This is What Bitcoin Actually Looks Like 10 Years From Now | David Marcus

If the internet could move money natively, would you use anything else? Of course you wouldn't. We were going to actually take over the unit of account that is actually being used by citizens of sovereign countries. Bitcoin was the only network that was neutral and open enough to be around in 100 years as kind of this open network for money for all of the money in the world. The way we think about ourselves is that the network has no notion of compliance or enforcement. If you think another company is not doing it right, build a better thing instead of just complaining on X. Just build a better thing. Money is like water. It'll flow in the path of least resistance. Bitcoin is an escape valve to mismanagement of monetary policies and currencies. And the fact that it exists is so valuable. Within the next 10 years, most of the money in the world, most of the global money movement will happen on top of Bitcoin.

Glad to be here. Thanks for having me.

Of course. Of course. So look, I built a number of startups and that's how my real professional side of my life started. I was 23 when I started my first startup which was actually a telco and ISP in Switzerland. And then I sold that and the next company that I built was actually a mobile entertainment company at the time. Like that's... I'm going to date myself but that was like pre-iPhone era where you would still buy things like ringtones and wallpapers for your Nokia or Ericsson phone. And so we built that into a pretty big business and then we did live voting for the European version of American Idol and all of these things that were taxed at 50 cents or a dollar a pop. And so we built this whole network around payments on your phone bill with over 200 mobile operators or carriers around the world. And then when the iPhone came out, I realized that actually this was a good time to pivot because no one was going to download a wallpaper for $2 when you can actually browse the web on your phone. And so I moved to Silicon Valley. This was early 2008 and converted that company into a payments company, pivoted and leveraged basically the connections that we had with so many mobile operators around the world to build a payments network on top of the mobile network's capabilities to build on behalf of third parties. And I'm saying all of this because it's actually relevant to the work we're doing now. And that thing really took off. And this was at the time where Facebook interestingly enough had a lot going on with their gaming platform. If you remember the Farmville era and all of these things.

And you know, Zynga at the time was selling virtual cows on virtual farms for dollars a pop. And like, if you're actually entering a credit card and 16 digits of your PIN and your expiry date and your CVV and all of that while you're buying a $4 virtual cow on a virtual farm, by the time you end up inputting all of that data, you're like, what the hell am I doing? And you're not. And so there was just too much friction with card payments at the time. And so we figured out that if you can use mobile with no friction, you could just put your phone number, get a text message, and respond, and boom, you're done. Then you would buy more virtual cows on more virtual farms and this really blew up. And that's what got me into PayPal because at the time they really had this drive to figure out their mobile strategy and our company was on fire. It was really growing by leaps and bounds and Facebook was a client and all the digital content providers were clients and were growing really fast. And so PayPal at the time acquired our company and then five months later the CEO of PayPal left to become the CEO of Yahoo. And I'm like great, I'm just going to go back to startups. But it turns out that everyone else on that leadership team wanted that CEO role and I didn't and I was like okay that's great. But I ended up being asked by John Donahoe who at the time was running eBay because PayPal was still part of eBay to go lead PayPal and you don't say no to that even if you don't have the right experience. So I did that for a few years and really revamped the culture of the company. And then I was getting frustrated because I was too far from the product and I was about to get ready to move on when Mark Zuckerberg basically reached out to bring me into Facebook and that was my almost four-year sabbatical from payments where I basically built Messenger and business messaging at Meta and then I was really frustrated with the fact that it was 2017 and money still didn't move on an open network like any other type of content. And I was like, okay, this is the right time. I had been in Bitcoin since late 2011. I had been on the board of Coinbase, so I saw what was going on there. And I was very much deep into the digital assets, crypto, blockchain, Bitcoin world. And so I wanted to go build that. And that's how the Libra journey started basically. And we wanted to actually build that on Bitcoin at first, but it just wasn't ready for prime time. So we went full-on proprietary with one of the first arguably corporate chains. Now I call these things corporate chains. And that thing got killed by Janet Yellen on the morning of June 2021. So, I packed my bags and here we are at Lightspark and we can talk about why Bitcoin and what we're doing whenever you're ready for that.

Yeah, it's really a hard question to answer if we don't unpack the details. If it was the true original vision for Libra, I think it would have helped literally billions of people move money in real time on top of an open network. And because Facebook had a reach of over three billion people using their product every month and we had Shopify, Spotify, Uber, Lyft, even Visa, Mastercard, PayPal as part of the consortium, everyone would have actually adopted that stablecoin and used the network to start moving money around. And that would have completely changed the game. But that was kind of the idealistic vision that we had which is like okay money should move natively on the internet. What is the network that is going to be the best most efficient network to actually move that money in real time at a very low cost and let's go build that and then let's build an alliance of companies that would serve as distribution for all of this. So I think the original version would have really helped a lot of people but I think it was naive to be candid. It was naive to think that the consortium of very large tech companies, some of them and especially Facebook at the time really not liked as a company to say the least, and that we were going to actually take over the unit of account that is actually being used by citizens of sovereign countries and that governments are not going to actually go crazy. The general idea was really a replace all of the financial system kind of thing for money movement at least and that included literally going all the way to the consumers holding the asset. And as such not having to worry about adapting to the legacy rails and systems and all of that. And I think that part was a little naive in the sense that governments are not going to let that happen. And that's actually what got us and me to Bitcoin, which is like if you want a payment network to actually exist, an open payment network to exist where all of the money in the world can move and you're going to intermediate in and outflows of very large sovereign countries that are very proud of their currencies, you can't do it from a corporate chain or a controlled thing or a thing that flies an American flag or a thing that's run by a CEO, a corporation, a foundation, an association, a conglomerate or whatever you want to call that. It has to be really open and neutral and feel like TCP/IP for money basically. And so that's how we got back to building on Bitcoin, no matter how hard it was.

Yeah. So we started at Lightspark with this conviction that Bitcoin was the only network and settlement asset that was neutral and open enough to be around in 100 years as kind of this open network for money for all of the money in the world. And so once we decided that this was the only thing that would withstand the test of time and everything else, we then had to ensure that Bitcoin, if you look at it really as TCP/IP for money, could actually move real time really fast, super scalably at a low cost. And so the thing that was available to us at the time to actually go build on is the Lightning Network. And when we started, I remember vividly that 50% of transactions over $100 were failing at a very high rate because you just couldn't find a routing path on the network that was actually going to work. Channel management was still super manual, cumbersome, non-automated, etc. And so we got to work to actually try to make Lightning more enterprise grade. So the actual endpoints like exchanges and others could actually get on without a hefty ROI analysis of like I need two full-time people to rebalance channels and optimize our routes and there's no volume and of course then it becomes a self-fulfilling prophecy because it's like oh there's no volume and so why should I put the effort then no one puts the effort then there's no volume. And so we tried to automate a lot of that and we spent probably the first year and a half or so because it's complicated to actually get this thing to work and we're assembling the team of the company and all of that. And the proof point for us that we did a good job at this was signing Coinbase and a dozen exchanges around the world to support their Lightning implementation. But obviously we were not into this just to become a better Lightning company. We're into this to build a global open internet for money for all of the money in the world. And so the next step was okay, how do we move now real money now that we figured out a scalable way to actually make the TCP/IP for money on Bitcoin work? How do we get real endpoints to actually build a very good user experience for people around the world to move money? And so that's when UMA came out, a Universal Money Address standard. It came out of this idea that if you use Bitcoin as a neutral settlement asset between real-time domestic payment systems, I can now send dollars from the US to someone in Mexico receiving Mexican peso in real time 24/7. Which you know now you can try if you have a SoFi account, you can send to many countries in real time at a very low cost 24/7 using the network. That's a good example. And we started really developing this, building all the capabilities so that if you're an endpoint on this network you can actually reliably send and receive transactions using Bitcoin as a neutral settlement asset, you can meet your compliance obligations for those things. And by the way, this is something that gets really misunderstood. Lightspark in the core Bitcoin circle has this brand of like you're a surveillance thing, you're a compliance company. That's not the way we think about ourselves at all. The way we think about ourselves is that the network itself has no notion of compliance or enforcement and that's true whether you're using one of our Lightning implementation or Spark. But if you want volume, real volume, you cannot expect the whole world and businesses and people and all of that to accept Bitcoin as a unit of account in real time and pay their bills in Bitcoin and get paid their salaries in Bitcoin and buy their stuff in Bitcoin. Maybe someday that'll happen, but it's not going to happen for a while. So if you need banks where people hold their money, pay their bills from, etc. to be on the network, you have to provide them with capabilities that enable them to actually meet their compliance requirements. So at the edges of the network between regulated entities, we give people like businesses, banks, wallets, tools to remain compliant. But we don't have a point of view on what happens on a network. We give off-band messaging capabilities with UMA for businesses and banks to be compliant, remain compliant. So anyways, this was long-winded but that was part two. Part two is moving real money, fiat pairs basically, start with dollar, start with any other currency, end up in another currency in another part of the world in real time 24/7 on top of UMA and on top of Lightning. And then we started realizing okay, a lot of the banks cannot actually do the implementation natively like Nubank did in Brazil and other places. So we need to actually go do the work to connect to every domestic payment system all around the world so that wallets and banks and businesses can actually use their domestic payment network denominated in fiat to use the Bitcoin network to settle in real time in another country in another currency. And that's a lot of hard work because it's complex, it's difficult, sometimes you don't find the right partners, sometimes the partners are not set up for the right thing. And so that took a while for us to actually get the reach we have now of over 60 countries that we can send and receive money in real time 24/7 at a low cost using the Bitcoin network. So that was kind of act three of the company. And then we're like, okay, great. Now we have a really good network that can move money on top of Bitcoin for the benefit of businesses, banks, wallets. But the network is not open enough because it doesn't work on a self-custodial wallet. It just doesn't work. You can't actually use the network on a self-custody wallet because Lightning really sucks at this. You have to put liquidity in front of every wallet so that you can actually receive money on the network. If you do it yourself, it's the most counterintuitive thing that you can ask a consumer to do like what do you mean I need to actually put money to receive money? Or you have to use an LSP and it turns out that a lot of those LSP activities turn out to be money transmission. So if you're not a regulated entity you're not supposed to do that. So it's not scalable. And then the stablecoin conversation started really blowing up and more and more hype was starting to build around stablecoins. Legislation started to catch up. And then I had this super long schizophrenic soul-searching moment where I'm like, okay, we worked so hard to actually make this network unassailable built on top of Bitcoin and then I'm going to put a fully centralized stablecoin on top of this thing. It just killed me for months. But ultimately, you can't go against a tide of that size. And so we decided to fully embrace stablecoins and actually enable them to be issued on top of Bitcoin via Spark. But the genesis of Spark is basically that: self-custodial Bitcoin at scale, real time, low cost, super developer friendly, and then a tokenization standard to enable stablecoins to be issued on top of Spark which is the BTKN standard which also exploded completely as a Bitcoin DeFi use case which we didn't actually plan for. And that's kind of the act we're in right now. So making Lightning scale so that people can use Bitcoin efficiently as TCP/IP for money, enabling fiat use cases by enabling UMA and enabling connectivity to domestic payment systems in 65 countries, and then a new Bitcoin L2 that's backward compatible with Lightning and enables self-custodial wallets, stablecoin issuance, and all kinds of other things. So that's the arc of the three and a half years at the company and how we're building layers of capabilities to enable Bitcoin to be the winning network to move all the money in the world. Okay, this was so long-winded. Wow.

Yeah, the only thing I would... So yes, generally I think Jack and I are on the same page here. But I think there's nuance. I think the way that he says this is like if Bitcoin is not everyday money then we're not actually there. And I agree with that. I just think we need to unpack and double-click on what everyday money means. Does it mean it's actually a medium of exchange like you said or does it mean that it's used in everyday payments but in some cases people and businesses don't even know they're using it, the same way that when you send an email you don't think about SMTP and TCP/IP? And to me my definition is really that it's both and that one is probably required as a prequel to actually what's going to happen next and as a prerequisite as well. Money is like water, it'll flow in the path of least resistance. And so if you connect Bitcoin real time, super cheap, super deep liquidity of Bitcoin into the places where money is stored in, namely banks and wallets and all of that, and it's super cheap and it's available real time and it allows you to actually get the money to the other part of the world or wherever you need it to be in the most efficient way, then the money will actually go to Bitcoin. And that's what we're doing at Lightspark. We're actually trying to connect all of these pockets of money wherever they exist and where they need to start from and end to onto real-time fast Bitcoin on Lightning, Spark, etc. to actually make Bitcoin the winning settlement network. Also add stablecoins. If you have stablecoins, you want to use the network. Fine, use it. And so you need to drive real money movement utility for the network to win. And that's what we've been really focused on. And I think that if we do that, then people have all kinds of opportunities to start accruing Bitcoin. I think if you look at what Square did with the Square Terminal, it's so clever the way that they did it. First of all they tell their merchants you don't have to actually pay fees anymore, so no more interchange if you accept Bitcoin, so super big incentive for merchants. Two is you can receive all the payments from people paying in Bitcoin in full dollars or a portion in Bitcoin, a portion in dollars, so there's an opportunity for people to learn and think and ask themselves the question as a merchant, a coffee shop, anything, do I want to keep some Bitcoin for every single purchase or not. And every month you see it in your settings. And so you start to learn about it, you start to care. But then what's really great is what they did on the reverse on the flip side on the Cash App side, which is that you can choose to pay with Bitcoin using Bitcoin and Lightning or you can fund your Bitcoin transaction with US dollars with fiat. So you go dollar to Bitcoin on Lightning and then on the merchant side it could be a dollar to dollar transaction but it's using Lightning network. So I'm a fan of that because it gives people the opportunity to use the network and get a benefit from using the network and it gives both the merchants and the consumers the ability to use Bitcoin if they choose but not force them to. And I just posted a demo last week or so of me paying with a stablecoin on a Spark-enabled wallet at a Square terminal which is kind of next level when you think about it. You have a stablecoin balance and now I'm using the Lightning network to actually pay a merchant that could be settled in dollars or in Bitcoin. But that's the beauty of an open network. And I think that that's the way that we will collectively all of us make Bitcoin everyday money whether it's money or settlement, but used in everyday transactions.

Look, I think it depends what kind of company you're building and what's the purpose of the company. We're here to build an open network for money on top of Bitcoin. And the reason we build on top of Bitcoin is for all of the things we discussed. And if you look at companies that have been very successful at payments on top of other chains and using stablecoins like there's Bridge, there's BVNK, there's a bunch of others. What they're doing is orchestration. So you give us fiat and we'll terminate in stablecoin. You give us stablecoin we'll terminate in fiat. You give us all kinds of permutations of that from one network to another network and all of that. And that's great. And those guys have built really great businesses on top of that. But personally, this is not the kind of stuff that gets me out of bed and excited to actually go build something because we have those payment companies on top of traditional financial networks. They're called Stripe and Adyen and Checkout and it's the same thing. It's like, oh, I have a payment network here. I'm just going to take a thing, build a little bit of better functionality here. And those are fabulous companies, so don't get me wrong, I wish I built one of them. But for me what's more exciting is can we all build an open network and an open standard for developers, banks, wallets, people to actually move money on an open network that's unassailable, will be around in 100 years, and is not controlled by anyone. And that gets me really excited. If we can really do that, that's not only a great successful company, but it's also an insane multi-generational impact to have on the world and potentially something that lifts global GDP by a couple of points and gets the money where people need to have it. And it's the way it should be in my opinion. I can't remember who said that, but it's like you should go build the future you want. That's what gets me excited. That's the future I want. I don't want the financial system to be the same financial system as today, which is different rails, different names, and different companies. I want an open internet for money. And I personally believe that the only way that you build an open internet for money is by building it on top of something that's truly neutral, truly open, truly decentralized and that's Bitcoin.

Yeah, so Spark... honestly I wish we didn't have to build Spark. I'm serious, I wish someone else did. It's so hard to build a protocol and make it scale and make it not vulnerable to attacks and decentralize it and have all the right trust assumptions. It's really hard. But the problem is Bitcoin didn't have enough utility for payments use cases with just Lightning. And the two major issues were really that you can't serve self-custody endpoints well with Lightning. It's just for the reasons we discussed. And you can't support stablecoins. I think people would disagree with me. There's a bunch of stuff happening on the Lightning Network with Taproot Assets, with RGB, with this, with that. I developed this conviction that it was just not going to work, not going to scale, too complicated, or you have to have a middleman again engaged in money transmission that requires licensing and all of that to make it work there. And so if you want to compete with other networks with Bitcoin and you don't have at least the same capabilities on top of the neutrality, the decentralization, all these things, then how are we going to win? And so the state of things kind of forced our hand into spending a ton of energy and resources and investment into building Spark into what it is. And the goal is really to provide a technology, a settlement network on top of Bitcoin that actually competes with other chains really well. And it's working. It's really working. All of the self-custodial wallets or wallets that wanted to operate in a bunch of countries in a self-custodial way for Bitcoin are now, if not all of them, 90% of them that have traction are on Spark. Wallet of Satoshi, Xverse, Breeze, and Breeze has a phenomenal SDK that enables all of these wallet developers to actually integrate and they're doing a fantastic job. But it's dozens and dozens of other wallets that have built really cool experiences on Bitcoin for the first time. Like the Bitbit wallet on X that enables you to tip people in real time. Stuff that really wasn't possible before. And so I view the Spark piece as a core required infrastructure layer for Bitcoin to have a winning chance. And then Grid is different. Grid is basically taking everything we talked about until now, all of the capabilities we built over the three and a half years that we've been around in connecting to 65 countries' payment systems and enabling all of these flows and actually unbundling all of it and putting it in a very simple API front end to enable global money movement using the network. And that's already getting a huge amount of traction because people need to move money around. And it turns out that in many cases using Bitcoin the network, if you're moving fiat to fiat for instance, is actually cheaper than using a stablecoin sandwich as being used in a lot of payments use cases because of the depth of liquidity of Bitcoin with a number of different currencies. It's not always true, but it's true for many destinations. And so we can be super competitive with real-time payments and money settlement. And we can enable, by unbundling the capabilities, developers to build the money movement experience of their choice without us imposing our views. No, you have to use UMA, you have to use this. They can do whatever they want.

Yeah, I mean, look, I think we're definitely working on the latter, not the former, because I think it's nice to have ideals like code is controlling the unit of account that is being used by humans and AI agents alike to actually move value around. I think actually that we might be in a reality where a lot of the net settlement happening between AI agents in the context of agentic commerce will actually happen using Bitcoin because if I was an AI, that's what I would pick. I wouldn't trust humans to get everything right and if it can be used in real time very fast and very low cost and it's the most efficient way to move value without touching any human, which it really is, then maybe hyperbitcoinization happens on AI networks before it gets to...

Thank you so much for having me. It was a great conversation. People can find me on X at @davidmarcus and learn more about Lightspark at lightspark.com.

Thank you.

Humans, but that's kind of a segue. But I think, look, at the end of the day, you have to meet people where they are and businesses where they are. You cannot have ideals of like everyone's going to use Bitcoin and then not solve any problem for anyone and hoping it's going to happen. Right? It's like, you know, this is like a very rich country, rich person ideal point of view that actually never meets the reality of the real world. People need to put food on the table. They need to pay their bills. They need to get paid. And you can't force the replacement of the unit of account, the units of accounts that are being used for all of these purposes on the whole world, in a short amount of time. I'm not saying it's not possible in places where you live in a country that has a really shitty currency that's really poorly managed and that's being debased all the time and hyperinflated all the time. That will happen naturally. I think people are already using Bitcoin and stable coins in parts of the world to actually replace their home currencies for lots of that. And I think maybe it's the views of people that within our lifetime, like 50 plus years, that fiat currencies are going to be so mismanaged around the world that everyone's going to actually run to Bitcoin and then we get to hyper bitcoinization. Maybe that'll be true, but if that happens, we have much bigger problems. I think, to your point earlier, I think that if all fiat currencies cease to exist within the next couple of decades or so, it's going to be so disruptive that I'm not sure I wish for that to happen within that time frame. So, if we're talking many hundreds of years, or 100 years or whatever it is, that might be possible. But I think I'm very focused on what I can do in my current lifetime to see the fruits of my labor rather than just hoping for what's going to happen after I'm long dead.

I think, by the way, you really hit the nail on the head here. It's the fact that Bitcoin is an escape valve to mismanagement of monetary policies and currencies, and the fact that it exists, not the fact that everyone's using it, the fact that it exists is so valuable. And I think people really don't understand that. The fact that if you know you're going to mismanage your country's currency, people will actually escape to stable coins, to Bitcoin, etc. That's immensely valuable because it keeps those people in check and it creates a viable alternative and so they have to compete to keep people using their thing. And that never happened before. And it's huge value.

Because I think it's just so obvious, but people don't think about it this way. If you were to go back to the time where you had a landline and you were paying a dollar a minute for an international call, and you would go back to that time with modern tools, it would be obvious that you would not use that thing. You would use what we currently use. But if you go back then without the knowledge of the value of the network right now and tell people, 'Hey, you're going to be able to hold a piece of glass and talk in high quality video at no cost 24/7,' people would think you're crazy. It's just a leap. And we have a little bit of that right now. No one is sending faxes in the era of the internet. And I think the equivalent of the way we're sending money is sending faxes. Wire transfer, SWIFT, correspondent banking, closed global money movement platforms that front liquidity of their own or their clients to fake real-time money movement. It's crazy. We call wire transfers 'wires' because in 1871, that's the first time money was sent across two copper pair of wires with Western Union being the telegraph operator. This is 1871 and we still call them wires. And when you look at the way that money moves through the banking system today, it hasn't changed all that much. There is a little bit of automation here and there, but to a great extent, it's the same process of moving money around the world. And when you see the evolution of AI and all of the crazy things, I live in LA and I see Waymos everywhere driving without a driver, and you're still sending money that way. It makes no sense. It's a massive anomaly. So, yes, if the internet could move money natively, if you could actually as a developer build a thing that will enable you to send and receive money for others, and if banks and wallets could do the same, would you use anything else? Of course you wouldn't. And our stipulation is that that thing is Bitcoin, fast real-time Bitcoin using Lightning, using Spark, and the connectivity of that network to all the places where the money is at right now. So you can enter and exit the network in real time at a very low cost to use the network. And now we just have to continue connecting all these things. I also said in my intro that I think of Lightspark and all of us working here as Bitcoin plumbers, which is basically plugging tubes into every payment system so that people can actually get on the network. And I think once that happens, it's obviously going to be the thing that's going to be used by everyone. Not only the few people that we got to right now, the network effects are going to start playing out.

Sure. Yeah. And we power many banks now with the system and they can connect in a variety of different ways. In the case of SoFi, you're either an institution that can actually connect natively onto the network, so you can have a Spark wallet or Lightning integration that can receive and send Bitcoin and you can convert in and out on behalf of your clients. That's a certain smaller subset of regulated financial institutions and banks. And for the others, and by the way, Nubank is one of those, 100 million plus customers in Latin America and a bunch of other countries, they have a Bitcoin buy and sell business, so they had the capability to actually connect natively onto the network. But in the case of SoFi and many other banks, the way that we are onboarding them is using their domestic real-time payment system. So the way that money travels from SoFi to say India or Europe is that a SoFi customer or member, as they call them, can actually go to their checking account, click on pay, and they can pick a recipient in one of these countries or send them an invite. And they send dollars to say someone in India receiving rupees, or someone in Europe receiving euros, or someone in Mexico receiving Mexican peso, and so forth. And they can see the exchange rate in real time and you can just move money. The way that it works is SoFi, we're interconnected with SoFi using FedNow, and FedNow is real time, 24/7 domestic. So that allows them to actually send dollars to us in this case. We're kind of the switch for them to get on the network, and we're the ones doing the conversion to Bitcoin and the push to the other side of the world. If it's in Mexico, we have a partner there that can actually take the Bitcoin, convert to Mexican peso, and push to the SPEI network. If it's in Europe, we now acquired Strea, which is now Lightspark Europe, which has the licensing and a connection to SEPA Instant to actually convert the Bitcoin to euro and push to a bank account in Europe instantly. So the experience is really a magical experience that takes a second to get to the endpoint, 24/7. It's super competitive. And no one knows you're using Bitcoin. And the reason SoFi does it is because they can offer something that their competitors can't offer to their clients. They can offer 24/7 real-time fiat settlements in 60 plus countries at a most competitive rate. And it's a competitive advantage. People are opening SoFi accounts just to use that feature, and it drives customer adoption. It's a good business to be in. And it just works. I mean, it's really cool. And I think, again, I'm sure I'll get some pushback on this, but I think that people should use money how they want to. And I agree with the design principle of meeting people where they are, because that's how you're actually going to drive meaningful adoption and network effects and network growth.