David Marcus is taking his experience as the former head of PayPal and Meta Messenger and applying it to building bitcoin's Lightning Network.
At the first Lightspark Partner Summit, Light Spark SyncHe and his team implemented new capabilities for the Universal Money Address (UMA) standard that launched a year ago. These new features will make it easier to tip, pay for subscriptions, and bill via Lightning (and in conjunction with banks in some cases).
At the summit, Lightspark also presented a new bitcoin L2 that it has built: Spark – which is interoperable with Lightning and allows users to use bitcoins (and stablecoins) without custody.
I sat down with Marcus the day before Lightspark Sync to learn more about what motivates him. We also discuss their strategy for harnessing the power of bitcoin as a neutral global settlement layer, while still getting to know everyday users as to what type 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 happy to be sick on a weekend instead of a weekday because you're so excited about what you're working on here at Lightspark. What excites you so much about this job?
David Marcos: 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 actually change this potentially for billions of people in a profound way is a once in a generation opportunity where I really get to work with an incredible team. It's exciting when you start to make progress and when you start to see product market fit.
Corva: Some members of the Lightspark team just showed me the new capabilities of Universal Money Addresses (UMA), as well as Lightspark's new bitcoin L2, Spark. It is aimed at both regular people who want to move money globally and bitcoin enthusiasts who care about self-custody. Is the strategy to get as many people as possible to use your products?
Frame: Just to back up a bit, I don't need to convince you, but once you have the conviction that bitcoin is the only thing that can truly be the Internet of Money because it is the only asset and network that is neutral enough to be, then you have to ask yourself : Why hasn't he won already?
If you go back and peel the onion, you start to see, first of all, that bitcoin didn't move that fast or that cheap. That's where the Lightning Network came in. The problem with the Lightning Network, although it has been around for a while, was that it was very difficult to implement, very difficult to operate, and very difficult to maintain. And it was not very reliable for transactions.
So we spent a good portion of the two-plus years of our existence really 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 Lightning Network and the complexity of getting on 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.
Frame: We broke that cycle by launching light spark connection. That was the basis, because if you can't get what I call TCP/IP packets for money (bitcoin chunks in Lightning) to work really well, then you can't do anything. That was priority number one.
Then we realized that we needed to allow people to move the currencies they use for their everyday goods and services around the network. That's when we launched UMA, which is this universal monetary address standard built on top of LNURL, and we expanded it so that regulated entities can not only comply with the rules, but they can also get in and out of bitcoin and get a quote from the counterparty. to which they belong. sending to for the recipient's desired currency.
That was starting to really work, but then we realized, “Okay, we need to reach (the people on) the network that are going to deploy UMA natively around the world, but the network effects will take forever.” . That's where Extend come in. It makes bitcoin, Lightning and UMA compatible with legacy banking and payment systems, which is really critical.
It's now launching and we're seeing really promising traction in making the entire banking industry basically Lightning compatible. People have the ability to send and receive money in real time 24/7, no holidays, no weekends, nothing.
Then we realized that institutions are building on UMA and offering their customers, whether consumers or businesses, the ability to claim a UMA address, which is good for peer-to-peer payments, but there's a lot more to it. what we can do That's where UMA Request and UMA Authentication Forward.
Corva: From what I've learned so far, it looks like they will be very important for traders.
Frame: With UMA Request, whether you are a business or an e-commerce site, you can request money from a wallet (containing) another currency and settle the transaction in Lightning. Then there is UMA authentication, which is OAuth for money. Basically it is the ability for UMA enabled wallet or account holders to delegate the transfer and withdrawal of funds with limits set by the user. If you do the credit card comparison, you can give your credit card for a subscription, but you don't set the limit.
So now if we look at where we are: we basically made Lightning what moves bitcoin quickly and cheaply, really easy to integrate, maintain and operate. We discovered a way to move fiat currencies to the top of the network without problems. We expanded the network to make it compatible with the old banking channels. But what is missing for bitcoin to completely and completely win and become the true open standard for moving money on the Internet? I think there are two things that are holding it back.
One is self-custody wallet support. If the network is closed and only works between custodian entities, we don't want that. We want this to be as open as possible. Also, for developers, if you need to ask someone's 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 in bitcoin is something we're trying to figure out with Lightning, and it's basically impossible. I mean, it is possible, but economically unfeasible, to deposit that amount of liquidity in front of each self-custody wallet for an eventual future transaction. Then there are a lot of different things that we explore with LSPs. Either they don't comply or they have a lot of other problems with how 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 hold the real currency. As they grow in popularity and usage, if we can't get them to ride natively on bitcoin, then we are at a disadvantage. And that's why we created Spark, which is what we see as a totally non-linear leap forward for bitcoin that will allow self-custody wallets to fully interoperate with Lightning.
It really extends the reach of self-custody to Lightning. It makes stablecoins a reality on bitcoin, which couldn't be as good on Lightning, because if you look at Taproot Assets and (other similar protocols), they're pretty good on top of Lightning, but then we come back. to the problem of pairwise channels for each of those stablecoins. In a world where there will be thousands of stablecoins, it simply won't work.
We believe Spark solves the last two problems preventing bitcoin from becoming the Internet of Money.
Corva: UMA Auth allows people to make payments within other applications. Was it a challenge to build something that accomplishes this, something that makes payments and tipping not only possible but easy?
Frame: There are several things here to unpack. First of all, getting Lightning to work really well for regulated entities was really difficult. Once you've done that, you need to build something that allows you to move the money that people want to use and do it in a way that regulated entities can meet their compliance requirements. That is something that is not trivial.
Extend's paper is then about understanding how payment systems work and actually doing the work (which is a lot of work) to make the network compatible with existing payment lanes.
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 is like, and what people, what companies and regulated institutions really need to trust the network they are on. . They are going to connect and offer to their customers.
Corva: Do banks see the benefits of using Lightning as a settlement layer? In some ways, it seems that with what they have built, there would be no need for CBDCs, which would help keep smaller banks in business, because it is not a given that CBDCs can be used for international remittances.
Frame: Some banks do this and some will do it eventually, but it will take a little longer.
At the end of the day, if you build a more efficient network that allows for faster, cheaper, real-time 24/7 global movement of money without blackout dates, then that's where it will flow. money and the financial system and the ecosystem. Players will just have to adapt to that.
If you are a bank, you will be able to offer global payments to your clients at a cheaper price and you will also have a margin, which you know will be very comfortable if you compete with the current bank. Alternatives: International bank transfers still cost between forty-five and fifty dollars.
Corva: you are working with Nostr Wallet Connection (NWC) and Alby's team. It sounds like you're really keeping an eye on new technologies coming to market in the bitcoin, Lightning, and Nostr spaces.
Frame: Absolutely. With Nostr Wallet Connect, there is actually a very good solution to the problem of delegating authentication, or delegating the ability to push and pull from a wallet with a protocol, which is starting to have nascent network effects in the bitcoin and Nostr communities.
It's a really cool piece of work, so why not extend it and allow more things to happen with Nostr Wallet Connect for mainstream use cases? This is how we see things. We look at what the entire community is building, contribute to those efforts, and then try to extend it to mainstream consumers so they can use it in a way that's familiar and not foreign to them.
Corva: Do you have any final thoughts you would like to share?
Frame: We are very excited. We feel like all of these capabilities that we've been working hard on for almost two and a half years of existence are reaching a tipping point right now where basically all of the capabilities exist that are required for bitcoin to decisively win in becoming the open internet for money. , and now it's just a matter of executing, of finding all the entities that will not only share that vision but execute it with us.
So, to your point about not wanting to be sick on a work day, I feel like this is too exciting not to work on it every day.
