‘Bitcoin and Nothing Else’: Why Former PayPal, Meta Executive David Marcus Is Building on the Lightning Network

For nearly 25 years, virtually as long as online payments have been possible, David Marcus has been trying to figure out how to perfect them,

In the mid-’90s, he founded a telecom company that offered internet access along with telephone service. In 2000, he launched EchoVox, which he introduced in 2008 into Zong – a mobile platform that lets users make online payments directly through their mobile phone bills. When the venture was acquired by PayPal in 2011, Marcus joined the digital payments giant and became its president the following year.

He read the bitcoin white paper soon after it was published, but didn’t “fall down the rabbit hole” before, he recalled in an interview with Bitcoin Magazine. Then, in 2012, Argentina ordered PayPal to stop all transactions that sent money out of the country as it grappled with the crisis. Currency inflation and a fiscal austerity effortAnd the real value of this peer-to-peer electronic cash system began to resonate with him.

“We had to (comply), we were a regulated entity,” Marcus explained. “The day it happened, bitcoin prices went up a lot and I was like, ‘Wow.’ Like, it’s something where consumers in a place like Argentina are really rushing into bitcoin as a way to make money – it’s their money – in the way they saw fit. So, I felt that my interest in bitcoin in terms of It was a very eye-opening moment for me, an escape valve for some of the behaviors that were not in line with my ideas of self-sovereignty, wealth… So it was a turning point for me in 2013, where It really strengthened my faith.

Shortly after, in May 2013, he participated in bitcoin 2013 conference in San Jose and, despite its relatively small community, he was intrigued by bitcoin’s success in facilitating digital payments.

“It was really a handful, basically like two handfuls of people, it was so incredibly quick,” he said. “I was fascinated by the general idea that you move value in a completely self-sovereign way with no intermediaries. And during that same time period, I remember sending and receiving bitcoin, and I set up wallets for friends. Was doing it to show them what’s possible: ‘Look, it’s me sending you money and nobody’s in the middle, right?’ And I was really thrilled with it.

to the best of our abilities

But Marcus wasn’t quite ready to give up on the possibility of institutional yet open payments for the Internet just yet. In June 2014, he joined Meta (then Facebook) as vice president of messaging products, developing the Facebook Messenger mobile app. Marcus released messenger p2p payments in 2015, which allowed users to send each other money from their synced checking accounts through the app.

By mid-2019, Marcus began leading Facebook’s cryptocurrency project, Libra, which was later renamed Diem, before being abandoned entirely. Libra was almost immediately dismissed by bitcoiners as nothing particularly valuable compared to other centralized digital currency projects. And Marcus found himself defending the project before the House Financial Services Committee as well as the US Senate Banking Committee, forced to answer questions that often focused more on Meta’s history of invading user privacy. Were.

But before Libra was allowed, the oligarchy settled on the node model outlined in its white paperMarcus actually considered leveraging the Lightning Network for his project.

“I remember meeting with Elizabeth Stark (CEO of Lightning Network development firm Lightning Labs) in early 2018 and trying to figure out if Lightning was really the way to go, because if there was really a way to use bitcoin. If there was some way, I really wanted to do that,” Marcus said. “At that point, we thought, okay, maybe we can use Lightning and then build a world-class wallet that we can embed into all the Meta products, WhatsApp and Messenger and others, and then let people enable the transfer of value.

Ultimately, they decided that the protocol was not robust enough to meet the meta’s vision due to certain inadequacies, including limited nodes and liquidity.

“Even today, it will be challenging, and it will be challenging to actually reach billions of consumers on the Lightning Network,” Marcus said. “Even in layer 1 there won’t be enough HTLCs (hash time lock contract) to actually do so. So, once we get there, we have to find solutions. But our view was that it wouldn’t scale… and so, we came to the conclusion that we needed to build this proprietary technology, then do whatever we could to decentralize it to the best of our abilities. Yes, will do.

In the end, Marcus’ ability to decentralize a payment project under Meta proved insufficient and he has since realized that attempting to do so on any network other than bitcoin is futile.

“We have made a firm belief at this point that the only blockchain and the only underlying asset that can support a truly open protocol for payments on the Internet is bitcoin and nothing else,” he said.

In 2021, Marcus left Meta and the following year he launched Lightspark to further that belief.

Reasons Bitcoin and Lightning Are Better

LightSpark creates software and development tools to simplify access to the Lightning Network, such as software development kits to help businesses provide Lightning wallets to their customers and Lightspark ProphecyWhich identifies the best performing Lightning nodes and can route transactions to them.

Rather than building a centralized platform to enable digital payments, LightSpark is focused on building tools to help customers access this existing, decentralized payment system. And while Lightning Network adoption is still far from rivaling the user base of something like PayPal, Marcus is optimistic about its potential if companies like his are successful.

“There are still issues with Lightning, but I am very confident that we are in a position to resolve these issues,” he said. “You will see that for companies using LightSpark services to integrate on Lightning, you don’t even need to worry about channels. You do not need to worry about liquidity. You do not need to worry about channel rebalancing and distribution of liquidity. You don’t have to worry about which routes you are going to use and which minimum fee or maximum fee you are going to set. All that complexity is being taken completely out of the equation for a company that is deciding whether or not they are going to implement Lightning for their consumers.

When asked whether abstracted users too far away from managing their own liquidity, channel balancing and routing could recreate the issues with centralized, trusted financial intermediaries in a way, Marcus responded with an analogy.

“In the early days of the web, if you wanted a website and you wanted to be on the Internet, you had to go build your server, find a rack, put it in a rack, buy a router, configure your router tha, get an E1 or a T1 line, plug that router into your E1 or T1 line and then maintain that whole thing all the time, and it was like, well, nobody does that, ”he explained.” But the reason Lightning and bitcoin are better is because there are companies like Lightspark that make things easier for mass-market adoption, but if you’re in a random country somewhere, and all you have is the internet You can run a node on your own if you have connectivity. Call yourself and become a participant in this network. And I think that’s what makes it wonderful.

And he went on to emphasize that his intention now is to enable a certain type of Lightning adoption, not roll out a solution that obviates the need for independent participants.

“We don’t expect everyone to use our software,” he continued. “That would be a really bad thing, wouldn’t it? We think everyone should run their own business and we’re going to cater to a certain segment of the market that’s going toward larger, enterprise-type customers. Is.

Of all the executives actively working on bitcoin projects, Marcus probably has the most legacy experience to tell what it takes for bitcoin to succeed as well as not fail. And, declaring that building on Lightning is the culmination of his life’s work, he is determined to succeed.