Jack Mallers, CEO of bitcoin investment and payment company Zap, made a promise at Bitcoin Conference 2021: “One small step for Bitcoin, one giant leap for mankind.” On his agenda for the day was discussing Bitcoin for countries. “And, in particular, the human freedom and financial inclusion that Bitcoin for countries brings.”
As he said it, he let out a chuckle. “So, the Federal Reserve.” And then he paused. “Anyone know what that is? We’re seeing an unprecedented amount of monetary expansion from central banks right now. It’s very scary…Inflation is not distributed equally, right?”
Mallers—who was clad in tight black jeans, a black Bitcoin Racing Team hat with orange font, and an oversized gray sweatshirt with the bold letters “ABC” written in black across the front—made it clear: he doesn’t think the Federal Reserve is being truthful about inflation numbers. He showed the audience the Consumer Price Index, which showed little inflation. But, he pointed out that prices were rising nonetheless. “Things that we all enjoy in life that we strive for, that we want to obtain, and we work hard for, that we sacrifice and save for, so that our kids can go to a college. University tuition is averaging about 8% year over year on inflation.”
US consumer prices increased in May, the month before the Bitcoin Conference where Mallers spoke; that’s the fastest annual rate in nearly 13 years. The Labor Department announced last week that the Consumer Price Index in May rose 5% year over year, more than the 4.7% increase that had been anticipated. The reading was above last month’s 4.2%, as prices jumped 0.6% month over month.
Used car and truck prices surged 7.3%, accounting for about one-third of the index’s gain. Food prices rose 0.4% matching April’s increase. Core CPI excludes food and energy, and rose 3.8% in May, the most since June 1992. Core prices increased 0.7% month over month, outpacing the 0.4% increase that was expected. The index rose 0.9% in April.
Maller, who is from Evanston, Chicago, pulled up a chart of Chicago area real estate, showing 9.2% inflation year over year. “So, unless I am getting a 10% raise every single year, I got no [expletive] chance of owning a house. But, there’s no inflation.”
Nationwide single-family rents were up 5.3% year over year in April, rising from a 2.4% increase in April 2020, according to CoreLogic—the largest gain in nearly 15 years. “Central banks are increasingly taking actions that may cause harm to the economic stability of developing countries and emerging markets,” said Mallers. “The large scale printing of dollars by the Federal Reserve has an unintended spillover that’s drastically, drastically impacting the quality of life of those less privileged and those that need help in developing in emerging markets, and we’re facing unprecedented times—check all the data you want—that we haven’t seen for a century.” Around now, Mallers began to become emotional. He would apparently shed tears intermittently throughout the rest of the speech, sniffling along the way, which moved some of the crowd.
Hidden inflation causes rising rates, and crushes emerging markets, said Mallers. “…This is real. And it’s happening now. And it’s really scary. For those of you that aren’t from the US, aren’t from Europe, aren’t from the UK or live in the developed world, you’re tremendously scared. Effects from major country policies will hit emerging countries economically and financially. Both. And it’s a huge, huge problem. It’s a huge problem.” Bitcoin fixes this, said Mallers. A presentation slide which read “Fix the money, Fix the world” listed many reasons why Bitcoin was good:
- Fixed supply
- Monetary policy enforced by distributed network
- Predictable issuance
- Open, global, permissionless,
- Improves remittance
- Lowers transaction costs
- Improves financial inclusivity
“We now have an asset class that has a fixed supply and the issuance of that is known,” said Mallers. “…The monetary policy is protected by a distributed network. There’s no central point of failure in this asset. It’s open, it’s global, it’s permissionless, it works the same in a country in the developed world as it does in New York City. The Bitcoin network carries no bias. It improves things like remittance, because a lot of the GDP of this developed world is sending money back home. It lowers transaction costs and ultimately improves transaction scalability and financial inclusivity.”
Mallers is the founder of Strike, which is a startup that exists to take advantage of the fact that Bitcoin fixes so much. Strike is built on top of the Bitcoin network. “We want to make cross-border payments free,” said Mallers. “I want to make cross border payments free to solve the remittance problem and the financial inclusivity problem and an absolute mess that the Federal Reserve is causing to those that need it most.”
That brought Mallers to El Salvador. “A country that uses the dollar because in a Civil War, they lost their own currency,” he said. “It’s a country where over 20% of the GDP is inbound remittance…However, of that GDP, fees can be upwards to 50%. And the true crime is that there’s over two million Salvadorans that live in the United States. And people are leaving because of the economic instability and the lack of economic support, the lack of economic opportunity. What that does is it causes individuals to rely on crime and violence.”
Mallers says this ruins the security of the country. “It’s generated a tremendous immigration problem. But, if you rewind those steps, if you can fix the money, you can fix the world. If we can provide economic stability, economic opportunity, financial inclusion, and if we can build an asset that is defended by an open distributed network, and we have cyber hornets that will fight on that hill and die on that hill and protect it and we can fix that, then they won’t have to resort to crime and violence.”
They won’t be subject to the intermediary financial system that is taking 50% of their remittance, says Maller. “No, they won’t have immigration problems, and they can love the country that they were born in.”
Mallers went to El Salvador and lived there for almost three months. He tried to send a remittance, but he couldn’t do it. The ATM didn’t work. He says he talked to the kids there. “I told them “Hey, we got this. Bitcoin’s here. We got this.”
Mallers retold a story of a man who told him that his grandfather was a fisherman, his dad was a fisherman, and the man thought he would always be a fisherman. Mallers had a Chase Bank account, and a debit card. The man had fish, nothing more. Until Bitcoin.
“I scan the same QR codes you do,” the man said. “When Bitcoin goes up to 10%, Michael Saylor makes a lot of money, so do I.” The man who thought he would be a fisherman has a bitcoin wallet, but has never had a savings account. He’s got a hardware wallet.
“He saw that this is financial inclusion, that this is a network and a monetary system that doesn’t hold any bias. And there’s no intermediary that can tell him that he’s not allowed.”
According to Mallers, Strike was onboarding 20,000 Salvadorans a day, most of whom didn’t have bank accounts. Remittance was free. Remittance was instant. “The Lightning Network works, man,” said Mallers. “And, in real time, we were improving the GDP of the country.”
Then Mallers got a message on behalf of the President of the country, Nayib Bukele, who wanted to talk. “I called my dad, ” said Mallers. “I was gonna piss my pants.”
They talked. “We talked about life. Talked about anime. Talked about how to provide a high quality of life to everyone in the world about financial inclusivity, about human freedoms, and where we lost them and how we can re-instill them. We talked about the world we want to live in, and the fact that we build the tools that shape the world that we end up living in.”
The El Salvador representatives dropped some “really heavy stuff” on Mallers. For instance, over 70% of the active population doesn’t have a bank account. They’re not in the financial system. They have a huge problem of financial inclusivity and providing their citizens with basic human freedom.”
The president asked Mallers to help write a bill and put together a Bitcoin plan. Mallers then shared a pre-recorded message Bukele:
Great ideas are beautiful and have great power. But, like the most beautiful things, they can also be more fragile than we think. When I was a kid, we thought about the future. And we were delighted by the possibilities. We couldn’t wait for it to happen and be part of its creation. But now, ask most anyone what they think about the future, and they will say something along the lines of nuclear war, climate catastrophe, hunger, pestilence, the death of life.
We didn’t take care of the beautiful idea that we create our own future. That we as humanity can do almost anything that we imagine. Our ingenuity is what separates us from other species. In El Salvador we are trying to rescue this idea and then start designing a country for the future. Using the best ingredients that makes us who we are, while using sensibility to find the best examples of ideas from history and around the world. I believe Bitcoin could be one of these ideas. That is why next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador.
The crowd burst into an uproar. Mallers, having taken off his sweatshirt, was now clad in the royal blue soccer jersey of El Salvador that Bukele had given to him. He read his favorite part of the bill. “Central banks are increasingly taking actions that may cause harm to the economic stability of El Salvador. That in order to mitigate the negative impact from central banks, it becomes necessary to authorize the circulation of the digital currency with the supply that cannot be controlled by any central bank and is only altered in accord with objective and calculable criteria.” El Salvador is set to be the first Bitcoin country in the world to make Bitcoin legal tender and treat it as a world currency with Bitcoin on their reserves.
Strike will open an innovation headquarters in El Salvador. Blockstream will be involved. “A lot of companies in this space are going to come because a country that supports and fosters innovation is a company that this community is going to stand behind,” said Mallers. “I can build any future I want and the government wants innovation, and they want us to prove Bitcoin and I don’t have to go get a [expletive] BitLicense.”
As he sniffled, Mallers also pledged to open source all of the work. “It’s going to be called Bitcoin For Countries and any country that needs help can download it from the internet. Contact me. I don’t know what camera is filming me, but you call me if you need help. I’m not launching in Europe. I will be there. We die on this hill. I will [expletive] die on this hill.
“So, today, a country plugs into an open monetary system and gives their citizens hope. Today, a country chose Bitcoin as a currency with the supply that cannot be altered by the Central Bank.” Mallers was seemingly very emotional at this point as he wrapped up his talk.
“Today, humanity takes a tremendous leap forward,” Mallers began, pausing to look at the teleprompter, “in re-instilling human freedom and financial inclusivity. And today, I hope we all can celebrate the resilience and strength of humanity and the direction that we’re bending humanity towards. Today is a really special day.”
Mallers said this was achieved because of the work of everyone in the room. “It was this community,” Mallers said. “They can come after me, they can come after any individual—I will die on this hill—but they can’t stop this idea. And all the individuals in this room have to fight for what’s right. And this is why we’re all here. And it’s so important. And I hope you all can get out of the shower and look yourself in the mirror and say you’re improving humanity and don’t you dare let anyone tell you otherwise.”
There’s people out there that need help, said Mallers. “And today they got help. And this is a tremendous day for humanity. It is a tremendous [expletive] day and everyone in this room should be proud.” This is one small step for Bitcoin, emphasized Mallers.
“It is not a big step for Bitcoin,” Mallers said. “It is just another node on the network. It’s another wallet, the president’s just another bitcoin hodler just like all of us. The network doesn’t know who he is, the network doesn’t give a [expletive]. And if he gets mad at the network, the network is not going to flinch. If he mines an invalid block, my node won’t accept it. It’s a small step for Bitcoin, but it’s a giant leap for humanity…there are people that need hope and they found it in Bitcoin.”