‘Bitcoin And Nothing Else’: Why Former PayPal, Meta Executive David Marcus Is Building On The Lightning Network
For nearly 25 years, as long as online payments have been possible, David Marcus has been doing it Trying to figure out how to master it.
In the mid-1990s, he founded a telecommunications company that provided Internet service in addition to telephone service. In 2000 he launched Echovox, which he launched at Zong in 2008 – a mobile platform that allows users to pay for things online directly with their cell phone bills. When that venture was acquired by PayPal in 2011, Marcus joined the digital payments giant, becoming its president the following year.
He read the bitcoin white paper shortly after it was published, but “didn’t fall down the rabbit hole” at first, he recalled in an interview with Bitcoin Magazine. Then, in 2012, Argentina ordered PayPal to stop all transactions that would send money out of the country while it dealt with PayPal. Currency inflation and fiscal austerity effortsand the real value of the peer-to-peer electronic cash system began to resonate with him.
“We had to (comply), we were an organized entity,” Marcus explained. “The day it happened, bitcoin prices skyrocketed and I said ‘stop.’ Like, this is something where consumers in a place like Argentina are actually flocking to bitcoin as a way to move the money they’ve won — it’s their money — however they see fit. So, I felt that This was a great moment for me in that bitcoin is an escape valve for certain behaviors that don’t align with my views on self-sovereignty, money… So that was kind of a turning point for me in 2013, really reinforcing my convictions.”
Shortly thereafter, in May 2013, he attended Bitcoin conference 2013 In San Jose, despite its relatively small community, he was intrigued by Bitcoin’s breakthrough in how it facilitates digital payments.
“It was really a handful, like a couple of people mainly, it was incredibly early,” he said. “I was fascinated by this general idea that you transfer value in a completely independent, self-sovereign way with no intermediaries whatsoever. During that same time period, I remember sending and receiving bitcoins, and I was setting up wallets for friends to show them what was possible: ‘Look, this is it. Sending you money and there’s no one in between, right?” And I was really impressed with it.”
To the best of our abilities
But Marcus was not yet ready to give up the possibility of institutional and open payment of the Internet. In June 2014, he joined Meta (then Facebook) as Vice President of Messaging Products, developing the Facebook Messenger mobile app. Marcus is released Messenger P2P payments in 2015, allowing users to send money to each other from their synced checking accounts via the app.
By mid-2019, Marcus began leading Facebook’s cryptocurrency project, Libra, which was later renamed Diem before being completely abandoned. Libra was almost immediately dismissed by Bitcoiners as offering nothing of particular value compared to other centralized digital currency projects. And Marcus found himself defending the project before the House Financial Services Committee as well as the US Senate Banking Committee, having to answer questions that often focused more on Meta’s history of invading user privacy.
But before Libra settled on the authorized model of the oligarchy node set out in its white paperMarcus had already considered making use of the Lightning Network for his project.
“I remember meeting Elisabeth Stark (CEO of Lightning Network development company Lightning Labs) in early 2018 and trying to figure out if Lightning was really the right way to go, because if there was a way to actually use Bitcoin, I wanted to do it,” Marcus said at the time. We thought, well, maybe we can use Lightning and then create a world-class wallet that we can embed across all Meta products, WhatsApp, Messenger, etc., and then enable people to transfer value.”
In the end, he determined that the protocol was not robust enough to achieve Meta’s vision due to some shortcomings he had yet to overcome, including limited nodes and liquidity.
“Even today, it’s going to be difficult, it’s going to be difficult to actually reach the billions of consumers on the Lightning Network,” Marcus noted. Even the first layer will not contain enough HTLCs (Fragmentation of time lock contracts) to do so already. So, we have to find solutions when we get there. But our opinion is that it will not scale… And as such, we have come to the conclusion that we need to build this proprietary technology that we will then do everything we can to decentralize to the best of our abilities.”
Ultimately, Marcus’ ability to decentralize a payments project under Meta proved insufficient, and he has since realized that trying to do so on any network other than Bitcoin is a futile exercise.
“We have built an unshakable conviction at this point that the only blockchain and the only underlying asset that can support a truly open protocol for payments on the Internet is Bitcoin and nothing else,” he said.
In 2021 Marcus left the Meta and the following year launched Lightspark to pursue this conviction.
The reason why bitcoin and lightning are better
Lightspark builds software and development tools aimed at making the Lightning Network more accessible, such as its Software Development Kit to help companies offer Lightning wallets to their customers and Lightspark predictionwhich identifies the best performing Lightning nodes and can route transactions to them.
Rather than building a centralized platform to enable digital payments, Lightspark is focused on building tools to help customers access this existing decentralized platform. And while the adoption of the Lightning Network is still far from rivaling the user base of something like PayPal, Marcus is optimistic about its ability to expand if companies like him succeed.
“Lightning still has problems, but I feel very confident that we are in a position to address those issues,” he said. “You’ll see that for businesses to integrate with Lightning using Lightspark services, you don’t have to worry about channels. You don’t have to worry about liquidity. You don’t have to worry about rebalancing channels and distributing liquidity. You don’t have to worry about which methods you’re going to use and what minimum or maximum fees you’re going to set All of this complexity is completely removed from the equation for a company deciding whether or not to implement Lightning for their customers.”
When asked if stripping users away from their liquidity management, channel balances and routing could recreate issues with centralized and trusted financial intermediaries, Marcus answered measuredly.
“In the early days of the web, if you wanted a website and you wanted to be on the Internet, you had to start building your server, find a rack, put it in a rack, buy a router, configure your router, get a line E1 or T1, and plug that router into your E1 or T1 line, and then have this whole thing on it all the time, and it was like, well, nobody does that,” he explained. “But the reason why Lightning and Bitcoin are better is because there are companies like Lightspark that will make things easier for mass market adoption, but if you are in a random country anywhere, and you only have an internet connection, you can run a node on your own and be a participant in this network.” .I think that’s what makes it amazing.”
He went so far as to assert that his intent now is to enable a specific type of Lightning adoption, rather than come up with a solution that reduces the need for independent participants.
“We don’t expect everyone to use our software,” he continued. “That would be bad, wouldn’t it? We think everyone should run their own thing, and we’re going to cater to a certain market segment that tends to be larger than enterprise customer types.”
Of all the executives actively working on Bitcoin projects, Marcus probably has the most legacy of experience to inform him of what Bitcoin needs to succeed as well as what to avoid in order for it not to fail. Declaring that building on Lightning is the culmination of his life’s work, he is determined to succeed.
