David Marcus takes his experience as the former head of PayPal and Meta Messenger and applies it to building on Bitcoin’s Lightning Network.
At Lightspark’s first partner summit, Lightspark synchim and his team rolled out new possibilities for the Universal Money Address (UMA) standard that it launched a year ago. These new features make it easier to tip, pay for subscriptions, and bill through Lightning (and in some cases, in combination with banks).
At the summit, Lightspark also unveiled a new Bitcoin L2 that it built – Spark – which is interoperable with Lightning and allows users to use bitcoin (and stablecoins) non-custodial.
The day before Lightspark Sync, I spoke with Marcus to learn more about what makes him tick. We also discussed his strategy to leverage Bitcoin’s power as a neutral global settlement layer, while still meeting regular users where they stand on the types of money they like to use.
Below is a transcript of our conversation, edited for length and clarity.
Frank Corva: I recently saw you post on Twitter that you were glad you were sick on the weekend instead of a weekday because you’re so excited about what you’re working on here at Lightspark. What makes you so enthusiastic about this work?
David Marcus: Well, the general idea of changing the way money moves around the world is something I’ve been obsessed with for a long time. The fact that we can really change this in a profound way for potentially billions of people is a unique opportunity that I get to work on with a great team. It’s exciting when you start to make progress and find product market fit.
Corva: Some members of the Lightspark team just showed me the new capabilities of the Universal Money Addresses (UMA), as well as Lightspark’s new Bitcoin L2, Spark. You target both regular people who want to move money worldwide and Bitcoin enthusiasts who care about self-control. Is the strategy to get as many people as possible using your products?
Marcus: To back up a bit, I don’t need to convince you, but once you are convinced that Bitcoin is the only thing that can actually be the Internet of Money, because it is the only asset and network that is neutral enough to are, then you have to ask yourself: why hasn’t it won yet?
If you go back and peel the onion, you start to see that bitcoin wasn’t moving that fast or cheap in the first place. That’s where the Lightning Network came into play. The problem with the Lightning Network, even though it had been around for a while, was that it was very difficult to deploy, very difficult to operate, and very difficult to maintain. And it wasn’t super reliable for transactions.
So we have invested a good part of the more than two years of our existence in creating a real gateway to Lightning for institutional players, banks and exchanges. That really changed the game, because a lot of them looked at the lack of activity on the Lightning Network and the complexity of getting into the Lightning Network, and then it became a self-fulfilling prophecy: there’s no activity, it’s too hard, I’m not going to do it
Corva: I’ve heard those complaints before.
Marcus: We broke that cycle by launching Lightspark Connect. That was the basis, because if you can’t really make what I call TCP/IP packets for money – fragments of bitcoin on Lightning – work properly, then you can’t do anything. That was priority number one.
That’s when we realized we needed to enable people to move the currency they use for their everyday goods and services across the network. That’s when we launched UMA, the Universal Money Address standard built on top of LNURL, and extended it so that regulated entities can not only comply with the rules, but also exchange in and out of bitcoin and get a quote from the opponent they are dealing with. send to for the recipient’s preferred currency.
That really started to work, but then we realized, “Okay, we have to reach (the people on) the network who are going to implement UMA around the world, but the network effects are going to take forever.” That’s true Extend comes in. It makes Bitcoin, Lightning and UMA compatible with the old payment and banking rails, which is really critical.
That’s launching now and we’re seeing promising results in basically making the entire banking industry compatible with Lightning. People can send and receive money in real time 24/7, no holidays, no weekends, nothing.
Then we realized that institutions are building on top of UMA and offering their customers (be they consumers or businesses) the ability to claim a UMA address, which is good for peer-to-peer payments, but there’s so much more. that we can do. That’s true UMA request and UMA auth Come in.
Corva: From what I’ve learned so far, it seems like they’ll be pretty important for sellers.
Marcus: With UMA Request, whether you’re a business or an e-commerce site, you can request funds from a wallet (containing a different currency) and have the transaction handled through Lightning. Then there is UMA Auth OAuth for money. It is essentially the ability for wallet holders or account holders that have UMA support to delegate the pushing and pulling of funds with user-set limits. When you do the credit card comparison, you can enter your credit card for a subscription, but you don’t set a limit.
So if you look at where we are today, we’ve basically made Lightning the thing that moves Bitcoin quickly and cheaply – very easy to integrate, maintain and operate. We have devised a way to move fiat currencies across the network in a seamless manner. We expanded the network to make it compatible with the old bank rails. But what’s missing now for Bitcoin to fully and completely win and become the true open standard for moving money on the internet? I think there are two things holding it back.
One of them is support for self-custody wallets. If the network is a closed network and only works between management entities, we don’t want that. We want this to be as open as possible. And for developers, if you have to ask someone for permission to develop something, test something, build something, then it’s not like the Internet – it’s like CompuServe or AOL.
Support for fast and cheap self-custody wallets on Bitcoin is something we tried to figure out with Lightning, and it’s basically impossible. I mean, it is possible, but not economically viable, to park that amount of liquidity for each self-custodial wallet for any future transaction. Then there’s a lot of different things that we’ve explored with LSPs. They are not compliant or have many other problems with the way they move money.
The second thing was stablecoins, which are basically a version of a US dollar-denominated bank account for people who can’t have the real thing. As they grow in popularity and use, we will be at a disadvantage if we cannot make them travel on Bitcoin by default. And that’s why we built Spark, which we see as a completely non-linear leap forward for Bitcoin, allowing self-managed wallets to fully interoperate with Lightning.
It really expands the reach of Self-Control to Lightning. It makes stablecoins a reality on Bitcoin, which they might not be as good on Lightning because, if you look at Taproot Assets and (other protocols like it), they’re pretty good on top of Lightning, but then you go back to the problem of pairwise channels for each of these stablecoins. In a world where you’re going to have thousands of stablecoins, it’s just not going to work.
We believe Spark solves the last two problems holding Bitcoin back from becoming the Internet of Money.
Corva: UMA Auth allows people to make payments within other apps. Was it a challenge to build something that achieves this, something that makes payments and tipping not only possible but easy?
Marcus: There are several things to unpack here. First of all, it was very difficult to get Lightning to really work well for regulated entities. Once you’ve done that, you have to build something that allows them to move the money that people want to use, and do it in a way that allows regulated entities to meet their compliance requirements. That is something that is not trivial.
Then the Extend piece actually understands how payment systems work and really does the work – which is a lot of work – to make the network compatible with existing payment rails.
So, A, it’s a lot of work. B, it’s a lot of insight into not only how Bitcoin and Lightning work, but also how traditional payments work globally, what the regulatory landscape looks like and what people, what businesses and regulated institutions actually need to trust the network that they are. will connect with and offer to their customers.
Corva: Do banks see the benefits of using Lightning as a settlement layer? In some ways it seems like with what you’ve built there wouldn’t be a need for CBDCs, which would help keep smaller banks afloat, because it’s not obvious that CBDCs can be used for international money transfers.
Marcus: Some banks do, and others will eventually, but it will take a little more time.
Ultimately, if you build a more efficient network that enables the global movement of money faster, cheaper, in real time 24/7 and without blackout dates, then that’s where the money will flow and the financial system and ecosystem players will just have to adapt to that to adjust.
If you are a bank, you can offer your customers global payments at a cheaper rate and have a margin on top of that, which you know will be very comfortable if you compete with the current alternatives – international transfers still cost forty-five to fifty dollars.
Corva: You work with Nostr Wallet Connect (NWC) and the Alby’s team. It seems like you really have an ear for the new technologies coming to market in the Bitcoin, Lightning, and Nostr spaces.
Marcus: Absolute. With Nostr Wallet Connect there is actually a very good solution to the problem of delegating Auth, or delegating the ability to push and pull from a wallet with a protocol, which is starting to have incipient network effects in the Bitcoin and Nostr communities.
It’s really good work, so why not extend it and enable more things with Nostr Wallet Connect for mainstream use cases? That’s the way we look at things. We look at what the entire community is building, we contribute to that effort, and then we try to expand it to bring it to mainstream consumers so they can use it in a way that’s familiar and not alien to will be them.
Corva: Do you have any final thoughts you would like to share?
Marcus: We are very excited. We feel like all of these opportunities that we’ve been working hard on for the almost two and a half years that they’ve been around are now reaching a tipping point where basically all of the opportunities needed for Bitcoin to win decisively are in place. become the open internet for money, and now it’s just a matter of executing, of finding all the entities that are not only going to share that vision, but are also going to execute it with us.
That’s why – to your point about not wanting to be sick on a work day – I feel like this is just too exciting not to work on every day.