Bud to Bitcoin: How Strike’s Jack Mallers stumbled from cannabis to crypto
Zap Solutions founder Jack Mallers helped make Twitter’s new Bitcoin-centric Tips tool happen. In doing so, the 27-year-old entrepreneur solidified himself as a digital asset darling.
Twitter’s Tips allows users to send Bitcoin sats to certain creators. This may seem like just another tech-sector gimmick, but it does nudge crypto further from speculative investment and toward mainstream commerce.
Users send and receive small amounts of Bitcoin through API integration using Strike, a Zap-owned digital wallet. Mallers launched the Strike API platform to serve marketplaces and merchant businesses just five days ago.
In a press release, Mallers called it a “giant leap forward” for Bitcoin, despite the app leveraging a permissioned (centralized) ringfence of hubs within Bitcoin’s Lightning Network.
Still, Protos compiled some background info on Mallers to help illuminate his journey. Here’s what you need to know.
Bitcoin was not Mallers’ first mission
Bitcoin’s new favorite was born with a silver spoon. Mallers’ grandfather signed the check that funded the Chicago Board Options Exchange itself, and his father was a long-standing member of the equally prestigious Chicago Mercantile Exchange.
Mallers’ lineage likely helped woo investors. San Francisco-based Greenoaks Capital, for example, backed Zap with $3.5 million in funding.
Mallers was 26 at the time. But few companies have pivoted through as many distinct business models as Zap.
Zap first targeted cannabis dispensaries with a payment app. It initially supported two dispensaries in Colorado when it debuted in 2018.
Although marijuana has been legalized at a state level across much of the US, it’s still federally illegal for recreational use.
This makes it difficult for dispensaries to access banking services, which forces them to deal in mostly cash and cryptocurrencies.
After struggling as a marijuana payments startup, Zap later morphed into a crypto exchange of sorts. It integrated Bitcoin’s Lightning Network with other features provided by Las Vegas-based Bittrex.
In September 2019, Zap launched the beta for Olympus. Zap claimed Olympus make it easier to convert fiat currencies for use on Bitcoin’s Lightning Network.
Olympus relied on centralized stablecoin Tether
Zap eventually rebranded Olympus to Strike when it abandoned requiring users to hold Bitcoin themselves.
The new Strike would hold a “USD” balance (denominated in Tether, but more on that later) and pay a Lightning-based payment invoice whenever users sent a payment.
Strike planned to use Bittrex as part of its backend to enable Tether (USDT) and Bitcoin transfers around the world more cheaply than traditional remittance services like Western Union.
For years, Bittrex was a key exchange willing to serve Strike’s operations outside of the US. But Strike had found a better product-market fit as a traditional payment gateway rather than middleware for marijuana merchant services.
Strike’s partnership with Bittrex added more cryptocurrencies to Strike’s “Bitcoin only” ecosystem, especially Bittrex’s Bitcoin-to-Tether trading pair.
White lies for marketing
But Mallers has a history of misrepresenting Strike’s functionality, including in a variety of live demos, and his teary-eyed speech at Bitcoin Miami 2021.
In the first half of 2021, he demonstrated El Salvadorans receiving a USD remittance and claimed they received actual US dollars in their Strike account.
They never did. They were Tethers.
When called out by journalists, Mallers promised to remove Tether from Strike’s ecosystem altogether, without further explanation.
Strike subsequently abandoned both Bittrex and Tether in favor of Nevada-based fintech startup Prime Trust.
Mallers ditched by El Salvador
Earlier this year, Strike tried to become a contractor to El Salvador’s government by servicing the country’s adoption of Bitcoin as legal tender.
Despite Mallers’ peculiarly close relationship with El Salvador president Nayib Bukele — and passionate speech at the year’s largest Bitcoin conference — El Salvador opted for a Venezuelan operator for its Chivo app in Ulter.
However, Strike is allowed to operate and advertise its services in El Salvador.
Read more: [Read this before criticizing El Salvador’s adoption of Bitcoin as legal tender]
But as of last week, Strike’s focus has switched to Twitter.
Jack backs Jack
Jack Dorsey, Twitter’s billionaire founder and chief exec, endorsed Mallers’ Strike for its ability to process non-fiat tips between users.
Tips in fiat currencies were already enabled prior to Strike’s integration via Venmo and other third-party providers.
Assuming that Strike can continue acquiring critical money transmitter licenses (Strike is still not operating in New York nor Hawaii), Twitter’s partnership will certainly be accretive for Mallers’ startup.
Read more [Twitter makes ‘sats’ the Bitcoin standard with new Lightning tipping feature]
With his newly released API and Lightning Network transaction growth, Mallers may well succeed at his goal to lower the cost of international remittances.
In any case, Mallers certainly seems to have finally found his fit in crypto, as one of the scene’s premiere influencers.
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Edit 09:31 UTC, Sept 28: Updated context throughout.