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The Scoop

David Marcus wants to make Bitcoin's Lightning Network the global settlement layer for the internet

Tue Jun 27 2023

Light Spark: Exploring, Building, and Extending Bitcoin

00:05 - 08:19

  • David Marcus, former president of PayPal and head of Messenger and Noviett Facebook, now meta, talks about his venture Light Spark that aims to explore, build, and extend the capabilities and utility of Bitcoin.
  • Marcus discovered Bitcoin in 2009 but only started to understand it in 2012 when a friend introduced him to it. He was fascinated by the idea of being self-sovereign for digital value without intermediaries.
  • In 2013 at PayPal, Marcus saw Argentines moving their funds into Bitcoin so they could have control over their money when Argentina asked PayPal to stop the flow of money going out of the country from PayPal accounts located in Argentina.
  • Lightspark aims to enable an open, interoperable, cheap payment protocol for the Internet using lightning as a potential way of doing that. The platform will abstract all complexity from what is a channel-based payment system which is very unintuitive for people.
  • The idea is to build a platform that enables an enterprise.

Lightspark Features and Use Cases

07:58 - 16:17

  • Lightning channels need to be rebalanced from other liquidity from other channels and do that at scale.
  • Lightspark is a platform that enables an enterprise-type of company to use lightning in a seamless way.
  • Lightspark Connect is the enterprise-grade node management software.
  • Lightspark Predict ties AI predictive capabilities of trying to have a map of the entire network and where the liquidity is and trying to predict ahead of time whether a transaction would actually succeed with a given route.
  • SDKs are available so that people can build lightning experiences inside their apps and a wallet SDK that enables non-custodial wallets to actually build a really great lightning experience with offline receive.
  • Exchanges out there are early users of Lightspark, which addresses all problems related to implementing lightning such as managing nodes, wallet operators, rebalancing channels daily, low success rate of larger transactions etc.
  • Bitcoin is special because it has been clearly defined as not a security by the SEC and US. It is maximally decentralized when compared to others. The history of Bitcoin's blockchain is unique. Regulated financial institutions like Fidelity are doing Bitcoin denominated for 9A's, Bank of New York Mellon trying to do more Bitcoin custody services etc.

Challenges and Use Cases for New Payment Systems

16:04 - 24:31

  • Regulatory clarity is needed for progress in payment solutions.
  • New payment systems should target use cases that are hard or impossible to perform on existing systems.
  • Global payments and micro transactions are two such use cases.
  • Moving money across borders is complicated and costly, requiring the same stack on both sides or cash out points with issues when paying out to many people.
  • The cost of moving small amounts of money online exceeds the amounts being transacted on current rails, making it difficult to make micro transactions a reality.
  • Lack of interoperability between wallets and high transaction costs force consumers to commit to loading a captive wallet balance and spend it in small increments.
  • Streaming money could be a future application if money moved on the internet like every other bit and byte.
  • Noster, a decentralized Twitter clone, shows promise with its small but engaged user base sending and receiving small increments of money in real time on the Lightning Network.
  • Exapo Bank was Lightning Labs' first client, offering dollar-denominated and Bitcoin-denominated balances to customers across Europe.

Lightning Network and its Applications

24:12 - 32:10

  • Lightning transactions have become more relevant since ordinals and BRC-20 tokens clogged up the mempool and took fees to new highs.
  • Xapo enabled lightning transactions after using Lightspark's stack.
  • Rain, the largest exchange in the MENA region, was onboarded by Lightspark, opening up lightning to a whole new region.
  • Having an exchange on the Lightning network enables fast global transactions on top of Bitcoin.
  • Lightning on top of Lightspark's stack can guarantee that even large payments succeed on lightning.
  • The Lightning Network can be used as a settlement layer or connective tissue for crypto's broader capital markets.
  • Companies fail when people don't like their product. The Libra project was worth a shot but failed due to rumors and regulatory issues.

The Rise and Fall of the Libra Project

31:44 - 39:30

  • 28 companies joined the Libra Association
  • Rumors about the project were worse than reality
  • Mark Carney coined the name 'World Coin'
  • Facebook builds products in the open and wanted feedback on Libra
  • 'Summer of '21' was the end of the road for Libra due to regulatory concerns
  • Building on top of open protocols is generally a good thing because it's hard to shut down a network
  • Real decentralization and solving real-world problems is key for success in crypto
  • Many people around the world needed Libra/DM, especially unbanked households in the US who preferred cash transactions due to unexpected fees from bank accounts

The Future of Lightning Network and Bitcoin Payments

39:03 - 46:46

  • Sending money across the world is still expensive and risky in 2023.
  • Lightning Network aims to modernize payment infrastructure for digital payments.
  • The focus is on building capabilities that enable any enterprise to access a real-time, low-cost settlement network for the internet.
  • More adoption of Lightning Network requires more exchanges and wallets on the network.
  • The aim is to enable transactions in different currencies using Bitcoin as a settlement asset.
  • An open network allows players like exchanges, OTC players, and market makers to provide services in their own vertical industries.
  • Building within a community of other builders accelerates innovation.
  • Open real-time infrastructure for almost free payment network on the internet is underrated but will be meaningful in the next decade.
  • Bitcoin's narrative started as payments 10 years ago, then store value. Payments narrative has ebbed and flowed but will play a bigger role in the future. It just needs patience and energy from builders.

Building on Bitcoin and Crypto Industry Challenges

46:29 - 50:36

  • Lightspark believes in bringing together the best engineering team and people from all disciplines to solve the world's biggest problems when it comes to moving value around the internet.
  • The Bitcoin community is changing as more people come back to building on Bitcoin, resulting in more development energy in the last 12 months than in the last X number of years combined.
  • Removing fanatics would be one thing that could improve the crypto space, as being extreme in views and narrative rather than staying factual and grounded is counterproductive.
  • Building things that are compatible with the real world requires understanding how it functions and building it in such a way that it will work with the real world.
  • Coinbase and Brian Armstrong are driving clarity by trying to explain things clearly and fighting to be properly regulated in the US.
  • Extreme views and narratives are not good for the industry, as they do not focus on factual information or grounded work.
  • David Marcus, CEO and co-founder of Lightspark, was interviewed.