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 the first Lightspark Partner Summit, LightSpark Synche and his team have unlocked new capabilities for Universal Money Address (UMA) The standard was launched one year ago. These new features will make it easier to tip and pay subscriptions and bills via Lightning (and in combination with banks in some cases).
At the summit, Lightspark also revealed the new Bitcoin L2 it has built – spark – It is interoperable with Lightning which enables users to use Bitcoin (and stablecoins) in a security-free manner.
I sat down with Marcus the day before Lightspark Sync to learn more about what drives him. We also discussed his strategy for harnessing the power of Bitcoin as a neutral global settlement layer, while still meeting everyday users where they are in terms of the type of money they want to use.
Below is a transcript of our conversation, which has been edited for length and clarity.
Frank Curva: I recently saw you posting on Twitter that you were happier being sick on the weekends than on weekdays because you’re so excited about what you’re working on here at Lightspark. What about this job makes you so excited?
David Marcus: Well, the general idea of changing the way money moves around the world is something I’ve been obsessed with for a very long time. The fact that we can really change this for potentially billions of people in a profound way is a once-in-a-generation opportunity that I can already work on with a great team. It’s exciting when you start making progress and when you start seeing product-market fit.
Curva: Some members of the Lightspark team have just shown me the new capabilities of Universal Money Addresses (UMA) as well as Lightspark’s new Bitcoin L2, Spark. You cater to both everyday people who want to move money globally and Bitcoin enthusiasts who are interested in self-custody. Is the strategy aimed at getting as many people using your products as possible?
Marcus: Just to backtrack a bit – I don’t need to convince you, but once you’re convinced that Bitcoin is the only thing that can actually be the Internet of Money because it’s the only asset and network that is neutral enough to be so, then you have to wonder: why hasn’t it won already?
If you go back and peel the onion, you’ll start to see, first of all, that Bitcoin wasn’t moving that fast or that cheaply. This is where the accelerator network comes into play. The problem with the accelerator network, even though it had been around for a while, was that it was very difficult to implement, very difficult to operate, and very difficult to maintain. It was not very reliable for transactions.
Therefore, we invested a significant portion of the additional two years of our existence in creating an enterprise-grade entry point to Lightning for institutional players, banks, and exchanges. That really changed the game, because a lot of them were looking at the lack of activity on the accelerator network and the complexity of getting into the accelerator network and then it became a self-fulfilling prophecy: no activity, it’s too hard, I’m not going to do it
Curva: I’ve heard those complaints before.
Marcus: We broke that cycle with our launch Light Spark connection. That was the key, because if you can’t make what I call TCP/IP packets for money — bits of Bitcoin on Lightning — work really well, you can’t do anything. That was priority number one.
Then we realized that we needed to enable people to move the currencies they use for their everyday goods and services on the network. That’s when we launched UMA, the Universal Money Address standard built on top of LNURL, and scaled it so that regulated entities are not only compliant, but can also change in and out of Bitcoin and get a quote from their counterparty to send to the recipient’s desired currency.
That started to really work, but then we realized, “Okay, we need to reach[the people on]the network that will do UMA locally around the world, but the network effects will take forever.” This is the place extends It makes Bitcoin, Lightning, and UMA compatible with legacy payment and banking systems, which is really crucial.
This has now been launched, and we are seeing really promising traction in making the entire banking sector fundamentally compatible with Lightning. People have the ability to send and receive money in real time 24/7, without holidays or weekends or anything.
Then we realized that organizations were relying on UMA and providing the ability for their customers – whether consumers or businesses – to claim a UMA address, which was good for peer-to-peer payments, but there was so much more we could do. This is the place UMA request and UMA authentication Come in.
Curva: From what I’ve learned so far, it sounds like these will be very important to traders.
Marcus: Using a UMA request, whether you are a business or an e-commerce site, you can request funds from a wallet (that contains) another currency, and settle the transaction on Lightning. Then there is UMA authentication, which is OAuth For money. It is basically the ability of UMA-enabled wallet holders or account holders to authorize payment and withdrawal of funds with limits set by the user. If you do a credit card comparison, you can give your credit card a subscription, but you don’t set a limit.
Now, if you look at where we are: we’ve basically made Lightning the thing that moves Bitcoin fast and cheap – and it’s really easy to integrate, maintain, and operate. We’ve figured out a way to move bills up the grid in a smooth way. We have expanded the network to make it compatible with legacy banking rails. But what is needed now for Bitcoin to completely and completely win and become the true open standard for transferring money online? I think there are two things holding him back.
The first is to support a self-custody portfolio. If the network is a closed network and only works between sponsors, we don’t want that. We want this thing to be as open as possible. Also, for developers, if you need to ask someone for permission to develop something, test something, or build something, it’s not like the Internet – it’s like CompuServe or AOL.
Supporting fast and cheap self-custodial wallets on Bitcoin is something we tried to figure out with Lightning, and is basically impossible. I mean, it is possible, but not economically feasible, to hold that amount of liquidity in front of each self-custodial wallet for an eventual future transaction. Then there’s a bunch of different things that we’ve discovered with LSPs. They’re either not compliant or have a lot of other issues with how they move the money.
The second thing is stablecoins, which are basically a version of a bank account denominated in US dollars for people who can’t get the real currency. As it grows in popularity and usage, if we can’t get it to travel locally using Bitcoin, we will be at a disadvantage. That’s why we built Spark, which we see as a completely non-linear leap forward for Bitcoin that will enable self-custodial wallets to fully interoperate with Lightning.
It really extends the scope of self-guarding to Lightning. It makes stablecoins a reality on Bitcoin, which can’t be the case on Lightning, because if you look at Taproot Assets and (other protocols like it), they’re very good on top of Lightning, but then it goes back to the issue of pair channels for each of those currencies Sedentary. In a world where you would have thousands of stablecoins, this wouldn’t work.
We believe Spark solves the last two problems standing in the way of Bitcoin becoming the Internet of Money.
Curva: UMA Auth enables people to make payments within other applications. Was it difficult to build something that did that, something that made payments and tips not only possible, but easy?
Marcus: There are many things here to unpack. Initially, making Lightning work well for regulated entities was very difficult. Once that’s done, you have to build something that enables them to move the money that people want to use and do it in a way that regulated entities can meet their compliance requirements. This is not trivial.
Then, the extended part actually understands how payment systems work and actually does the work — which is a lot of work — to make the network compatible with existing payment paths.
So, A, it’s a lot of work. B, it’s a great understanding of not only how Bitcoin and Lightning work, but also how traditional payments work globally, what the regulatory landscape looks like, what people, what regulated companies and institutions actually need to have confidence in the network that they’re going to connect and deliver to their customers.
Curva: Do banks see the benefits of using Lightning as a settlement layer? In some ways, it seems that with what you’ve created, there will be no need for CBDCs, which would help keep smaller banks in business, because it’s not a given that CBDCs will be able to use them. In international transfers.
Marcus: Some banks do it, others will eventually do it, but it will take a little longer.
Ultimately, if you build a more efficient network that enables faster, cheaper, real-time, 24/7 movement of global funds with no blackout dates, that is where the money, financial system and ecosystem will flow. Players will just need to adapt to that.
If you are a bank, you will be able to offer global payments to your customers at a cheaper rate and you will have a margin on top of that, which you know will be very convenient if you are competing with the incumbent. Alternatives — International wire transfers still cost between forty-five and fifty dollars.
Curva: You work with Nostr Wallet Connect (NWC) And the team from Albi. You seem to be really interested in new technologies coming to market in the Bitcoin, Lightning, and Nostr spaces.
Marcus: definitely. With Nostr Wallet Connect, there is actually a good solution to the problem of delegating authentication, or delegating the ability to pay and withdraw from a wallet using a protocol, which is starting to have network effects emerging in the Bitcoin and Nostr communities.
It’s working really well, so why not scale it up and enable more things to happen with Nostr Wallet Connect for mainstream use cases? This is the way we look at things. We look at what the entire community is building, contribute to those efforts, and then try to scale it to get it to everyday consumers so they can use it in a way that’s familiar to them and not alien to them.
Curva: Do you have any final thoughts you’d like to share?
Marcus: We are really excited. We feel that all of these capabilities that we’ve been hard at work on for nearly two and a half years of existence have reached the tipping point right now where basically all the capabilities required for Bitcoin to win decisively exist. The internet is open to money, and now it’s just a matter of implementation. , and find all the entities that will not only share this vision, but also implement it with us.
That’s why – to your point about me not wanting to be sick on a workday – I feel like this is too exciting to work on every day.