Breaking Down Digital Payments | DAVID MARCUS

1
00:00:00,000 --> 00:00:07,940
What we try to represent at LightSpark is like build on Bitcoin, a network that no one owns, but everyone can get value from.
2
00:00:08,160 --> 00:00:13,040
Enable people and businesses to like have exposure to Bitcoin really without any friction.
3
00:00:13,360 --> 00:00:21,220
Have the ability to still hold dollars and use Bitcoin as a neutral settlement network and asset for all of the payment systems in the world.
4
00:00:21,720 --> 00:00:25,560
David, Marcus, thank you so much for coming on to the Bitcoin Radio Show.
5
00:00:25,560 --> 00:00:25,840
My pleasure.
6
00:00:25,840 --> 00:00:28,520
Yeah, this is a super exciting interview.
7
00:00:28,520 --> 00:00:34,280
you. LightSpark is also a sponsor of the pod, so very excited to have you here. You're, of course,
8
00:00:34,400 --> 00:00:40,560
CEO of LightSpark, which is developing Spark, a state chain's kind of style layer two on Bitcoin,
9
00:00:40,680 --> 00:00:47,940
which we'll talk about. But you have a particularly rich and interesting history in the payments
10
00:00:47,940 --> 00:00:54,040
world and sort of payments fintech broadly. I'd love to dive in. I mean, just to start with your
11
00:00:54,040 --> 00:00:59,220
story at PayPal. You were vice president at PayPal. I don't know exactly how you got into
12
00:00:59,220 --> 00:01:02,640
working with PayPal, but I mean, that might be a good place for us to start.
13
00:01:02,860 --> 00:01:08,580
Yeah. No, so basically I sold my company to PayPal in 2011 and joined, to your point,
14
00:01:08,660 --> 00:01:13,540
as, you know, vice president of mobile, basically running mobile. And then five months later,
15
00:01:13,960 --> 00:01:19,380
the then president slash CEO of PayPal left to become the CEO of Yahoo. And I was like,
16
00:01:19,380 --> 00:01:24,520
great, I'm just going to go back to startups. And I was the only guy on that leadership team that
17
00:01:24,520 --> 00:01:30,680
actually didn't want that top job. And sure thing, you know, because probably I didn't want it or
18
00:01:30,680 --> 00:01:36,660
something else. But I got the opportunity to go run the company, which I did for about three,
19
00:01:36,800 --> 00:01:40,780
three and a half years. I'm curious of the reason why they sort of picked you for that role was
20
00:01:40,780 --> 00:01:46,420
because mobile was such an important part of the strategy at that time. Like, what were the problems
21
00:01:46,420 --> 00:01:49,160
people were trying to solve with payments back then?
22
00:01:49,280 --> 00:01:50,740
Like, what was the kind of conversation?
23
00:01:50,740 --> 00:01:54,480
Yeah, I mean, look, I think the reason that John Donahoe,
24
00:01:54,680 --> 00:01:57,360
this was the time where PayPal was still part of eBay.
25
00:01:57,680 --> 00:02:01,100
So the reason John Donahoe probably gave me the job
26
00:02:01,100 --> 00:02:04,220
is that I got into the company guns blazing
27
00:02:04,220 --> 00:02:07,940
and, you know, decided that mobile was something
28
00:02:07,940 --> 00:02:10,500
that we were behind at at PayPal at the time
29
00:02:10,500 --> 00:02:12,900
and we needed to really catch up.
30
00:02:13,360 --> 00:02:15,060
And in a short few months,
31
00:02:15,060 --> 00:02:19,480
shipped a number of products, which wasn't really happening at that time.
32
00:02:20,120 --> 00:02:23,240
The company was kind of stale, not really shipping new products.
33
00:02:23,520 --> 00:02:28,040
And I came in and in four or five months started shipping the first hardware products,
34
00:02:28,340 --> 00:02:32,500
like the chip and pin card readers for PayPal in Europe,
35
00:02:32,820 --> 00:02:34,980
like the thing that was PayPal here,
36
00:02:35,100 --> 00:02:39,700
which was kind of like the square ripoff at the time for PayPal,
37
00:02:39,840 --> 00:02:40,800
the PayPal version of that.
38
00:02:40,900 --> 00:02:42,940
But the company didn't actually build hardware.
39
00:02:43,220 --> 00:02:44,880
And we did that in four months.
40
00:02:45,060 --> 00:02:49,600
from start to finish, and we were really moving fast.
41
00:02:50,580 --> 00:02:54,440
And I think at the time, what John probably saw is,
42
00:02:54,560 --> 00:02:59,740
okay, we need to bring PayPal back to its roots of building products and shipping products,
43
00:02:59,740 --> 00:03:04,700
and that's probably why he decided to bet on me at the time.
44
00:03:04,960 --> 00:03:10,420
So at that time, I mean, was Square basically leading kind of the fintech payments world at that time?
45
00:03:10,560 --> 00:03:11,280
I mean, what?
46
00:03:11,280 --> 00:03:13,240
Not really. It was kind of early for Square,
47
00:03:13,240 --> 00:03:28,560
So it was like the time where they had like this super genius idea of leveraging the audio jack of the phone to actually have the little square terminal setup, which was really, really smart.
48
00:03:28,560 --> 00:03:45,680
Not super secure, but no one cared at the time. And it was still at the time where you had the MaxTripe set up where you would like actually swipe to pay versus the chip and pin version of cards that happened after.
49
00:03:45,680 --> 00:03:52,900
But so you would say, so I mean, so then it wasn't just like the necessarily the hardware piece, but more like the movement into mobile payments generally.
50
00:03:53,140 --> 00:03:59,320
I mean, was that sort of broadly understood and sort of fintech payments like, OK, everyone needs to be moving into fast mobile.
51
00:03:59,440 --> 00:04:02,940
I guess Venmo may have also been around at the time or.
52
00:04:03,320 --> 00:04:04,980
Yeah. And then I acquired Venmo, actually.
53
00:04:05,540 --> 00:04:05,940
Smart.
54
00:04:06,480 --> 00:04:08,940
When I was running PayPal, we acquired.
55
00:04:09,440 --> 00:04:10,200
That was your doing.
56
00:04:10,440 --> 00:04:10,700
Yes.
57
00:04:10,700 --> 00:04:15,740
So we acquired Braintree, Braintree acquired Venmo.
58
00:04:15,860 --> 00:04:27,240
So we got both at the same time and basically enabled them to tap into the resources and the network and the reach of PayPal at that time, which was a great acquisition.
59
00:04:27,880 --> 00:04:33,560
Was anyone in the sort of traditional finance payments world at that time or fintech world talking about crypto?
60
00:04:33,660 --> 00:04:35,320
I mean, this was this was what, 2014?
61
00:04:35,320 --> 00:04:49,780
Yeah, it was 20, I got there 2011, that's, you know, 2012, 2013, 2014 were the years where I was running the company, basically. And I was already deep in Bitcoin at that time.
62
00:04:49,840 --> 00:04:50,360
Oh, you were?
63
00:04:50,360 --> 00:05:06,200
Yeah, I was. Like, I was really deep in Bitcoin since, you know, 2011. So I was already like talking about Bitcoin a lot. And everyone thought I was a total lunatic. And yeah, no, so I was already deep in that.
64
00:05:06,480 --> 00:05:07,440
How did you get into Bitcoin?
65
00:05:07,940 --> 00:05:17,480
Wences Cazares is the answer. So Wences is a very close friend. He was like really arguably patient zero of Bitcoin for Silicon Valley and wouldn't stop talking about it.
66
00:05:17,480 --> 00:05:25,780
I mean, I looked at it in late 2009 and I was like, OK, this is even by my geeky standard, like, you know, too geeky and put it aside.
67
00:05:26,180 --> 00:05:35,700
And then in 2011, Wenceslas was kind of like, you know, obsessed and was like, OK, you need to really spend time.
68
00:05:35,860 --> 00:05:37,260
You need to really understand it.
69
00:05:37,500 --> 00:05:39,400
And then I went down the rabbit hole.
70
00:05:39,480 --> 00:05:40,420
It never left, basically.
71
00:05:40,840 --> 00:05:43,040
Was it the payments use case that got you?
72
00:05:43,140 --> 00:05:45,920
Like, I mean, what was most interesting to you about Bitcoin at that time?
73
00:05:45,920 --> 00:05:59,080
No, at that time, it was just the wildest thing that you can actually transmit money electronically with no one in between, like no intermediary that would actually control the payments to ensure that the payment would actually get from point A to point B.
74
00:05:59,580 --> 00:06:01,480
And that blew my mind entirely.
75
00:06:01,480 --> 00:06:13,880
And then there was that moment when I was running PayPal where the government of Argentina asked us to block currency, basically foreign payments.
76
00:06:14,100 --> 00:06:15,300
I did not know this.
77
00:06:15,300 --> 00:06:26,020
And that day where we actually stopped at PayPal enabling Argentine citizens to move money out of the country, Bitcoin price shut up.
78
00:06:26,280 --> 00:06:33,220
And it was really clear that people were going to Bitcoin to actually move money out of the country at the time.
79
00:06:33,740 --> 00:06:39,780
And that was kind of a reinforcing moment for me in my belief that we had something really special here.
80
00:06:40,020 --> 00:06:41,400
And once this is Argentinian, right?
81
00:06:41,460 --> 00:06:41,660
Yes.
82
00:06:41,660 --> 00:06:43,500
Yeah, yeah, yeah. So this all makes sense.
83
00:06:43,500 --> 00:06:56,380
Wow. Okay, that's super interesting. Okay, so then at PayPal, I mean, when you were having conversations with folks at PayPal about this, like, was there interest? Like, what was the conversation happening in sort of this fintech tradify world?
84
00:06:56,380 --> 00:07:00,720
At the time, it was like really like this thing is an exotic thing.
85
00:07:00,860 --> 00:07:02,360
We're a very regulated business.
86
00:07:03,080 --> 00:07:06,660
We shouldn't really spend too much time like touching it because it's risky.
87
00:07:07,480 --> 00:07:12,160
We were still in that phase of like Bitcoin is for, you know, drug dealers and criminals.
88
00:07:13,040 --> 00:07:16,740
You know, the successive layers of FUD of Bitcoin.
89
00:07:17,680 --> 00:07:22,720
And so, you know, at the time we were already starting to talk about like, hey, should we
90
00:07:22,720 --> 00:07:28,120
actually enable people to buy and sell Bitcoin within PayPal within Venmo, which eventually
91
00:07:28,120 --> 00:07:33,360
happened much later. But we were casually talking about it, but like everyone was kind of freaking
92
00:07:33,360 --> 00:07:38,240
out because of regulatory risks. Makes sense. And that, I mean, to be fair, they are, they were
93
00:07:38,240 --> 00:07:41,900
considerable and you have a lot of experience with that as well, which we'll get into. So,
94
00:07:41,900 --> 00:07:47,640
so while you were at PayPal, that was pre PayPal and Venmo, you know, kind of integrating Bitcoin
95
00:07:47,640 --> 00:07:49,800
at all or like enabling Bitcoin payments.
96
00:07:49,980 --> 00:07:50,100
OK.
97
00:07:50,520 --> 00:07:55,220
And then I think so makes sense now that you were already in Bitcoin personally, because
98
00:07:55,220 --> 00:07:57,960
I did hear also at one point you were an advisor to Coinbase.
99
00:07:58,460 --> 00:07:59,520
I was on the board of Coinbase.
100
00:07:59,680 --> 00:08:00,080
You were.
101
00:08:00,260 --> 00:08:01,540
OK, you were on the board of Coinbase.
102
00:08:01,700 --> 00:08:05,800
And that was also while you were at PayPal or that was that was after it was after.
103
00:08:06,020 --> 00:08:09,440
What were you I mean, what was the relationship there like?
104
00:08:09,440 --> 00:08:11,080
Like, why did they bring you on to the board?
105
00:08:11,080 --> 00:08:15,660
Well, I think, you know, at that time, Coinbase was really, really growing like crazy.
106
00:08:15,660 --> 00:08:20,560
and they needed someone who had experience
107
00:08:20,560 --> 00:08:23,640
with running regulated businesses and scaling businesses.
108
00:08:24,400 --> 00:08:25,920
And it was really crazy times.
109
00:08:26,020 --> 00:08:29,640
It was the time where Coinbase was actually growing.
110
00:08:30,020 --> 00:08:32,380
It was 2017, 2016.
111
00:08:32,820 --> 00:08:33,200
Bull market.
112
00:08:33,480 --> 00:08:35,360
And it's a massive bull run.
113
00:08:35,960 --> 00:08:37,580
All of the systems were breaking
114
00:08:37,580 --> 00:08:41,160
because customer service was just not scaling up
115
00:08:41,160 --> 00:08:43,760
and all of these good problems that you have
116
00:08:43,760 --> 00:08:47,320
when you hit a vein and the business is scaling at super rapid pace.
117
00:08:47,860 --> 00:08:50,240
And it was a really fascinating time for the company.
118
00:08:50,620 --> 00:08:54,220
And hopefully it provided some help during that phase.
119
00:08:55,420 --> 00:08:57,420
They needed an adult in the room is what it sounds like.
120
00:08:57,420 --> 00:09:00,640
Yeah, I mean, you know, really a bunch more experience
121
00:09:00,640 --> 00:09:02,920
on the regulated scaling side, I think.
122
00:09:03,280 --> 00:09:05,960
And then, you know, we started launching
123
00:09:05,960 --> 00:09:11,380
or working on the Libra project at Facebook, which I started.
124
00:09:11,380 --> 00:09:18,300
And at that time, it felt like we were starting to go after the same talent and the same talent pool, etc.
125
00:09:18,400 --> 00:09:25,740
So I went to O'Brien and I'm like, look, I'm a guy who's like, you know, never wants to have a conflict, which is unusual for Silicon Valley.
126
00:09:26,000 --> 00:09:33,240
But like, and so I just can't stay on the board and at the same time try to recruit the same people you're recruiting and try to build a team, etc.
127
00:09:33,600 --> 00:09:36,240
So I stepped down from the board at that time to focus on Libra.
128
00:09:36,460 --> 00:09:38,880
So, but it was a fun run.
129
00:09:38,880 --> 00:09:49,500
I mean, it sounds like a super fun run. So, and I mean, how did you start working with Meta? I mean, like Facebook at the time, right? So, I mean, how did that opportunity come about?
130
00:09:49,500 --> 00:09:55,660
Well, I was running PayPal, so it was not an obvious choice to actually jump ship to go run messaging at Facebook.
131
00:09:56,840 --> 00:09:58,300
It's mobile, though, right? I mean, it's mobile.
132
00:09:58,300 --> 00:10:12,820
Yeah, it's mobile. And, you know, I did like the payments company that I sold to PayPal, which was called Zong, was actually a mobile payments company that was actually in the business of enabling real-time transactions on mobile using premium SMS.
133
00:10:12,820 --> 00:10:19,720
and so there was there was a lot of messaging components in there but but basically at that
134
00:10:19,720 --> 00:10:24,940
time i was like super frustrated at paypal this was the time where carly come on the activist
135
00:10:24,940 --> 00:10:28,620
shareholder was in the ebay stock trying to push for the two companies to be split
136
00:10:28,620 --> 00:10:34,580
the ebay leadership of course didn't want that i felt like it was the right thing because paypal
137
00:10:34,580 --> 00:10:40,560
was obviously the fastest growing part of the two companies and definitely more future oriented at
138
00:10:40,560 --> 00:10:48,040
the time uh i mean now like it's in a totally terrible place which i can like actually complain
139
00:10:48,040 --> 00:10:53,900
about and feel frustrated about for hours but i'll leave that aside um but i i was really frustrated
140
00:10:53,900 --> 00:10:59,320
at the time and i was ready to go back and jump in to start something new again and that's when
141
00:10:59,320 --> 00:11:05,260
mark reached out and was really persuasive to convince me to come and join the company to build
142
00:11:05,260 --> 00:11:09,100
what he thought was actually one of the most important part of the company going forward which
143
00:11:09,100 --> 00:11:10,500
was messaging at the time.
144
00:11:11,300 --> 00:11:13,100
And so I did that for four years
145
00:11:13,100 --> 00:11:16,580
until I found myself being super frustrated
146
00:11:16,580 --> 00:11:19,360
with a lack of progress of payment infrastructure
147
00:11:19,360 --> 00:11:21,260
and the fact that we still didn't have
148
00:11:21,260 --> 00:11:22,720
an open protocol for money.
149
00:11:23,960 --> 00:11:28,920
And that's when I decided to try to build this Libra thing.
150
00:11:29,460 --> 00:11:30,640
Did you pitch?
151
00:11:31,480 --> 00:11:34,620
Did you basically pitch this idea to Facebook?
152
00:11:34,860 --> 00:11:36,740
I mean, yeah, this was like your brainchild
153
00:11:36,740 --> 00:11:37,680
from like day one.
154
00:11:37,680 --> 00:11:41,540
What was the connection between payments and messaging to you at that time?
155
00:11:42,220 --> 00:11:50,340
Well, I mean, you know, I mean, messaging is always a lot of there's always a lot of messaging involved in paying someone, right?
156
00:11:50,380 --> 00:11:53,200
It's like you have to ask someone to pay you to get paid typically.
157
00:11:54,120 --> 00:12:01,380
And with WhatsApp and Messenger reaching billions of people every month, those were the two natural platforms to actually try to bring native payments.
158
00:12:01,380 --> 00:12:05,200
and to use those as a distribution mechanism
159
00:12:05,200 --> 00:12:08,640
to convince the whole world to adopt a standard for payments
160
00:12:08,640 --> 00:12:10,200
that was going to be an open standard.
161
00:12:10,980 --> 00:12:12,600
And so that was worth a shot.
162
00:12:13,840 --> 00:12:15,660
I knew it was high risk.
163
00:12:15,960 --> 00:12:17,780
We actually looked at Bitcoin at first
164
00:12:17,780 --> 00:12:21,400
because I didn't want to get in the middle of all the governance structure
165
00:12:21,400 --> 00:12:24,140
and setting up like a consortium
166
00:12:24,140 --> 00:12:27,440
and try to devolve power and try to set governance
167
00:12:27,440 --> 00:12:31,060
and all of these things that eventually ended up being the weak spot
168
00:12:31,060 --> 00:12:38,700
of the project and the choke points that the governments used to kill it. And so my original
169
00:12:38,700 --> 00:12:43,020
instinct was, let's build this on Bitcoin. But obviously at the time, we're talking about like
170
00:12:43,020 --> 00:12:48,320
2018, building on top of Lightning at a scale of 3 billion people wasn't going to be a thing.
171
00:12:48,900 --> 00:12:53,660
And, you know, there was no way to actually scale that. There was no way to set up Lightning in a
172
00:12:53,660 --> 00:13:00,960
way that would actually work. And there was no real way to provide stable value to customers that
173
00:13:00,960 --> 00:13:05,880
would not have necessarily the financial literacy to be exposed to Bitcoin volatility for everyday
174
00:13:05,880 --> 00:13:10,840
payment at that time. And so we decided to go the proprietary route, which eventually,
175
00:13:11,320 --> 00:13:17,300
or the cork chain route, which I like to call all of these things. And that's eventually what
176
00:13:17,300 --> 00:13:21,400
killed the project, that vulnerability of having some centralized form of governance
177
00:13:21,400 --> 00:13:27,680
that could be choked. It's interesting you say that, you know, one of the reasons why you decided
178
00:13:27,680 --> 00:13:31,440
not to use Bitcoin because that would involve educating people about volatility, which I think
179
00:13:31,440 --> 00:13:38,380
is a common thing that comes up. But Libra originally was not a stable coin. I mean, it was a
180
00:13:38,380 --> 00:13:44,840
it was what was it pegged to? It was a stable coin, but it was a stable coin that had a basket
181
00:13:44,840 --> 00:13:49,320
of different currencies because we were totally naive. Like, just to be clear, like, you know,
182
00:13:49,380 --> 00:13:55,320
it's like now I know a lot more than I did back then. And it was like very idealistic,
183
00:13:55,320 --> 00:14:02,180
Like many of the tech projects start from a total utopian view of the world and idealistic point of view of the world.
184
00:14:02,780 --> 00:14:04,920
And sometimes it works, sometimes it doesn't.
185
00:14:05,080 --> 00:14:06,040
In this case, it didn't work.
186
00:14:06,140 --> 00:14:13,360
But like the whole premise was really, hey, can we create this thing that's actually going to make everyone happy?
187
00:14:13,380 --> 00:14:17,220
Because it's kind of a basket of currency where the dollar is the predominant.
188
00:14:17,360 --> 00:14:18,440
It was the predominant.
189
00:14:18,540 --> 00:14:19,960
Yeah, it was 50 plus percent.
190
00:14:20,080 --> 00:14:20,820
50 plus percent.
191
00:14:20,900 --> 00:14:22,340
That's not 80 percent.
192
00:14:22,340 --> 00:14:26,860
No, it was 50 plus percent, but then like the euro would actually be a part of it.
193
00:14:26,940 --> 00:14:28,940
Like then the Japanese yen would be another part of it.
194
00:14:29,020 --> 00:14:40,880
And so basically you had this basket that would actually represent the economic value of each of the countries and economies into a stable coin that was way ahead of its time.
195
00:14:41,040 --> 00:14:56,400
But I mean it still has volatility relative to whatever currency the user is actually facing So in my mind that like a little bit different than like how we think about stable coins today Yeah it would be But actually like when you think about like a dollar stable coin that used in the U it one thing
196
00:14:56,520 --> 00:15:04,780
But if you look at the dollar stable coin that's used outside of the U.S. versus what Libra would have had in terms of volatility, it would have been better, actually.
197
00:15:05,780 --> 00:15:06,640
Than Bitcoin to dollars.
198
00:15:07,020 --> 00:15:10,300
It would have been better than even a dollar stable coin would have been.
199
00:15:10,300 --> 00:15:20,700
Because like if you're in Europe and you're using, you would have used Libra, the original version of Libra, then you would have had less volatility than if you were using a dollar stable coin in Europe.
200
00:15:21,400 --> 00:15:33,900
And so, and the goal was really like a global stable coin that would actually be used as a very stable asset that represented the economic contributions of each of these economies.
201
00:15:34,580 --> 00:15:36,680
And of course, like the net result of it.
202
00:15:36,740 --> 00:15:37,900
And we thought, this is great.
203
00:15:37,980 --> 00:15:45,880
Like the Europeans are going to be happy because they're finally going to be part of something because like, you know, increasingly so they're not part of anything and completely irrelevant.
204
00:15:46,780 --> 00:15:50,200
And so the what happened is actually the opposite.
205
00:15:50,380 --> 00:15:52,880
It's like we actually successfully pissed off everyone.
206
00:15:53,880 --> 00:15:59,320
And so we had all of the central bankers that really came out with the knives instantly.
207
00:16:00,520 --> 00:16:02,000
Everyone was down your throats on that one.
208
00:16:02,000 --> 00:16:07,600
I mean, the way that you describe it, it sounds like you are trying to create a new global reserve currency.
209
00:16:07,860 --> 00:16:10,200
Like, that's what it sounds like.
210
00:16:10,260 --> 00:16:19,160
Yes, and the lesson here is actually, like, if you're trying not to be killed by doing something when you change the way that money moves around the world,
211
00:16:19,680 --> 00:16:26,420
then don't try to replace sovereign currencies from the get-go from a company that is not the most popular company at the time,
212
00:16:26,840 --> 00:16:30,400
that reaches billions of people every month, so it makes the threat really real.
213
00:16:30,920 --> 00:16:34,900
Someone told me, it's actually when you announced this thing, you were systemic instantly.
214
00:16:35,360 --> 00:16:38,880
You presented a systemic risk, even with a white paper, not even launching.
215
00:16:39,580 --> 00:16:41,160
And that's exactly what we experienced.
216
00:16:41,760 --> 00:16:44,640
But it sounds like you, I mean, you said I was aware of the risks.
217
00:16:44,640 --> 00:16:46,520
I mean, how aware of the risks were you?
218
00:16:46,560 --> 00:16:50,200
And was there pushback also from other folks at Meta and Facebook about these risks?
219
00:16:50,400 --> 00:16:50,960
Oh, yeah, totally.
220
00:16:51,180 --> 00:16:53,900
Not Mark, though, who was always very supportive of the thing.
221
00:16:53,980 --> 00:16:59,420
But like the majority of that leadership team at the time really didn't like that idea.
222
00:16:59,420 --> 00:17:12,120
We had, and arguably, I mean, I can't blame them. We had lots of other issues at the company at the time. And this was actually adding a lot of heat on the company at a time where we really didn't need more heat.
223
00:17:12,320 --> 00:17:13,480
Like, regulatorily specifically?
224
00:17:13,480 --> 00:17:35,380
Yeah, yeah. And attention and like, you know, what do you mean? Like, who do you think you are? And so I can't blame them. So we were basically sandwiched between like internal pressures of people wanting to kill this thing, external pressures of people wanting to kill this thing as well. And we were under a microscope for the duration of.
225
00:17:35,380 --> 00:17:46,500
It kind of survived for a long time, though, considering the pressures around this. I mean, like, why ultimately was this pushed through for as long as it was internally, despite all of this sort of internal and external pressure?
226
00:17:46,500 --> 00:17:48,520
Because I died trying to make it happen.
227
00:17:48,720 --> 00:17:48,980
Okay.
228
00:17:49,700 --> 00:17:53,640
Like, I and the team, like, we really, really, really tried.
229
00:17:53,640 --> 00:18:03,780
And like, look, at the end of the day, the version that Janet Yellen single-handedly killed in that breakfast meeting that she had with Jay Powell at the time.
230
00:18:04,700 --> 00:18:13,940
So Jay Powell and the Secretary of Treasury at the time had like a morning breakfast meeting every other Thursday, apparently.
231
00:18:14,140 --> 00:18:14,600
So I heard.
232
00:18:15,880 --> 00:18:22,560
And Powell was actually ready to let that thing go live with some constraints.
233
00:18:22,560 --> 00:18:25,780
and apparently Janet Yellen basically told him,
234
00:18:25,900 --> 00:18:27,460
look, this is political suicide
235
00:18:27,460 --> 00:18:28,760
and if you go forward with this,
236
00:18:28,800 --> 00:18:29,540
I won't have your back.
237
00:18:29,740 --> 00:18:31,000
And the next thing you know,
238
00:18:31,120 --> 00:18:33,600
next day you had the general counsel of the Fed
239
00:18:33,600 --> 00:18:35,460
calling all of the participating banks saying,
240
00:18:35,600 --> 00:18:38,080
hey, we can't prevent you from moving forward
241
00:18:38,080 --> 00:18:38,780
with this thing,
242
00:18:38,940 --> 00:18:41,080
but if you do, we would be very uncomfortable.
243
00:18:41,300 --> 00:18:42,500
And that was the end of the project.
244
00:18:42,500 --> 00:18:45,700
So soprano shakedown style thing.
245
00:18:47,200 --> 00:18:50,620
And yeah, and that was the time
246
00:18:50,620 --> 00:18:52,460
where I decided to pack my bags
247
00:18:52,460 --> 00:18:57,300
and start again at LightSpark, but this time building on top of Bitcoin so that you can't
248
00:18:57,300 --> 00:19:02,420
actually call someone like they did with me and with Mark and others to testify in front of
249
00:19:02,420 --> 00:19:05,680
Congress every time you do something. You can't call Satoshi to testify in front of Congress.
250
00:19:05,940 --> 00:19:10,160
We are definitely going to circle back on sort of, it sounds like the primary benefit of building
251
00:19:10,160 --> 00:19:15,380
on top of Bitcoin might be regulation. Not all of your peers went that route. Some of our other
252
00:19:15,380 --> 00:19:20,400
peers from Meta, I know, went on to build other L1s and sort of payment chains. So I'd be curious
253
00:19:20,400 --> 00:19:21,820
to chat about that.
254
00:19:21,900 --> 00:19:22,880
But before I do that,
255
00:19:22,940 --> 00:19:25,200
on the regulatory front, right,
256
00:19:25,240 --> 00:19:27,120
like in terms of the pushback
257
00:19:27,120 --> 00:19:28,080
that you were experiencing,
258
00:19:28,280 --> 00:19:31,380
what was their core, like, criticism
259
00:19:31,380 --> 00:19:32,800
or like their core argument?
260
00:19:33,100 --> 00:19:34,620
Like, what were they actually saying
261
00:19:34,620 --> 00:19:36,700
and doing that from like a legal standpoint?
262
00:19:36,960 --> 00:19:37,780
There was no legal basis.
263
00:19:38,020 --> 00:19:38,940
There was no legal basis.
264
00:19:38,940 --> 00:19:39,120
No.
265
00:19:39,520 --> 00:19:39,760
Okay.
266
00:19:39,880 --> 00:19:41,280
No, there was no legal basis.
267
00:19:41,420 --> 00:19:42,820
We had like absolutely
268
00:19:42,820 --> 00:19:45,760
like all of the legal rights
269
00:19:45,760 --> 00:19:47,140
to actually move forward.
270
00:19:47,140 --> 00:19:52,880
and the problem is that actually if you're presenting a risk
271
00:19:52,880 --> 00:19:57,100
to the financial stability of a country
272
00:19:57,100 --> 00:20:00,400
that they are perceived or real
273
00:20:00,400 --> 00:20:03,700
that they can exert a lot of power
274
00:20:03,700 --> 00:20:06,560
on top of participants
275
00:20:06,560 --> 00:20:09,100
to actually not do that
276
00:20:09,100 --> 00:20:12,900
and there were all kinds of totally egregious things that happened
277
00:20:12,900 --> 00:20:16,280
like we had a group of senators writing
278
00:20:16,280 --> 00:20:30,520
And we invited Visa and MasterCard and all of these to participate in this because we thought that they would actually bring a lot of capabilities to a new settlement network at the edges and all of that.
279
00:20:30,520 --> 00:20:46,460
And so all of these got letters from senators saying, hey, if you continue with the Libra project, if you persist, then you can expect increased scrutiny, not only on your Libra activities, but on your whole regulated activities, which is like crazy.
280
00:20:46,460 --> 00:20:55,120
um so we had all of those things happen and and that that really was the way that's like the risk
281
00:20:55,120 --> 00:21:02,240
crystallized in in in real life with like you know all kinds of of pressure to kill the thing and and
282
00:21:02,240 --> 00:21:09,080
that's that that's where my appreciation for bitcoin actually grew even more because there's
283
00:21:09,080 --> 00:21:15,740
no one person to pressure or no one group or no one institution or corporation or ceo
284
00:21:15,740 --> 00:21:17,920
that you can pressure when you're building on Bitcoin.
285
00:21:18,120 --> 00:21:20,360
And ultimately, that's why I'm building on Bitcoin today.
286
00:21:20,640 --> 00:21:24,280
So you would say ultimately really it boiled down to just straight up political pressure,
287
00:21:24,440 --> 00:21:30,300
like individuals receiving pressure from like top down forces to like disengage or like
288
00:21:30,300 --> 00:21:32,460
otherwise challenge the project in some way.
289
00:21:32,460 --> 00:21:39,780
Yes. And then banks, of course, like depend on retail payments revenue to a great extent.
290
00:21:39,960 --> 00:21:41,000
And so they don't like that.
291
00:21:41,000 --> 00:22:02,760
And so they can lobby politicians to actually pressure things to not happen. And they do that better than any other industry in the world. And so, again, building on Bitcoin allows us now to actually build an open, real-time, fast, cheap settlement network for all of the money in the world on top of a settlement network that no one owns, that no one controls.
292
00:22:02,760 --> 00:22:08,520
and and if you think about it in the lens with the lens of what we're doing right now
293
00:22:08,520 --> 00:22:13,900
let's imagine that you have a corp chain network and one of the you know there are dozens now
294
00:22:13,900 --> 00:22:22,440
um that are being built uh that are now starting to interoperate let's imagine 20 30 percent of
295
00:22:22,440 --> 00:22:29,380
in and out flows into large countries like mexico or brazil or india or europe for that matter
296
00:22:29,900 --> 00:22:31,500
they'll have the same problem
297
00:22:31,500 --> 00:22:33,060
because none of these countries
298
00:22:33,060 --> 00:22:34,420
want to actually delegate
299
00:22:34,420 --> 00:22:38,060
the interoperability of their payment systems
300
00:22:38,060 --> 00:22:39,040
with the world economies
301
00:22:39,040 --> 00:22:41,460
to an American-based company
302
00:22:41,460 --> 00:22:44,440
with an American CEO corporation running it, etc.
303
00:22:44,620 --> 00:22:47,000
And Bitcoin has the benefit of not flying any flag,
304
00:22:47,400 --> 00:22:49,840
being neutral, not being stoppable,
305
00:22:50,280 --> 00:22:52,800
and behaves like the internet, but for money.
306
00:22:53,160 --> 00:22:55,420
And so that's why we're building on Bitcoin now.
307
00:22:55,420 --> 00:22:57,200
So Bitcoin became the obvious,
308
00:22:57,200 --> 00:23:02,060
like the only option basically in your mind like after this libra dm experience you were like
309
00:23:02,060 --> 00:23:06,160
bitcoin is the only way yeah as far as the settlement network is concerned absolutely
310
00:23:06,160 --> 00:23:11,420
and then stable coins play a role but like ultimately and that's why we built spark and we
311
00:23:11,420 --> 00:23:18,420
i'm sure we'll get to that but but ultimately what is the core network that carries the tcpip for
312
00:23:18,420 --> 00:23:26,060
value uh and that network in my opinion cannot be controlled by a corporation by a consortium
313
00:23:26,060 --> 00:23:31,580
by governance. And if you look at most of these other chains, if not all of them,
314
00:23:31,740 --> 00:23:37,180
there are a few exceptions, but like I think most of them can actually be controlled by humans.
315
00:23:37,180 --> 00:23:41,180
And that's a problem. And by not a large number of humans. It's like a short number,
316
00:23:41,320 --> 00:23:46,420
like a small number. All right, guys, taking a quick moment to thank my new sponsors of the show.
317
00:23:46,860 --> 00:23:51,980
First off, the one and only Layer 2 Labs, pushing forward research and development of DriveChains.
318
00:23:52,780 --> 00:23:58,000
Drive chains were first introduced as a soft fork proposal to Bitcoin, aka BIP300, BIP301.
319
00:23:58,720 --> 00:24:04,840
These BIPs essentially propose a bridging mechanism between Bitcoin and Layer 2s that are incentive aligned with miners,
320
00:24:04,840 --> 00:24:08,520
and they've gotten a ton of attention over the last couple of years.
321
00:24:08,940 --> 00:24:12,200
If you're curious about how drive chains could work in practice, though,
322
00:24:12,660 --> 00:24:16,940
check out Layer2Labs.com and download their alternative front end to Bitcoin Core.
323
00:24:17,420 --> 00:24:21,120
It lets you play with drive chains and see how they actually work in real life.
324
00:24:21,980 --> 00:24:33,460
I'd also like to introduce Hashi, an alternative primitive to traditional L2s that allows users to execute a wide range of Bitcoin DeFi activities without having to trust a federated bridge.
325
00:24:33,620 --> 00:24:46,080
With Hashi, Bitcoin is controlled by an MPC wallet that requires a quorum of proof of stake validators on the SUI network to execute Bitcoin transactions based on the validity of smart contracts.
326
00:24:46,760 --> 00:24:54,160
At least a third of the staking power of the SUI validators network is required to execute these MPC mint and redeem transactions,
327
00:24:54,560 --> 00:25:00,240
which is a substantive improvement in trust assumptions relative to other L2s or sidechain bridges.
328
00:25:01,200 --> 00:25:07,140
Hashi's commercial team is also stacked, including a crew of former builders from the crypto division of Meta.
329
00:25:07,720 --> 00:25:12,500
I think we're going to see a suite of super competitive Bitcoin DeFi products built with this protocol,
330
00:25:12,500 --> 00:25:16,800
So definitely check out the HashU page on sui.io if you're curious.
331
00:25:17,840 --> 00:25:20,560
Last but not least, shout out to Bitbox.
332
00:25:21,040 --> 00:25:26,120
Bitbox is one of the easiest and most simple to use Bitcoin hardware wallets on the market right now.
333
00:25:26,280 --> 00:25:37,660
If you have friends or family members that you want to make sure stay safe and use cold storage, but maybe they're not the most Bitcoin native people in the world, I highly recommend checking out Bitbox.
334
00:25:37,660 --> 00:25:45,720
They're completely open source, no compromises on security, but they're also super easy to use, really intuitive UX.
335
00:25:46,300 --> 00:25:51,860
Plus, you can use them with concierge multi-sig services like Unchained, which I'm personally a big fan of.
336
00:25:52,280 --> 00:25:58,780
If you want to check out their hardware wallets, go to bitbox.swiss and use code BITCOINRAILS to get a discount.
337
00:25:59,320 --> 00:26:00,560
All right, back to the show.
338
00:26:01,260 --> 00:26:04,660
So you went on to create LightSpark, which initially was building Lightning infrastructure.
339
00:26:04,660 --> 00:26:08,480
infrastructure. It's interesting because you said that you had looked at Lightning in the past and
340
00:26:08,480 --> 00:26:13,520
you were concerned about its scalability. What changed that made you have enough conviction
341
00:26:13,520 --> 00:26:17,100
in Lightning to raise, you know, $175 million to build this company?
342
00:26:17,100 --> 00:26:25,440
Yeah. I mean, look, for me, the underlying technology is, you know, always not the goal,
343
00:26:25,580 --> 00:26:32,320
right? The goal is, can you fix a problem? And do you have the right solution to that problem?
344
00:26:32,320 --> 00:26:52,020
And so for me, the goal, like we didn't raise that money to build on Lightning, we raised that money to build on Bitcoin. And Lightning was the thing that, you know, we started with because it was the most obvious thing if you want to move Bitcoin cheaply in real time. It was the first step towards that.
345
00:26:52,020 --> 00:27:21,900
And so we spent the first two years really working very, very intensely on making Lightning work better for enterprise types of customers. And that's how we ended up like powering all of Coinbase Lightning, Infra, all of the largest exchanges in the world, basically using maybe not Binance, but like everyone else, basically using us for Lightning because we've automated channel management, liquidity, route finding and all of these things to actually make Lightning usable by enterprise types of customers.
346
00:27:22,620 --> 00:27:29,740
And then, like, after working on Lightning for a while, we really truly understood what the limitations are.
347
00:27:30,080 --> 00:27:34,360
And you have to spend a lot of time working with it to understand where the limitations truly are.
348
00:27:34,440 --> 00:27:36,860
And we tried to push the boundaries as far as we could.
349
00:27:37,520 --> 00:27:41,960
And the two things that we understood would never work on Lightning was self-custodial Lightning.
350
00:27:42,900 --> 00:27:45,780
And we can dive into why that is.
351
00:27:45,780 --> 00:27:55,380
And then for the same reason that self-custodial Lightning wouldn't work, stablecoins on Lightning, we believe, are not going to work either.
352
00:27:55,980 --> 00:28:06,000
And so in a world where everyone is stablecoin obsessed and you want to deliver the right settlement network that is not controlled by any one entity,
353
00:28:06,000 --> 00:28:13,220
we needed to go and figure out how to build something that would actually address self-custodial
354
00:28:13,220 --> 00:28:18,660
and stable coins really, really well and compete with all of those high performance corp chains
355
00:28:18,660 --> 00:28:22,620
that are meant for stable coins, but on top of Bitcoin, a network that no one owns.
356
00:28:22,620 --> 00:28:28,840
And I think that's where Spark really started germinating and really, really taking shape.
357
00:28:29,460 --> 00:28:35,380
So you would say the mission of LightSpark was never to build infrastructure for Lightning necessarily,
358
00:28:35,380 --> 00:28:39,460
but just to build on Bitcoin and make payments work on Bitcoin more broadly.
359
00:28:39,460 --> 00:28:43,060
And Lightning was just sort of the obvious thing that maybe needed support.
360
00:28:43,620 --> 00:28:43,660
Yeah.
361
00:28:43,800 --> 00:28:49,440
What was the strategy in terms of enterprise Lightning usage at that time?
362
00:28:49,560 --> 00:28:53,200
I mean, who were you talking to to try to onboard to Lightning?
363
00:28:53,380 --> 00:28:55,260
I mean, who were the companies that were interested?
364
00:28:55,300 --> 00:28:56,560
Who were the enterprise clients initially?
365
00:28:57,060 --> 00:28:57,740
I mean, exchanges.
366
00:28:57,740 --> 00:29:05,680
And really, so like we assumed many things when we started.
367
00:29:06,820 --> 00:29:08,600
First of all, it was a bear market.
368
00:29:09,000 --> 00:29:10,400
So we started in 2022.
369
00:29:11,380 --> 00:29:18,780
And, you know, we were buying Bitcoin for the purpose of liquidity at $16,000, $20,000 right at the time.
370
00:29:18,980 --> 00:29:20,580
So that was 2022.
371
00:29:21,480 --> 00:29:24,480
And it was a bear market.
372
00:29:24,480 --> 00:29:29,080
And we felt like it's interesting because we're in a bear market.
373
00:29:29,800 --> 00:29:32,480
Exchanges have nothing better to do.
374
00:29:32,620 --> 00:29:35,600
There's just not a lot of shitcoin activity in trading.
375
00:29:36,440 --> 00:29:47,860
But they have the right regulatory setup They have the integration with the payment systems locally to actually move from fiat to another network Lightning in this case
376
00:29:48,560 --> 00:29:52,260
And we can leverage the exchanges to build a payments network.
377
00:29:53,680 --> 00:29:58,360
And so the first step is actually making sure that all the exchanges are on the Lightning network.
378
00:29:58,360 --> 00:30:27,680
And at the time, there were lots of exchanges that were not on the Lightning Network because their calculus was, this is going to take like an army of people to implement and maintain. And then I have to have a team like rebalancing channels and looking at liquidity and optimizing routes and doing all these things. And where's the volume? And so it's kind of a circular problem of there's no volume. This is high effort. And so then it's kind of a self-fulfilling prophecy, right?
379
00:30:27,680 --> 00:30:34,760
And so what we did is we automated all of the craziness of Lightning so that the equation changed.
380
00:30:35,340 --> 00:30:40,340
And now it's like actually easy to integrate, not hard to maintain, not a lot of people needed.
381
00:30:40,860 --> 00:30:44,460
And so as such, like Coinbase and a bunch of others came on.
382
00:30:45,200 --> 00:30:48,520
And we thought, OK, this is great because now we have a bunch of exchanges.
383
00:30:48,520 --> 00:30:54,040
Now we can build a payments network using these exchanges as the edge endpoints.
384
00:30:55,240 --> 00:30:56,640
Meaning the liquidity providers, ultimately.
385
00:30:56,640 --> 00:31:08,280
I mean, right, it also creates, I mean, this is one of the great criticisms of Lightning is that there's major liquidity, like backup issues that potentially, I assume, theoretically could have been solved by this problem.
386
00:31:08,420 --> 00:31:08,820
Yeah, totally.
387
00:31:08,820 --> 00:31:24,280
Yeah. Yeah. I mean, but then the problem is we tried to actually get like some exchanges to be our partners for this payment network for the real mainstream payments use cases of using Bitcoin almost like TCP IP for money.
388
00:31:24,860 --> 00:31:30,120
And, you know, basically Lightning being the settlement network that moves those TCP IP packets.
389
00:31:30,360 --> 00:31:30,660
For dollars?
390
00:31:31,380 --> 00:31:32,940
For anything at the edges, right?
391
00:31:32,940 --> 00:31:43,940
It's like, you know, basically you send dollars to Mexico, like dollars get converted to Bitcoin, push to Lightning to an exchange in Mexico that then converts into Mexican peso and pushes to the local payment system all in real time, 24-7.
392
00:31:43,960 --> 00:31:45,100
The Jack Mauler's strategy.
393
00:31:45,500 --> 00:31:45,860
Exactly, yeah.
394
00:31:45,960 --> 00:31:46,720
Yeah, yeah, yeah.
395
00:31:47,300 --> 00:31:55,780
So that was sort of like one of the core goals at the time was to kind of get people using Lightning as rails potentially even for dollars for remittances or whatever.
396
00:31:56,020 --> 00:31:56,260
Correct.
397
00:31:56,440 --> 00:32:00,480
And do it at the institutional level so that people didn't even need to know.
398
00:32:00,480 --> 00:32:08,880
Were you talking to sort of TradFi payments companies about this? Like who, like what TradFi payments companies were like interested in this?
399
00:32:08,880 --> 00:32:19,740
I mean, look, that's what we built with UMA and all of the stack that we've built, which now NewBank is running, which now SoFi is running.
400
00:32:19,880 --> 00:32:27,640
So if you're a SoFi customer in the US, you can send money to two dozen different countries in real time.
401
00:32:28,000 --> 00:32:37,340
And it's all running with Lightning in the back end and Spark in some cases to actually settle between two different currencies and two different payment systems in real time.
402
00:32:37,340 --> 00:32:45,040
And the SoFi members, they call them members, but the SoFi members don't even know that there's Bitcoin in between.
403
00:32:45,180 --> 00:32:49,340
They're just sending dollars to someone receiving Brazilian reais on the other side or rupees.
404
00:32:50,320 --> 00:32:52,940
And they don't know. And it works. And it's magic.
405
00:32:53,940 --> 00:32:56,720
How difficult were those conversations with these companies?
406
00:32:56,840 --> 00:33:02,680
I mean, like what kind of like rebuttals or objections were you getting to this way of doing payments?
407
00:33:02,680 --> 00:33:07,440
Well, I mean, at first it was like, you know, we were post FTX.
408
00:33:08,660 --> 00:33:13,560
The market was a bear market and people were like, we don't want to touch this thing.
409
00:33:13,660 --> 00:33:16,540
Like, we don't want to touch anything that has to do with Bitcoin or crypto.
410
00:33:18,180 --> 00:33:22,880
And so it took a while for us to not only build the right infrastructure, the right capabilities,
411
00:33:23,220 --> 00:33:27,660
the right compliance infrastructure to actually power payments for banks themselves,
412
00:33:27,660 --> 00:33:34,120
like regulated federal banks in the U.S. have like a very high compliance bar.
413
00:33:35,180 --> 00:33:41,440
And so meeting that compliance bar so they can actually use the network for real-time payments for like millions of customers
414
00:33:41,440 --> 00:33:44,620
was something that was not trivial and took a while.
415
00:33:46,140 --> 00:33:48,380
But yeah, I mean, so, you know, we built this.
416
00:33:48,620 --> 00:33:56,260
This is the core of our business today is actually enabling global real-time fiat-to-fiat payments on top of Bitcoin,
417
00:33:56,260 --> 00:33:58,840
leveraging Lightning and Spark.
418
00:33:59,420 --> 00:34:03,520
And the next phase, which started in Q4 of last year,
419
00:34:03,920 --> 00:34:05,900
was really opening up that whole platform
420
00:34:05,900 --> 00:34:06,840
with LightSpark Grid,
421
00:34:07,300 --> 00:34:09,540
which is basically enabling
422
00:34:09,540 --> 00:34:12,060
all of these money movement capabilities
423
00:34:12,060 --> 00:34:16,000
plus stablecoin on top of a simple API
424
00:34:16,000 --> 00:34:18,080
that anyone can use to move money in real time.
425
00:34:18,080 --> 00:34:21,680
And it doesn't matter whether the recipient
426
00:34:21,680 --> 00:34:23,460
on the other side wants to receive stablecoins
427
00:34:23,460 --> 00:34:25,800
or wants to receive Bitcoin or wants to receive fiat.
428
00:34:26,260 --> 00:34:35,000
The platform can deliver money in real time in any of these three types of money, 24-7 in 65 countries.
429
00:34:35,580 --> 00:34:40,140
And that platform is now completely on a tear.
430
00:34:41,120 --> 00:34:42,820
And why?
431
00:34:43,440 --> 00:34:50,100
Because when we pitch to those companies, they want stablecoins, but they're not sure how much of their volume is going to be in stablecoin.
432
00:34:50,100 --> 00:34:56,160
They want to offer Bitcoin rewards or buy and sell Bitcoin, but they're not sure how much that's going to be.
433
00:34:56,260 --> 00:35:04,140
And they know they need to offer better payments in real time and fiat all the way to the bank account of the people or businesses that they need to deliver the funds in.
434
00:35:04,600 --> 00:35:11,200
And we can offer that with one single integration that enables them to have an account that's denominated in dollars or in euros.
435
00:35:11,420 --> 00:35:23,280
Because we bought this company, Striga, that's now LightSpark Europe, that has like the regulatory setup in Europe to integrate with SEPA in 32 countries, plus all of the other partners that we have.
436
00:35:23,280 --> 00:35:34,040
And so we can move money in real time between all of these endpoints and basically spit out on the other side stablecoins, fiat, or Bitcoin with one simple API call.
437
00:35:34,240 --> 00:35:36,100
And it's all running on Bitcoin.
438
00:35:37,020 --> 00:35:37,500
I'm curious.
439
00:35:37,660 --> 00:35:43,880
So you had mentioned like back in the day, one of the challenges with getting exchanges to use Lightning was sort of the lack of volume.
440
00:35:44,620 --> 00:35:47,180
How do you view kind of Lightning's growth so far?
441
00:35:47,180 --> 00:35:51,720
I feel like this is like a technology where, you know, some folks are like, no, no, no, Lightning's growing.
442
00:35:51,980 --> 00:35:52,860
Volume is up.
443
00:35:52,860 --> 00:35:53,700
and then other people are saying,
444
00:35:53,840 --> 00:35:55,120
this is really not fast enough.
445
00:35:55,220 --> 00:35:56,720
This is really not doing enough.
446
00:35:56,880 --> 00:35:58,480
You know, we need to move on to something else.
447
00:35:58,940 --> 00:36:00,600
Where do you kind of fall in that conversation?
448
00:36:01,180 --> 00:36:03,360
I still believe Lightning plays a role
449
00:36:03,360 --> 00:36:04,800
and will continue to play a role.
450
00:36:04,980 --> 00:36:08,780
And I kind of see it as kind of like this interrupt
451
00:36:08,780 --> 00:36:12,440
between different real-time Bitcoin protocols
452
00:36:12,440 --> 00:36:14,440
that will serve different purposes.
453
00:36:15,440 --> 00:36:17,480
And so I still think this is important,
454
00:36:18,340 --> 00:36:20,520
but not in the way that people think.
455
00:36:20,520 --> 00:36:22,400
It's like, it's almost like,
456
00:36:22,860 --> 00:36:28,540
you know, the backhaul for interoperability between a bunch of different layer twos
457
00:36:28,540 --> 00:36:32,440
that can still serve as the common denominator.
458
00:36:32,440 --> 00:36:41,760
So, for instance, when Square enables Lightning payments for their merchants,
459
00:36:42,720 --> 00:36:49,380
now a Spark wallet can pay that merchant with a stablecoin on Spark or with Bitcoin.
460
00:36:49,380 --> 00:36:54,500
and that endpoint terminal doesn't have to implement spark because it has lightning
461
00:36:54,500 --> 00:37:02,240
and so if lightning becomes kind of the the backbone of the the interrupt between these
462
00:37:02,240 --> 00:37:06,660
layer twos that are actually solving the problems that lightning has in terms of limitations
463
00:37:06,660 --> 00:37:13,060
um then it still serves a purpose and that's fine is do you think that is the purpose like
464
00:37:13,060 --> 00:37:17,500
why not just go straight from spark to bitcoin like is the reason to have this sort of potentially
465
00:37:17,500 --> 00:37:19,760
like B2B style Lightning integration
466
00:37:19,760 --> 00:37:21,760
because of its permissionless features?
467
00:37:22,020 --> 00:37:23,400
Or like, what is it about Lightning
468
00:37:23,400 --> 00:37:25,160
that you think keeps it alive in this universe?
469
00:37:25,460 --> 00:37:27,180
Yeah, I think, you know, I mean, it's like,
470
00:37:27,580 --> 00:37:29,700
first of all, Lightning has very few
471
00:37:29,700 --> 00:37:32,940
additional trust assumptions on top of Bitcoin L1,
472
00:37:33,020 --> 00:37:34,020
which I think is nice.
473
00:37:35,280 --> 00:37:38,620
Two is it has reach.
474
00:37:40,560 --> 00:37:43,960
And so, you know, Spark is growing really fast, right?
475
00:37:43,960 --> 00:38:02,640
It's like every single self-custody Bitcoin wallet that matters is either already on Spark or in the process of implementing Spark because we solve all of the real-time Bitcoin problems that everyone wants real-time cheap Bitcoin settlement on top of self-custody wallets.
476
00:38:02,900 --> 00:38:05,400
And no one has been able to do that at scale until now.
477
00:38:05,400 --> 00:38:14,000
and the fact that we have infra that enables stablecoin issuers to issue on top of spark to
478
00:38:14,000 --> 00:38:18,480
swap between the stablecoin and bitcoin at a really competitive rate in a fully peer-to-peer way
479
00:38:18,480 --> 00:38:25,580
that enables all of these you know atomic capabilities on top of bitcoin to actually
480
00:38:25,580 --> 00:38:32,840
come to life in a self-custodial wallet there's a massive need in the market for that and and and
481
00:38:32,840 --> 00:38:36,820
that's where Spark fits. And so I don't know how it's going to play out. There's a bunch of other
482
00:38:36,820 --> 00:38:42,360
Bitcoin L2s that are building for other purposes. And so that's the nice part of Lightning is like,
483
00:38:42,400 --> 00:38:47,060
you know, it can enable interoperability, real-time interoperability of Bitcoin protocols
484
00:38:47,060 --> 00:38:51,620
on top of layer one. So basically the interoperability between potential layer
485
00:38:51,620 --> 00:38:55,120
twos may actually be like the thing that keeps Lightning alive in particular.
486
00:38:55,120 --> 00:38:55,600
Might be, yeah.
487
00:38:55,720 --> 00:39:02,440
Might be. So in terms of like, you know, Spark's competitive advantage relative to other L2s,
488
00:39:02,440 --> 00:39:03,320
while we're on the subject.
489
00:39:03,980 --> 00:39:05,680
What do you think makes Spark different
490
00:39:05,680 --> 00:39:07,960
either on the technical side or the commercial side?
491
00:39:08,340 --> 00:39:10,560
I mean, I could imagine that you guys
492
00:39:10,560 --> 00:39:12,260
have a commercial advantage in some ways
493
00:39:12,260 --> 00:39:13,580
just in terms of business development,
494
00:39:13,580 --> 00:39:16,220
but, you know, what do you think are Spark's advantages
495
00:39:16,220 --> 00:39:17,780
relative to other Bitcoin L2s?
496
00:39:17,780 --> 00:39:19,940
Well, first of all, it works and it's live, right?
497
00:39:20,220 --> 00:39:23,380
So that's like an already pretty big advantage.
498
00:39:23,720 --> 00:39:24,380
You already had.
499
00:39:24,620 --> 00:39:25,980
Yeah, it's like it's live, right?
500
00:39:26,020 --> 00:39:27,400
It's like you can use it right now.
501
00:39:28,200 --> 00:39:30,340
And so I think that's a big advantage.
502
00:39:30,340 --> 00:39:33,180
but look I think the implementation is really easy
503
00:39:33,180 --> 00:39:35,220
so like you know
504
00:39:35,220 --> 00:39:37,040
in an age where everyone's like
505
00:39:37,040 --> 00:39:39,080
agent coding I like that term better
506
00:39:39,080 --> 00:39:40,300
than vibe coding
507
00:39:40,300 --> 00:39:43,460
but at a time where everyone's agent coding
508
00:39:43,460 --> 00:39:45,220
like you know I coded this
509
00:39:45,220 --> 00:39:46,900
like a stupid bitcoin game
510
00:39:46,900 --> 00:39:49,260
on Sunday using Spark
511
00:39:49,260 --> 00:39:50,980
and it took me half a day
512
00:39:50,980 --> 00:39:53,300
and it's really easy to add a
513
00:39:53,300 --> 00:39:54,800
wallet that actually supports
514
00:39:54,800 --> 00:39:57,280
Bitcoin L1 deposits, Lightning
515
00:39:57,280 --> 00:39:59,400
Spark, stable coins
516
00:39:59,400 --> 00:40:03,260
like funding of your wallet with, you know,
517
00:40:03,400 --> 00:40:06,380
USDC on Solana and base that ends up in Bitcoin
518
00:40:06,380 --> 00:40:07,860
and your Bitcoin game.
519
00:40:08,120 --> 00:40:09,400
I might launch that game.
520
00:40:09,580 --> 00:40:11,420
It's kind of crappy, but it's fun.
521
00:40:12,340 --> 00:40:13,960
But it's easy.
522
00:40:14,100 --> 00:40:14,720
It's so easy.
523
00:40:15,240 --> 00:40:18,100
And so suddenly building real-time Bitcoin apps
524
00:40:18,100 --> 00:40:22,560
is now trivial and takes hours.
525
00:40:23,000 --> 00:40:24,760
And you don't have to worry about anything.
526
00:40:24,760 --> 00:40:26,360
Like you don't have to worry about liquidity.
527
00:40:26,700 --> 00:40:28,480
You don't have to worry about like, you know,
528
00:40:28,520 --> 00:40:29,240
opening channels.
529
00:40:29,400 --> 00:40:31,900
You don't have to worry about placing liquidity in front of a wallet.
530
00:40:32,040 --> 00:40:37,980
You don't have to worry about having a Lightning service provider provide that, whether it's money transmission or not.
531
00:40:37,980 --> 00:40:40,500
Like, you know, it's like you don't have to worry about any of that.
532
00:40:40,760 --> 00:40:44,420
And it's self-custodial without having to worry about any of that, which is the key thing.
533
00:40:44,620 --> 00:40:44,900
Yeah, exactly.
534
00:40:45,640 --> 00:40:48,460
And so I think that's the thing.
535
00:40:48,520 --> 00:40:55,440
It's just easy, fast, real-time, cheap Bitcoin with L1, Lightning, and Spark in one simple integration.
536
00:40:55,440 --> 00:40:59,920
and it solves a lot of problems for lots of endpoints.
537
00:41:00,120 --> 00:41:02,080
And so now Bitcoin is relevant again
538
00:41:02,080 --> 00:41:03,740
in all kinds of different apps
539
00:41:03,740 --> 00:41:05,640
where it was starting to fall behind
540
00:41:05,640 --> 00:41:08,800
because like no one in this day and age
541
00:41:08,800 --> 00:41:10,500
of fast table coin payments
542
00:41:10,500 --> 00:41:12,860
wants to wait for 30, 40 minutes
543
00:41:12,860 --> 00:41:16,400
for a transaction to clear mempool.
544
00:41:17,400 --> 00:41:19,820
And so, you know, no one wants to do that anymore.
545
00:41:20,720 --> 00:41:21,520
So, yeah.
546
00:41:22,220 --> 00:41:23,840
Do you think end users,
547
00:41:23,840 --> 00:41:28,520
Like assuming like we're living in this universe where like a billion people will use this technology.
548
00:41:28,960 --> 00:41:35,860
How much do you think end users really care about self-custody and or like what would need to happen to get them to care about self-custody?
549
00:41:36,460 --> 00:41:38,280
I think they don't care about self-custody.
550
00:41:38,400 --> 00:41:42,120
I think they care about an easy experience.
551
00:41:42,120 --> 00:41:49,080
and if my first experience of actually interacting with any of these things actually requires me to
552
00:41:49,080 --> 00:41:55,540
open an account and kyc and upload my id and upload a utility bill god knows what is needed
553
00:41:55,540 --> 00:42:00,260
in a country to actually have a basic experience to play a game that has this money involved
554
00:42:00,260 --> 00:42:08,640
just i'm in my game thing sure then like there's just too much friction and so i think actually
555
00:42:08,640 --> 00:42:12,140
that the future of those money apps
556
00:42:12,140 --> 00:42:14,340
are self-custodial,
557
00:42:14,420 --> 00:42:17,660
not because people care about the self-custodiality
558
00:42:17,660 --> 00:42:19,740
or the pureness of the self-custodiality
559
00:42:19,740 --> 00:42:20,940
of like the experience
560
00:42:20,940 --> 00:42:23,560
or the fact that they don't need to trust anyone,
561
00:42:24,060 --> 00:42:25,140
although I think it's important,
562
00:42:25,920 --> 00:42:30,440
but it's because it's an easy experience.
563
00:42:30,640 --> 00:42:35,400
And I think the future of those like near bank apps
564
00:42:35,400 --> 00:42:38,380
are going to be basically a Spark wallet
565
00:42:38,380 --> 00:42:41,060
that will have stable coins,
566
00:42:41,840 --> 00:42:43,240
that will have Bitcoin,
567
00:42:44,040 --> 00:42:45,260
that will have a debit card,
568
00:42:46,000 --> 00:42:47,500
that will connect to LightSpark Grid
569
00:42:47,500 --> 00:42:50,180
so that you can on-ramp and off-ramp in real time
570
00:42:50,180 --> 00:42:51,820
with your other bank accounts
571
00:42:51,820 --> 00:42:53,240
or people that you want to pay
572
00:42:53,240 --> 00:42:55,660
on the legacy payment systems and banking systems.
573
00:42:56,120 --> 00:42:59,740
And those will become the nexus of your transactional life.
574
00:43:00,140 --> 00:43:03,200
And the friction to actually have that experience
575
00:43:03,200 --> 00:43:04,900
that will enable you to have dollars,
576
00:43:05,400 --> 00:43:07,480
to have Bitcoin, to have a debit card,
577
00:43:07,480 --> 00:43:14,340
to have connections with payment systems, all of that on top of Bitcoin is going to be massively
578
00:43:14,340 --> 00:43:19,560
valuable. It's so interesting that you say that because I think most people think self-custodial
579
00:43:19,560 --> 00:43:25,400
is like antithetical to UX, right? Like by definition, you have to trade good UX for self-custody.
580
00:43:25,800 --> 00:43:28,980
But I mean, it sounds like what I'm hearing, if I'm hearing you correctly, is that like,
581
00:43:29,200 --> 00:43:32,140
there's actually a universe where custodial products have worse UX.
582
00:43:32,400 --> 00:43:33,320
Totally. Yes.
583
00:43:33,660 --> 00:43:36,420
And that we can actually make UX better through self-custody.
584
00:43:36,420 --> 00:43:37,240
A hundred percent, yeah.
585
00:43:37,240 --> 00:43:40,120
Like, like tangibly and practically, like how?
586
00:43:40,320 --> 00:43:47,840
Like, like, why will it be an easier experience for users to use crypto essentially and deal with private keys and all that?
587
00:43:47,960 --> 00:43:48,780
You won't need to.
588
00:43:48,900 --> 00:44:04,640
Like, look, I think like right now, if you look at the market for for embeddable wallets, there are lots of embeddable wallets where you can actually never be exposed to like a 12 word mnemonic and like, you know, private key and all these things.
589
00:44:04,640 --> 00:44:14,820
You just like onboard with whatever login you want, whether it's like Turnkey or Privy or any of those embedded wallet platforms, like they enable you to spin up these wallets.
590
00:44:14,940 --> 00:44:16,500
So it's happening on the hardware device, basically.
591
00:44:16,740 --> 00:44:17,600
It's like in your phone.
592
00:44:17,840 --> 00:44:19,520
And that will also happen more and more.
593
00:44:19,640 --> 00:44:42,600
I think like the hardware manufacturers the device manufacturers are going to enable you to have that in your device with like a way to recover it like without it feeling like you recovering something Again it like all tech that will actually disappear in the background And I think this is real right now I think you seeing really good self wallets now that actually don require you to jump through fire
594
00:44:42,600 --> 00:44:50,160
and do all kinds of crazy tribal stuff to actually operate it. And yeah, I feel like
595
00:44:50,160 --> 00:44:55,360
this is where we're going. And it's going to exist on top of Bitcoin on Spark.
596
00:44:56,280 --> 00:45:00,900
When you think about Spark, do you think of it, I mean, are you thinking more about end users?
597
00:45:01,060 --> 00:45:02,980
Are you thinking more about enterprise clients?
598
00:45:03,100 --> 00:45:08,480
Like how much of this do you think of as sort of like a consumer product versus like business products or B2B?
599
00:45:08,480 --> 00:45:09,720
It doesn't really matter.
600
00:45:09,880 --> 00:45:10,320
It doesn't.
601
00:45:10,400 --> 00:45:11,780
Because the primitives are the same.
602
00:45:11,780 --> 00:45:26,860
And so you can imagine being a small business and connecting your bank, various bank accounts to a Spark endpoint and enabling you to have that be your nexus.
603
00:45:26,860 --> 00:45:51,060
So you can actually move funds in real time from your bank account to a stablecoin asset on top of Spark that can actually move that value to another Spark wallet somewhere else in another country that has the connectivity with their own banking system with the ability to move that balance in real time between their Spark wallets to their local bank in local currency at a very competitive rate.
604
00:45:51,060 --> 00:45:55,440
also an advantage of Bitcoin because of the depth of liquidity of Bitcoin versus
605
00:45:55,440 --> 00:45:59,400
other currencies, fiat currencies, because of trading volume.
606
00:46:01,260 --> 00:46:05,500
And it can be a business and it can be a person. It doesn't really matter. The primitives are the
607
00:46:05,500 --> 00:46:11,320
same. When you think about, so like we talked about like, okay, getting big TradFi payments
608
00:46:11,320 --> 00:46:17,000
in for companies to use Lightning as Rails. Do you imagine them in that instance to be continuing
609
00:46:17,000 --> 00:46:22,040
to use lightning or would spark be an appropriate switch in that no spark spark is a totally
610
00:46:22,040 --> 00:46:27,400
appropriate switch right and and it really depends and it's fine because like it works either way
611
00:46:27,400 --> 00:46:32,200
like you can have a spark endpoint and a lightning endpoint they talk like the same language doesn't
612
00:46:32,200 --> 00:46:37,560
matter it doesn't really matter yeah interesting how big like how important is stable coins for
613
00:46:37,560 --> 00:46:41,480
your strategy like how much do you think about stable coins for spark i know you guys launched
614
00:46:41,480 --> 00:46:46,040
I think what was the was it the first stablecoin on Bitcoin technically?
615
00:46:46,040 --> 00:46:47,080
Yeah, technically it was.
616
00:46:47,080 --> 00:46:47,960
I mean, it's not us.
617
00:46:47,960 --> 00:46:51,560
It's like actually Braille and FlashNet that launched that.
618
00:46:51,560 --> 00:46:53,960
Which is the stablecoin issuer?
619
00:46:53,960 --> 00:46:54,120
Yeah.
620
00:46:54,120 --> 00:46:55,240
USDB is the stablecoin.
621
00:46:55,240 --> 00:46:57,400
Okay, so Braille is the USDB stablecoin issuer.
622
00:46:57,400 --> 00:46:57,560
Yeah.
623
00:46:57,560 --> 00:46:57,880
Okay.
624
00:46:57,880 --> 00:46:59,000
Uh, yes.
625
00:46:59,000 --> 00:47:04,360
So yeah, that's the first stablecoin on Bitcoin that works really well, actually.
626
00:47:06,200 --> 00:47:06,920
And there's like-
627
00:47:06,920 --> 00:47:11,080
Do you feel like that's important for the proliferation of Spark, like going forward?
628
00:47:11,080 --> 00:47:12,420
I mean, do you feel like that was like a key?
629
00:47:12,520 --> 00:47:20,620
Yeah, I think having like the ability to have a Bitcoin at the end of the day, a Bitcoin wallet that can contain dollars is really important.
630
00:47:21,400 --> 00:47:27,540
And and, you know, I think that's like an important primitive for for where we're going.
631
00:47:27,540 --> 00:47:42,780
And I think it's also a great way to get people onto Bitcoin more, because if you can hold a balance in dollars and swap a little bit in Bitcoin when needed or when rewarded, then you start to get more interested in Bitcoin.
632
00:47:43,680 --> 00:47:49,280
And the key thing here that I'm hearing right now is you think it's important to be able to hold dollars in Bitcoin wallets specifically.
633
00:47:49,480 --> 00:47:50,480
I mean, is that the answer?
634
00:47:50,620 --> 00:47:54,420
If I was planning on asking you this question, why have a stablecoin on Bitcoin?
635
00:47:54,640 --> 00:47:54,760
Yeah.
636
00:47:54,960 --> 00:47:55,760
Is that the answer?
637
00:47:56,040 --> 00:47:56,260
Yeah.
638
00:47:56,380 --> 00:47:58,040
Because you need to have a wallet that can hold both?
639
00:47:58,180 --> 00:47:58,460
Yes.
640
00:47:58,880 --> 00:48:02,800
And I think, like, look, if you have a Spark wallet, you have a Spark address, right?
641
00:48:02,800 --> 00:48:16,980
That one Spark address, it's one address, it's one signature scheme, it's one wallet can receive Bitcoin, stablecoin tokens of all kinds, but it's one address for different asset types.
642
00:48:18,080 --> 00:48:19,380
And you don't have to...
643
00:48:19,380 --> 00:48:20,800
This is a Spark specific feature.
644
00:48:21,660 --> 00:48:21,780
Yeah.
645
00:48:22,000 --> 00:48:23,140
And it's a big, big one.
646
00:48:23,340 --> 00:48:23,820
It is a big one.
647
00:48:23,940 --> 00:48:23,980
Yeah.
648
00:48:24,000 --> 00:48:27,820
Because like you have one address, you can receive all kinds of different assets and it's all on Spark.
649
00:48:28,140 --> 00:48:31,460
And you can swap these assets all on Spark without ever leaving.
650
00:48:31,460 --> 00:48:31,800
Right.
651
00:48:31,800 --> 00:48:36,980
So I think like that that has a lot of a lot of value, in my opinion.
652
00:48:37,620 --> 00:48:46,660
Do you I mean, what are you kind of what are your broad thoughts about this sort of I don't want to call it like a stable coins bull market, but all these stable coins kind of coming onto the market?
653
00:48:46,760 --> 00:48:49,740
I mean, we have USDT, Tether and Circle that sort of dominate.
654
00:48:49,840 --> 00:48:51,380
They have clear network effects.
655
00:48:51,500 --> 00:48:54,260
What do you think is going to happen to all these other stable coins that are coming on?
656
00:48:54,260 --> 00:49:03,260
like i don't know i think the brand of the stable coin will kind of like be with the exception of i
657
00:49:03,260 --> 00:49:08,640
think usdt usdc i think they're the brands are just going to be more muted and you're just going
658
00:49:08,640 --> 00:49:17,800
to have dollars basically um i personally care no you have a dollar coin they're using yeah i think
659
00:49:17,800 --> 00:49:22,120
you know that's not true in a bunch of different countries so like you know if you go to certain
660
00:49:22,120 --> 00:49:26,920
countries where USDT on Tron is the way that people actually move money and pay one another,
661
00:49:27,780 --> 00:49:32,280
it's basically the local payment system, then the network effects matter.
662
00:49:33,000 --> 00:49:36,820
In all kinds of other places where basically stablecoins are not prevalent right now,
663
00:49:36,920 --> 00:49:42,100
you'll just have like dollars. And it won't matter what dollars you have. To the extent
664
00:49:42,100 --> 00:49:44,840
you can move them in real time or spend them in real time.
665
00:49:46,060 --> 00:49:49,380
So it won't be up to the consumer which kind of stablecoin they're receiving,
666
00:49:49,380 --> 00:49:51,580
which is currently the case.
667
00:49:51,680 --> 00:49:54,140
It'll be like whatever wallet software you're using
668
00:49:54,140 --> 00:49:55,820
will just have dollars for you
669
00:49:55,820 --> 00:49:58,240
and they'll decide which network they're using.
670
00:49:58,240 --> 00:49:59,100
Probably, probably.
671
00:49:59,360 --> 00:50:00,840
I think you'll see more and more of that.
672
00:50:01,220 --> 00:50:06,580
I do feel like the reality of a world
673
00:50:06,580 --> 00:50:09,100
that's massively fragmented
674
00:50:09,100 --> 00:50:11,360
with like a thousand different stable coins
675
00:50:11,360 --> 00:50:14,240
and then bridges, centralized bridges or not,
676
00:50:14,320 --> 00:50:16,180
but like, you know, vulnerable bridges
677
00:50:16,180 --> 00:50:17,940
that actually serve as a way
678
00:50:17,940 --> 00:50:20,520
to actually move the liquidity and make it more fungible
679
00:50:20,520 --> 00:50:22,660
between one stable coin to another stable coin,
680
00:50:23,200 --> 00:50:25,380
it's kind of a really shitty, depressing future.
681
00:50:26,060 --> 00:50:29,800
Like, it's like, basically, take the current, like, financial system
682
00:50:29,800 --> 00:50:32,400
and just replace it with a bunch of new names.
683
00:50:32,800 --> 00:50:34,680
But basically, everything is centralized.
684
00:50:35,240 --> 00:50:36,380
The issuer is centralized.
685
00:50:37,000 --> 00:50:38,220
The bridges are centralized.
686
00:50:38,900 --> 00:50:42,480
Then the settlement network are cork chains that are run by people.
687
00:50:43,140 --> 00:50:44,940
Like, that's a really depressing future.
688
00:50:44,940 --> 00:50:47,080
It's fully custodial at that point, basically.
689
00:50:47,080 --> 00:50:47,540
Oh, 100%.
690
00:50:47,540 --> 00:50:48,480
Like it's fully trusted.
691
00:50:48,920 --> 00:50:51,660
It's just like a new kind of trusted system.
692
00:50:51,980 --> 00:51:04,420
And I think what we try to represent at LightSpark is an alternative reality to that depressing future, which is like build on Bitcoin, a network that no one owns, but everyone can get value from.
693
00:51:04,420 --> 00:51:11,360
enable people to have some people and businesses to like have exposure to Bitcoin really without any friction,
694
00:51:12,180 --> 00:51:17,760
have the ability to still hold dollars and use Bitcoin as a neutral settlement network
695
00:51:17,760 --> 00:51:21,500
and asset for all of the payment systems in the world.
696
00:51:21,500 --> 00:51:26,640
And I think that's a much better future than the alternative.
697
00:51:27,320 --> 00:51:29,560
And I think we're representing that.
698
00:51:29,780 --> 00:51:31,120
I think we're trying to represent.
699
00:51:31,180 --> 00:51:31,980
I love that vision.
700
00:51:32,140 --> 00:51:33,320
I'm spark-pilled right now.
701
00:51:34,020 --> 00:51:37,320
Okay, so RWA, that was the other thing I wanted to ask you about.
702
00:51:37,400 --> 00:51:41,640
So you have sort of broad asset, you know, token asset issuance on Spark.
703
00:51:42,560 --> 00:51:44,780
How are people wanting to use that?
704
00:51:44,880 --> 00:51:50,860
I mean, are you kind of, what kind of interest are you seeing on Spark in terms of sort of the RWA meta?
705
00:51:51,380 --> 00:51:56,720
I mean, I'm not that, like, personally, I'm not that interested in that aspect,
706
00:51:56,720 --> 00:52:00,240
despite the fact that it's really easy to issue new tokens on Spark.
707
00:52:00,240 --> 00:52:04,640
and the first use cases for that have been like meme coins
708
00:52:04,640 --> 00:52:07,020
and of course like that's always how it starts
709
00:52:07,020 --> 00:52:12,160
but like you know I mean it's kind of nice to see people take a tech
710
00:52:12,160 --> 00:52:15,620
that's actually a platform that's actually not meant for something
711
00:52:15,620 --> 00:52:17,560
and just go and build those things
712
00:52:17,560 --> 00:52:23,040
I think the nice aspect of all of this is that it enabled a bunch of different players
713
00:52:23,040 --> 00:52:29,440
to build capabilities that enable trading and swapping on Spark to be ultra efficient
714
00:52:29,440 --> 00:52:38,620
and so right now for instance like if you want to use flash net to swap between usdb and bitcoin
715
00:52:38,620 --> 00:52:46,960
you're going to have like a tighter spread than any centralized exchange at any given point in time
716
00:52:46,960 --> 00:52:52,660
and it's a real-time fast much more efficient like version of uniswap for bitcoin basically
717
00:52:52,660 --> 00:52:57,180
that now exists on top of bitcoin and that couldn't exist before spark and we're seeing
718
00:52:57,180 --> 00:53:02,020
volume pick up on those types of use cases where people start to arbitrage basically the ability to
719
00:53:02,020 --> 00:53:10,700
buy bitcoin at a cheaper spread um and uh and and cheaply and and then just you know arb the market
720
00:53:10,700 --> 00:53:16,180
and um which is kind of also an interesting side effect but again back to the point of like having
721
00:53:16,180 --> 00:53:23,940
people and businesses have those really easy to use wallets that are nothing like you know the old
722
00:53:23,940 --> 00:53:29,900
wallets that have caused so much pain and headaches and the ability to move in and out of
723
00:53:29,900 --> 00:53:36,100
bitcoin really really almost for free against the dollar and other currencies over time as part of
724
00:53:36,100 --> 00:53:42,620
the core capability of the wallet with one single address one single signature scheme and also make
725
00:53:42,620 --> 00:53:48,140
it like the most efficient way to move stable coins around in terms of cost without a need of
726
00:53:48,140 --> 00:53:53,460
an external token to pay gas fees and all of these things actually make it a really compelling
727
00:53:53,460 --> 00:53:58,260
value problem. Would you say that it's fair to say that the reason why you created sort of this
728
00:53:58,260 --> 00:54:04,620
asset token issuance capability on Spark was for stables? I mean, that was the reason. You weren't
729
00:54:04,620 --> 00:54:08,300
thinking about really anything else, even though it could be used for all these other things.
730
00:54:08,300 --> 00:54:13,440
Yes. For RWAs, for things like tokenized equities, you know, tokenized treasuries,
731
00:54:13,560 --> 00:54:17,160
all of these things that we hear, are you not interested in them or are you not bullish on them?
732
00:54:17,340 --> 00:54:21,860
No, I mean, I think they also serve a purpose. Like, I think tokenizing all kinds of different
733
00:54:21,860 --> 00:54:32,020
assets to make them more atomic, more fungible, will make sense. I'm not sure that Bitcoin is
734
00:54:32,020 --> 00:54:38,220
going to be the right home for that. Why? Because I think that for these types of things,
735
00:54:38,220 --> 00:54:43,460
you have chains that are really good already. And like Solana is a good example. Like it's like
736
00:54:43,460 --> 00:54:48,500
actually really high performance. It's programmable. It already solves the problem really well.
737
00:54:48,500 --> 00:54:56,380
And you don't need that sort of instant, that in-wallet trading experience with Bitcoin that maybe would make the argument for a Bitcoin stablecoin.
738
00:54:56,400 --> 00:54:57,260
Yeah, yeah, exactly.
739
00:54:57,780 --> 00:54:58,580
So I don't know.
740
00:54:58,800 --> 00:55:07,600
I think, and also we've been struggling, to be completely candid, like we've been struggling with this idea of programmability, right?
741
00:55:07,600 --> 00:55:18,940
Because Spark has this wonderful thing of having unilateral exits to L1, which is the way that you borrow trust from Bitcoin L1, right?
742
00:55:19,060 --> 00:55:27,040
Because otherwise there's always like anything that's off of you owning your UTXO on L1 is always like some trust assumption, right?
743
00:55:27,480 --> 00:55:32,940
And so there's definitely trust assumption with Lightning, not many, but still trust assumptions.
744
00:55:32,940 --> 00:55:39,620
uh there's trust assumptions with spark but because you have this unilateral ripcord to l1
745
00:55:39,620 --> 00:55:45,740
that you can pull at any given point in time you inherit the trust of bitcoin l1 right which is
746
00:55:45,740 --> 00:55:51,500
very important otherwise what's the point of building on bitcoin um and and the problem with
747
00:55:51,500 --> 00:55:58,600
introducing programmability to spark is that you would lose that so we've been struggling with
748
00:55:58,600 --> 00:56:02,480
You know, should we actually bring more programmability to Spark?
749
00:56:02,780 --> 00:56:03,620
Should we not?
750
00:56:04,460 --> 00:56:05,960
Is it net positive?
751
00:56:06,300 --> 00:56:10,140
Is it going to be problematic because then it's like any other EVM chain?
752
00:56:11,440 --> 00:56:11,840
So I don't know.
753
00:56:11,840 --> 00:56:15,240
There's a whole slew of different potential risks and vulnerabilities with that.
754
00:56:15,400 --> 00:56:17,780
I mean, yeah, that's a whole other can of worms.
755
00:56:18,180 --> 00:56:25,300
I'm curious, though, with stables, my understanding is there's an argument for the fact that you need some level of programmability even just to have a really high-functioning stable.
756
00:56:25,300 --> 00:56:29,300
Like you need the ability to like, you know, freeze assets and control supply.
757
00:56:29,300 --> 00:56:29,960
And we have supply.
758
00:56:30,160 --> 00:56:30,320
Okay.
759
00:56:30,400 --> 00:56:33,260
So that you would say like there's that level of technical ability.
760
00:56:33,260 --> 00:56:36,740
But once you start to get into like more complex, like smart contract stuff, that's where it ends.
761
00:56:37,520 --> 00:56:37,900
Okay.
762
00:56:38,020 --> 00:56:46,120
That's super interesting to hear that you guys are, you've been like on the fence about this, but it sounds like you're leaning in the direction of it's too much.
763
00:56:46,240 --> 00:56:49,600
Like that's, there's too much unknowns that come with introducing programmability.
764
00:56:49,600 --> 00:56:50,660
There's too much unknowns.
765
00:56:50,660 --> 00:56:57,760
and then I mean it's going to be a question of like is there a use case that we're really
766
00:56:57,760 --> 00:57:04,820
not able to address for a large swath of people who want to use the network because we don't have
767
00:57:04,820 --> 00:57:10,580
a certain thing or a certain programmability and if the answer to that is yes and we can do it in
768
00:57:10,580 --> 00:57:14,920
a certain way that actually enables those use cases for the people wanting to use those use
769
00:57:14,920 --> 00:57:22,460
cases, then I think that's when we'll push harder on that. But right now, I think we can actually do
770
00:57:22,460 --> 00:57:27,980
a really good job at Bitcoin and stable coins and swaps and all these things without having to do
771
00:57:27,980 --> 00:57:33,360
that. But things might change. I don't know. So it sounds like, again, even though you have this
772
00:57:33,360 --> 00:57:39,060
ability to do token as an issue, you're not sort of really seeing like a strong reason why people
773
00:57:39,060 --> 00:57:44,040
would use Spark for those use cases except for staples in Bitcoin because of the programmability
774
00:57:44,040 --> 00:57:51,560
situation. That makes sense. Interesting. So last and final question. So in terms of like the
775
00:57:51,560 --> 00:57:58,320
stables versus Bitcoin conversation, 50 years from now, 100 years from now, I mean, do you see a
776
00:57:58,320 --> 00:58:02,460
situation where like the demand for dollars will just continue to decrease and we'll eventually get
777
00:58:02,460 --> 00:58:05,980
to hyper Bitcoinization? Or are you sort of in the camp of like, no, we're going to have dollars
778
00:58:05,980 --> 00:58:11,340
forever. We'll always need dollars in Bitcoin and wallets. I think that we're going to need dollars
779
00:58:11,340 --> 00:58:12,420
for a long time.
780
00:58:14,360 --> 00:58:16,560
But I think it doesn't matter what we think.
781
00:58:16,900 --> 00:58:19,060
I think what matters is what we build.
782
00:58:19,800 --> 00:58:22,700
And ultimately, I think our thing
783
00:58:22,700 --> 00:58:24,280
is going to be around in 100 years
784
00:58:24,280 --> 00:58:26,100
because in either scenario,
785
00:58:26,400 --> 00:58:29,700
the demand for Bitcoin is not going anywhere.
786
00:58:29,920 --> 00:58:31,140
It's only going one way.
787
00:58:31,920 --> 00:58:34,480
And having Bitcoin natively exist
788
00:58:34,480 --> 00:58:37,220
in all of these hopefully billions of wallets
789
00:58:37,220 --> 00:58:44,180
and being so easy to reach and accumulate
790
00:58:44,180 --> 00:58:46,160
and convert into and out of
791
00:58:46,160 --> 00:58:48,860
and make those balances interoperable
792
00:58:48,860 --> 00:58:51,500
with all of the payment systems that are required still
793
00:58:51,500 --> 00:58:53,860
to move money around the world,
794
00:58:53,940 --> 00:58:56,700
I think is going to be relevant 100 years from now.
795
00:58:57,100 --> 00:58:59,920
And whether people are paying everything in Bitcoin at that time
796
00:58:59,920 --> 00:59:02,060
or still using dollars or other currencies,
797
00:59:02,600 --> 00:59:03,300
it doesn't matter.
798
00:59:04,920 --> 00:59:06,580
What I think, I think, you know,
799
00:59:06,580 --> 00:59:10,880
what matters is we build the thing that will support that use case if it happens. And that's
800
00:59:10,880 --> 00:59:14,700
what we're doing. I think that's the perfect place to call it. Thank you so much, David.
801
00:59:14,700 --> 00:59:17,780
This was super amazing. My pleasure. Thank you.