Good morning everyone! Hope y’all are having a great week so far! Welcome to another Thursday Update. This week marked a big change. Well, I guess it was technically last week, but I think everything finally went through this week.
I got paid in bitcoin!
Ok…
It wasn’t my salaried job that paid me in bitcoin.
As y’all know, I write this newsletter for free, but I also post them for free on Medium. At least I try to when I can remember to copy them over.
The difference is that on Medium you can get paid for your articles. I’ll give you a really quick rundown of how Medium works if you don’t know. If you do know Medium feel free to skip this.
How Medium Works in a Nutshell
There are two types of Medium users: readers and writers
For readers: you can pay $5 a month and read unlimited articles. That’s it. If you don’t pay $5 a month, then you only get to read 3 total articles per month for free.
For writers: you get to post articles for free and depending on the number of views and total read time of your post, you get paid for them. Some people have gotten really popular and figured out the whole “Medium algorithm” so they can earn a ton.
Medium used to send out the statistics every month for the top earners, but I guess they stopped that. All I could find was some stats from back in 2019 where in a single month one writer took home a whopping $30,000!! Someone else had a single article that earned over $7,000! That’s insane!
From what I can tell, people don’t make quite that much anymore. Since 2019, Medium has made some changes to the way payments get calculated, the way their algorithm works, and also since more and more people have flooded to Medium for writing, the payments get smaller and smaller.
Where does the money come from to support these payments? It’s a portion of that $5/month from all of Medium’s readers. They have around 100 million active monthly users so that’s a decent chunk of change to pass around.
Ok, back to me. That’s enough of you, Medium
For the month of October, I got paid a whopping $5 on Medium. Woohoo! It’s actually up from my typical $1.50 lol.
I guess I could try and learn how to play the Medium system more, but my main goal in using Medium is to actually spread the news on my newsletters, not so much to earn an income from Medium itself. So $5 is nice, that basically covers my monthly payment to be a Medium user.
Ok...ok...back to the exciting update! I got that $5 paid directly to me in bitcoin! I didn’t pay any fees or anything!
Medium had nothing to do with it, either. Medium has no idea I did this.
See, Medium does their payouts through a super popular service called Stripe. According to Stripe, “The company primarily offers payment processing software and application programming interfaces for e-commerce websites and mobile applications.”
So they do all the processing for Medium to give out payments.
I give Stripe a direct deposit, Medium gives Stripe some money, and Stripe gives it to me. All the nitty gritty bank-type stuff is taken care of by Stripe. This is great because I trust Stripe more than I would if Medium said they wanted to take over the entire payments system and security themselves.
So did Stripe pay me in bitcoin?
No, we haven’t made it there yet.
And, no, my bank didn’t pay me in bitcoin either. Though the FDIC is beginning to talk about how that might be a reality one day.
I used a service called: Strike!
Strike runs on what is called the Lightning network. I am a sucker when it comes to creative wordplay, so I was already in when I heard the name. However, it is really really cool.
This next part is a bit technical. Feel free to skip it.
My Try at Explaining Bitcoin and the Lightning Network
Bitcoin is amazing, right? The future gold for our generation. The issue is that bitcoin can never be used as a global transaction network alone. At least not yet. There was a big upgrade earlier this week that will help.
Let me explain because the naming of bitcoin is a bit confusing. Bitcoin (with a capital ‘B’) is talking about the blockchain network. The lowercase ‘b,’ bitcoin, is the currency that runs on the Bitcoin network. Satoshi should have named them differently, but he didn’t.
The Bitcoin blockchain network works similarly to this. It is a peer-to-peer network, meaning that instead of paying a centralized company to run a network (like banks do today) we pay other individuals to run the network. It’s the same philosophy behind Uber or Airbnb. Instead of paying for a taxi service or hotel, we just pay another person.
The individuals that run the Bitcoin network are called miners or node operators (technically those are different roles but we won’t go there). Each miner operates what is called a node.
The Bitcoin blockchain network is built of what are called blocks. More clever naming, haha!
Each block consists of a number of transactions. Every single miner in the world has a copy of the same exact blockchain. This is what makes Bitcoin secure; if everyone has a copy of all the transactions ever made, then no one can alter a transaction because every other miner in the world will invalidate it.
Ok, so when are blocks added and how are they added?
Blocks are basically on a timer. They are added around every 10 minutes or so forever. This is how it was in 2009 when it first started and it will continue like that forever.
The miners compete using their computers to see who gets to add the block. Think of it like there is a random number chosen by the Bitcoin network’s algorithm every 10 minutes, and whichever miner guesses it first wins.
The winner gets to add the next block and gets paid a reward of brand new bitcoin (the currency). That’s why they are called “miners”. Again, more creative wordplay.
I know that is kind of confusing and super fast to go over. However, here is where the problem lies.
Remember I said each block contains a number of transactions? Well, those transactions are limited. Each transaction is a certain size and the block can only hold so many transactions. That means in each 10-minute cycle, only a small number of transactions can be put on the blockchain.
All in all, it means the Bitcoin network can process ~7 transactions per second. For reference, Visa boasts it can process 24,000 transactions per second!
We have a problem.
For Bitcoin to be a globally used payment system we can’t have people waiting 30 minutes in the store to see if their payment went through.
Introducing the Lightning Network!
Techy Jargon is Basically Over Now :)
The Lightning Network is what they call a level 2 network. This means it runs on top of the Bitcoin network.
However, it runs in a fancy way so that it boasts instant transaction speeds. This solves the scalable issue of Bitcoin but still makes it so we can use bitcoin (the currency) in a global system.
Boom!
One of the first companies to institute the Lightning Network is Strike. Strike feels and looks a lot like Square’s Cashapp if you’ve used that. You can send money to and from friends, but you can also send bitcoin to and from friends instantly! With like no fees. It’s remarkable!
They also have a new feature adding direct deposits. This is how a lot of these big-time football players like Russel Okung are being paid millions of dollars in bitcoin.
And that’s how I did it too! I just got paid from Medium $5, but thanks to Strike it was all in bitcoin! I didn’t have to pay any fees or go to an exchange to convert the USD into bitcoin. Strike took care of everything for me.
They also have it set up so you can get your paycheck divided into USD and bitcoin. So if you want, you can just get 10% of your paycheck in bitcoin.
It’s really cool!
In Conclusion
Ok...that was a lot longer of a post than I anticipated, but hopefully, it was informational and pretty darn cool.
For reference, I’m not planning on switching my regular salary to Strike or anything quite yet. I don’t know if it would be a bad idea or not, but I don’t know how the process of moving USD out of Strike and back into a bank account would go. We just have so many things like rent and utilities that come out of the bank account, it sounds like a hassle for now.
But maybe one day.
By the way, I didn’t write this as a way to promote Strike, but just as a way to get y’all excited about the future of bitcoin payments and how some of this is possible. However, if y’all are interested in using or checking out Strike, you can use this code and we each get like $5 or something. Might as well take advantage of that, haha!