David Marcus uses his previous experience at PayPal, Meta Messenger, and Bitcoin to build on the Lightning Network.
Lightspark partners gathered for the first time at a summit. Lightspark SyncHis team and he rolled out The new capability for the Universal Money Address (UMA) Standard was released one year before. The new Lightning features make it easy to pay subscriptions, tip and issue invoices (and sometimes in combination with banks).
At the summit, Lightspark also unveiled a new Bitcoin L2 it has built — Spark — which is interoperable with Lightning and which enables users to use bitcoin (and stablecoins) non-custodially.
Marcus and I sat together the day prior to Lightspark Sync so that we could learn about Marcus’s motivations. The day before Lightspark Sync, I sat down with Marcus to learn more about what drives him.
The following is an edited transcript of the conversation.
Frank Corva You recently posted on Twitter about how you prefer to be sick at the weekend rather than during the week because you are so enthusiastic about your work here at Lightspark. What is it about this job that makes you excited?
David MarcusSince a long time, I have been fascinated by the idea of reshaping the global money system. This is an opportunity of a lifetime to be able to change things for millions and even billions in such a significant way. I am lucky enough that this team has given me the chance. When you see your product taking shape and you can start seeing its market potential, it’s exciting.
Corva: Lightspark members just demonstrated the capabilities of Lightspark’s Bitcoin L2, as well as the Universal Money Addresses. Your product appeals to everyday people looking to send money around the world, as well as Bitcoin enthusiasts concerned with self-control. Does the goal just involve getting as many users as possible to use your product?
Marcus: Just to backtrack a little bit — I don’t need to convince you, but once you get the conviction that Bitcoin is the only thing that can actually be the internet of money because it’s the only asset and network that’s neutral enough to be that, then you have to wonder: Why hasn’t it already won?
When you peel back the layers of an onion you can start to notice that Bitcoin wasn’t really moving fast or inexpensively. Lightning Network was born. Lightning Network has been around for some time, but it is still a problem. It’s hard to use, hard to manage and hard to maintain. The Lightning Network was not very reliable.
It took us a few years, but we finally made an entry-level Lightning solution for institutions, such as banks and exchanges. The fact that there was no activity on Lightning Network, and it is difficult to get on, changed everything.
Corva: These complaints have been made before.
Marcus: Launching a new product broke the cycle. Lightspark Connect. That was the foundation, because if you can’t make what I call TCP/IP packets for money — fragments of bitcoin on Lightning — work really well, then you can’t do anything. This was the number one priority.
We realized that we needed to allow people to use the currency they used for everyday services and goods on the network. We launched UMA – a Universal Money Address built on LNURL – to allow regulated entities to not only comply with the law but also get quotes from their counterparty for the currency they want the recipient’s money in.
The system started to work well, but we soon realized it was not what we expected. “Okay, we need to reach [people on] the network that are going to implement UMA natively across the world, but network effects are going to take forever.” You know where Extend It comes into play. The most important thing is that it integrates Bitcoin, Lightning, UMA, and legacy rails for payments and banks.
Lightning has now launched, and the banking industry is showing real promise. The ability for people to receive and send money 24/7 in real-time, without any bank holidays or weekends is a huge advantage.
Then we realized that institutions are building on top of UMA and are offering the ability for their customers — whether they’re consumers or businesses — to claim an UMA address, which is good for peer-to-peer payments, but there’s so much more that we can do. Here’s what we can do. UMA Request and UMA Auth Come in.
Corva: What I’ve read so far makes it seem that these will be very important to merchants.
Marcus: UMA Request allows you to send money via a wallet. [that holds] Lightning can settle transactions with another currency. UMA Auth is another option. OAuth Money. This is a feature that allows wallet or account owners who are UMA enabled to push and pull funds within user-set limits. You can use your credit card to pay for subscriptions, but the limits are not set by you.
So now, if you look at where we are: We basically made Lightning the thing that moves bitcoin fast and cheap — really easy to integrate, maintain, and operate. The network was able to seamlessly move fiat currency on top. We made the network compatible with older banking rails. What’s left for Bitcoin to become the open standard of money transfer on the Internet? There are at least two factors that hold it back.
The first is support for self-custody wallets. The network should not be a closed system that only allows communication between entities with custody. We want to make this as open as we can. Also, for developers, if you need to ask someone for permission to develop something, to test something, to build something, then it’s not like the internet — it’s like CompuServe or AOL.
Lightning was designed to support fast, cheap and easy self-custody on Bitcoin. But it is basically impossible. It’s technically possible, but not economically viable to store that much liquidity before every self-custody Wallet for a future transaction. There are also a lot of things we looked at with LSPs. The LSPs are non-compliant, or they have many other problems with how they handle money.
Stablecoins are essentially a US dollar denominated version of bank accounts for those who cannot have them. If we don’t allow them to be natively supported on Bitcoin then we will lose out as they gain in popularity. Spark is a nonlinear leap forward in Bitcoin, that allows self-custody Wallets to fully interoperate with Lightning.
This extends self-custody capabilities to Lightning. Stablecoins are now possible on Bitcoin. They couldn’t have been as easily on Lightning. [other protocols like it]The pairwise channels are a problem with each of these stablecoins. This is not feasible in a scenario where there are thousands of stablecoins.
Spark is our opinion that solves both of the problems which prevent Bitcoin from being the internet money.
Corva: UMA Auth enables users to pay in other apps. Is it difficult to develop something which accomplishes that, that allows payments and tipping?
Marcus: Here are a few things to consider. Lightning was a difficult product to make work for entities that are regulated. After you have done this, you will need to create something to allow regulated entities to meet compliance standards and move money. It’s not trivial.
Then, the Extend piece is actually understanding how payment systems work and really doing the work — which is a lot of work — to make the network compatible with existing payment rails.
This is a huge amount of work. It’s not only a matter of learning how Bitcoin works, but how payments are made globally, the way the regulators operate, as well as what it takes to build trust with the people and companies that will be connecting to the network and offering their services to customers.
Corva: Does Lightning have any benefits for banks? You’ve created a system that would eliminate the need for CBDCs. This would allow smaller banks to remain in business.
Marcus: Some banks are already doing this, others will follow suit eventually but it may take some time.
If you want to see money flow, the best way to do it is to build an efficient network which allows global money to be moved faster and cheaper in real-time 24/7 without blackout dates.
If you’re a bank you’re going to be able to offer global payments to your clients at a cheaper rate and have a margin on top of that, which you know is going to be very comfortable if you’re competing with the current alternatives — international wire transfers are still forty five to fifty dollars.
Corva: The team you’re with Nostr Wallet Connect (NWC) You can also read about the team from Alby. You seem to be on the ball when it comes to new technologies in the Bitcoin Lightning Nostr space.
Marcus: Absolutely. Nostr WalletConnect is a great solution for the issue with delegating Auth. Or delegating the power to push or pull data from a Nostr wallet using a specific protocol. It’s a problem that starts to show nascent effects on the Bitcoin community.
Why not expand it to include more mainstream uses with Nostr wallet Connect? This is how we see things. Then we extend that to the mainstream so it is familiar to consumers.
Corva: Are there any last thoughts that you would like to express?
Marcus: We are really excited. It’s exciting.
That’s why — to your point about me not wanting to be sick on a work day — I feel like this is just too exciting to not work on every day.
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Source: bitcoinmagazine.com
