Company Name: Spark of light
Founders: David Marcus, Kevin Hurley, Christina Smedley, James Everingham, Christian Catalini, Jai Massari and Tomer Barel
Foundation date: April 2022; Serie A May 2022
Headquarters location: Los Angeles, CA
Amount of bitcoin held in treasury: N/A
Number of employees: Four. Five
Website: https://www.lightspark.com/
Public or private? Private
Kevin Hurley and the team Spark of light We want to make it easier for institutions and everyday people to transfer value through bitcoin.
That's why they created Lightspark, a Lightning Service Provider (LSP) — and more — offering enterprise-grade infrastructure that enables businesses around the world, as well as the customers of those businesses, to make payments globally using the bitcoin Lightning Network.
“We want to continue with the vision we originally had with Diem,” Hurley told bitcoin Magazine. “We wanted to open up the financial world and make it something where you can send money as easily as you can send data packets today.”
Hurley also shared why the Lightspark team decided to build on bitcoin.
“Some of the learnings from[Diem]are that you really need something that is truly decentralized, something that is protocol neutral, and something with a lot of liquidity,” Hurley explained. “These are key aspects of bitcoin and part of what makes bitcoin so special.”
How does Lightspark work?
Lightspark is considered more than just an LSP because it offers a Software Development Kit (SDK)liquidity management through routing nodes, cloud-based node architecture, and API services that providers can employ to build certain functions or utilize certain services.
The Lightspark SDK makes it easy for customers to access the Lightning Network for payments without having to deal with the headaches that typically come with using the network.
“We tried to abstract away all the complexity of Lightning,” Hurley explained. “We talked to a bunch of companies that have been in the bitcoin space for a long time and tried to understand why they weren’t using Lightning or why they had tried it and then abandoned it, and we heard a pretty similar response from all of them: it was too complex.”
To use Lightning without an LSP, businesses would typically need dedicated employees to manage and rebalance liquidity on their Lightning nodes. However, with Lightspark, businesses only need to use a few lines of code provided by Lightspark to start using the Lightning Network for payments. Lightspark takes care of all the technical details of the backend. Additionally, Lightspark offers other features that institutions may find especially useful.
“We have compliance capabilities built into our stack,” Hurley said of how Lightspark can help businesses stay compliant. FinCEN Travel Guidelines.
“We’ve built ai into our stack to make payments extremely successful. We have Predict, which is like Google Maps for Lightning. (It shows us) where traffic is building up to help us route transactions more successfully. Then we started adding things like UMA or universal money addresses, which allow you to send from any currency to any other currency,” he added.
Universal Monetary Addresses (UMA)
One of the most notable features that Lightspark has designed and open sourced is UMA.
With Lightspark, businesses can offer their customers a Universal Money Address, which is a cross between a $cashtag cash app and a Email address (for example, $yourname@yourwallet/bank/exchange.com).
A UMA allows users to send cryptocurrency or fiat money seamlessly, albeit in a custodial manner.
Hurley explained how UMA is built on and is interoperable with LNURL and Lightning AddressesOne difference between LNURL and UMA is that UMA can be used to send fiat money in a unique way.
“You can move from any currency to another using UMA,” Hurley shared.
“Let’s say I’m coming from Brazil and I want to send money to someone in Mexico. Maybe I’m in Mexico for a visit and I go to 7-Eleven and I want to buy something. I should be able to send money from my native currency to Mexican pesos,” he added.
“With UMA, what happens is that my Brazilian reals are instantly converted to sats. They are transmitted through Lightning and instantly converted from sats to pesos and paid out at 7-Eleven.”
Part of the reason such transfers can legally occur is that UMA facilitates the exchange of compliance data between the different institutions Lightspark works with, which are located around the world.
Exchanges, neobanks, and other institutions that partner with Lightspark (all of which are regulated bitcoin/cryptocurrency custodians) have the appropriate money transfer licenses in their respective jurisdictions, keeping Lightspark and its partners in compliance with the aforementioned Travel Rule.
Lightspark Partner Institutions
Lightspark has been in the news lately, having signed deals with major institutions such as Coinbase, Xapo, and Nubank. And as a new partner comes on board, more potential partners are interested.
“They see the growth, especially as we integrate Coinbase, and a lot of entities have reached out to us and are curious about what’s going on,” Hurley said.
“They see that the big players are starting to show interest and see a real volume in the sector, and they also want to participate. They don't want to be left behind because they understand that this sector is growing and becoming very important,” he added.
For now, the interest is coming from more tech-savvy neobanks, as these institutions want to offer services that differentiate them from traditional banks. However, Hurley noted that major traditional banks are also paying attention.
“The benefit (that Lightspark offers) applies to both JP Morgan and Nubank,” Hurley explained.
“We've worked with a lot of them. A lot of times, they'll need to see others do it first,” he added.
“Once they start seeing real adoption, I think there will be rapid adoption on their part as well.”
Hurley also noted that there are good reasons for some of the larger traditional financial institutions to join in.
“Traditional financial companies are in big trouble,” Hurley said.
“They can have bank accounts in several countries and, even within their own bank, transferring money takes days because they do it using FAST“They move from one bank in, say, Argentina to another bank in Europe, and it takes them three to five days to transfer money. That means they have to set up correspondent banking. It’s a huge burden for them and can be quite costly,” he added.
“I think they're very excited to see something that can run faster, more efficiently and on better rails. It's a net win-win.”
Optimistic about bitcoin, aware of reality
While Hurley and the Lightspark team believe that bitcoin adoption will continue to grow, they are also aware that many people around the world are still uncomfortable using bitcoin.
Hurley sees Lightspark's approach as a way to promote bitcoin adoption, taking into account where the customer is coming from.
“To achieve real adoption and continue to scale, you need to reach consumers where they are, and many consumers right now are comfortable with fiat money,” Hurley said.
“These people probably don’t know anything about bitcoin and it will take them a while to get familiar with it. So if you can abstract that away from them and allow them to use whatever currency they’re comfortable with, that helps get people on board and drive adoption,” he added.
That said, Hurley also acknowledged that there are others who prefer to simply use bitcoin and ultimately use it non-custodially before noting that Lightspark and its partners allow users to send their bitcoin to a non-custodial wallet if they so choose.
“Users can leave a custodian at any time and move to a non-custodial one,” Hurley said.
He then noted that neither bitcoin nor Lightning currently have the potential to attract masses to the network in a non-custodial manner, which is why companies like Lightspark and the companies it partners with are important right now.
“It’s not possible to onboard billions of users to bitcoin and Lightning (non-custodial) today,” Hurley explained.
“In the long term, this could be possible and we are exploring a lot about how to achieve this, because we believe it is vital for the ecosystem,” he added.
For now, however, Hurley sees the custodial solutions offered by companies like Cash App, Coinbase and, of course, Lightspark as a means to make it easier for people to use bitcoin.
