, the resulting rate doesn’t deviate from the Forex rate. ==Bitcoin markets operate 24/7/365==, and bitcoin has sufficient liquidity across dozens of currency pairs. - That's a good point - the money can be sent 24/7 because it does not rely on forex markets ### Business model There are no fees associated with Strike payments. For now, Strike is a traditional VC-backed ([$3.5m raise](https://www.coindesk.com/lightning-startup-zap-raised-3-5m-for-bitcoin-app-ahead-of-visa-deal)) startup focused on rapid user growth. ==According to Mallers, Strike’s business model will leverage the large capacity of its Lightning payment channel. Institutional investors can leverage these channels to make lightning-fast arbitrage trades – something that isn’t possible today without depositing a lot of capital on multiple exchanges.== ==Another possibility that Mallers mentioned previously is the payment for order flow, an approach similar to how [Robinhood](https://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp) makes money on its free brokerage service.== Perhaps merchants will serve as a revenue stream through acquiring, as Strike’s costs are orders of magnitudes lower than card companies’ due to eliminating chargeback risks. [Strike’s cashback](https://jimmymow.medium.com/announcing-cashback-by-strike-cce2829bc152) trial may also develop into a viable business model. - Hopefully [[Strike]] does NOT go the [[Surveillance Capitalism]] route Whether Strike finds a successful business model or not, it already served as a proof of concept: services merging fintech and Lightning Network are possible and very popular when introduced to communities where they make an enormous impact due to substantial cost savings. Similar projects are already emerging ([[Lastbit]]) It will be exciting to watch Strike and similar startups come head to head with conventional remittance providers. One thing is for sure: the customer always wins when the industry is being radically disrupted through innovation.