It’s impossible to miss this news: El Salvador wants to make Bitcoin a legal currency. To do so, the country will need to surround itself with players to set up the necessary infrastructure.
A Bitcoin service that relies on USDT
Earlier this month, the president of El Salvador announced his desire to make Bitcoin a legal currency in his country. A few weeks after this announcement and the acceptance of the measure, it is now time to set up the necessary infrastructure to carry out this major project.
Soon, the name of the company Strike was stated to realize a Bitcoin-based payment system in El Salvador.
Its founder Jack Mallers was a guest on the “What Bitcoin Did” podcast presented by Pete McCormack, during which he was able to explain the various steps involved in creating this payment system.
The use of Strike was not immediately popular when it was announced, because of the dependence on the USDT that the system could have. Indeed, for many years, Tether’s USDT, while extremely widely used, has been plagued by constant questioning of the funds that are supposed to back it.
For example, in his first version for the Salvadoran government, Jack Mallers, the founder of Strike had architected the system as follows:
- Strike debits a bank account;
- the funds are converted into Bitcoin;
- these BTC are sent to the company’s infrastructure in Central America;
- the BTC are converted into USDT;
- and finally credited to the recipient’s account.
Why this reliance on USDT? Because it would be illegal for Strike to provide a custodial service in dollars to its customers, so an alternative had to be found: the USDT.
Strike breaks free from USDT
Fortunately for the company, this architecture was only temporary and will only have been implemented as part of a beta release.
So, as Mallers explained during his appearance on the podcast, Strike has since successfully integrated with the systems of five of El Salvador’s major banks. As a result, users are able to deposit their funds directly through these institutions or their ATMs, and Strike is no longer forced to provide a dollar custody service.
As a result, the Salvadoran payment system can do without Tether’s USDT. This is bad news for the stablecoin issuer, but great news for the system Strike developed, which now relies solely on Bitcoin.
