When David Marcus jumped into the crypto space I was pretty interested to find out what he was going to build, given his illustrious career (sold company to Paypal, was Paypal CEO, led Libra and Messaging at Facebook)

This interview goes into what he’s building now with Lightspark, a company building on top of the Bitcoin Lightening network. He thinks that the new global financial rails will be built on top of Lightening if it can be made easier to use.

I think Bitcoin will still be around in 100 years and he is right that it’s the most decentralised network, with the least regulatory risk (within crypto), and it is a great self-custodial store of value. I am skeptical that Lightening will be a good foundation for the settlement layer of finance however, as it’s too far behind other Blockchains in terms of developer horsepower, and the core (Bitcoin) too inflexible to adapt (that is also its strength, but for the store of value use-case). Will be interesting to see who is right!

Enjoy the notes!

Notes

• Wences Caceres as “patient 0” for bitcoin in Silicon Valley who got David Marcus into it
• Cannot interoperate between different fintech apps like Cash App Venmo Wise etc
• Lightning network is a channel based system, sound foundational design but too unintuitive and hard to use. The goal of Lightspark is to abstract away this complexity
  • Lightspark Connect – enterprise grade node management
  • Lightspark Predict – map network and liquidity, predict if a tx will go through and if not split it in smaller bits and reassemble it. And deploy liquidity dynamically on the network + make sure liquidity is useful
  • Wallet SDK for wallets to enable offline receive
  • All of this deployed in May 2023
• Early users
  • Exchanges that didn’t have a lightening interface and wallets that struggled with reliability
  • Xapo – regulated bank, now supporting Lightening network thanks to Lightspark 
  • Same with Rain – largest exchange in the MENA region – announcement
• Why lightening / bitcoin the only viable route for the future of money?
  • Regulatory landscape was a big factor. Bitcoin has been defined as not a security
  • POW more decentralised than POS
  • Cannot recreate what Bitcoin is with its 10 year history, satoshi etc
  • Instits realise this: Fidelity doing BTC denominated 409A. BNY Mellon (bank of banks) doing Bitcoin Custody
  • Realises that for other kinds of decentralised applications need something else than Bitcoin, with smart contracts
• Use cases improved by this?
  • International transfers are slow and expensive
  • Micro transactions never happened because cost of moving small amounts of money on current rails is too high
    • Nostr people using Zapps to send each other satoshis. Very small flywheel for now
  • Opportunity to recreate payment network on top of Lightening now that silvergate and signature networks are gone
  • Buying cup of coffee with bitcoin is the least useful use case! No real problem to solve there
• Bitcoin as a settlement asset, if tx takes 1s to clear the volatility is not really a problem, you swap in/out
• Libra was shut down by regulators
  • Mark Carney suggested they call it worldcoin. He was a proponent of the project
  • If building on top of an open protocol like bitcoin it’s really hard to shut it down
• 10m households in the US unbanked. Don’t want unexpected fees from banks so prefer to use cash and stuff like western union, payday loans
• A lot of developer energy on bitcoin now, more this year than the last few combined