Watch the Lightspark Sync 2024 Opening Keynote

Watch the Lightspark Sync 2024 Opening Keynote

Lightspark Sync brings together our partners to discuss the future of money movement, inspire new ideas, and foster progress. At Sync 2024, we unveiled two new foundational capabilities for Universal Money Address (UMA): UMA Auth and UMA Request, as well as one Lightspark product update, Lightspark Extend. We also announced Spark: a new open-source Bitcoin Layer 2, Lightning-compatible solution for stablecoins and self-custodial wallets. 

Here’s the Opening Keynote featuring David Marcus:

Transcript

[00:00:00] Great. Good morning, everyone. For those of you who don't know me, I'm David Marcus. I'm the co-founder and CEO of Lightspark, and we're so excited to have so many companies, exchanges, banks, wallets, investors that have come to Los Angeles for the day, and we have a really, good day planned for all of you, and my hope is that you'll go home tomorrow, or whenever you're flying back home, full of ideas and plans to make this bright future a reality together.

But without further ado, let me just dive in. I'd like you to meet Alice Ward and Bob Smith. The year [00:01:00] is 1871. And it's a very cold morning in New York City, 714 miles away. Bob is in Chicago and there they woke up really early because they're about to make history by sending money over the wire quite literally for the very first time.

So Alice arrives at the Western Union office at one four five Broadway. And she hands over a $20 bill, which at the time featured the one and only Thomas Jefferson. And then wrote on a piece of paper Bob's name, the Western Union office he was supposed to pick up the money at, and handed that over to the teller.

The teller added the fee and a special password to secure the transaction. He handed that to the telegraph operator, which then proceeded on transmitting the message to the Chicago office. And it sounded like this.[00:02:00] 

Just like that, the message was transmitted. The telegraph operator in Chicago decoded that message, wrote it on a piece of paper, handed it over to the teller went to the safe got ten and five and change. Gave that to Bob and boom, money was transmitted by transmitting electric signal over two pairs of copper wires.

And when you think about it, this was really amazing. It required liquidity to exist at both ends. And we use the telegraph as the messaging platform to move money around. In 1872, this was released to the public and a couple of years later was moving millions of dollars of this era's dollars.

Now let's fast forward to 2024 and take a look at how things have evolved. So in 2024, for the most part, domestic payments have been solved. Despite the fact that [00:03:00] I still can't send money between Cash App and Venmo and all of these things. We still have domestic payment systems. So we have PIX in Brazil.

We have UPI in India. We have SEPA in Europe. We have SPAY in Mexico. We have FedNow and RTP in the U.S. You can send money if you're in any one of these places really for free, in real time, as long as you're on the same payment system. But let's look at how modern day Alice and modern day Bob would send money between one another if one is in New York and the other one is in Rio.

For a lot of people in the U.S. sending an international wire still requires you to physically visit a bank branch. I'm not making this up for those of you who are not from the U.S. So Alice walks through her bank branch and [00:04:00] how does that work now? So she fills out a form with Bob’s bank details in Brazil.

She hands that over. And then the teller actually inputs the bank details from Bob in her terminal. And then it gets queued for a SWIFT wire transfer or correspondent banking SWIFT transfer. This takes on average three days to clear, is between $45 and $50 per transaction. Doesn't work Friday after 5 p.m. or after hours. Doesn't work on weekends. Doesn't work on bank holidays. There's a reason we call them that. And still, despite all of these things, moves about 5 trillion a day, today. So today, we are beaming broadband internet from space. You can get a Starlink terminal and you can actually get like 200 megabit [00:05:00] plus from space.

And this is the sad state of money movement. You still don't have a standard to move money on the internet natively in 2024. And so we believe that this is an anomaly. That is holding humanity and the global economy back and that it's time for an infrastructure inversion. And so let's talk about infra inversion and what it means.

In 2016, Andreas Antonopoulos gave a talk where he explained how the internet performed its most crucial infra inversion. See at that time in the early days of the internet, the network existed, but there were no users. And since there were no users there were no application developers or website developers that actually built things that solved real world problems for these people.

And as such there were no users, and because there were no users, there were [00:06:00] no application developers. Cold start problem. Typical, right? How did people do it? Because no one was going to lay out the capital needed to roll out new cables, like whether it's coax or fiber optic, to actually provide the internet at the edges.

So we had to use a network that already reached people's homes and businesses. And at the time, this was the telephone network. And the telephone network was actually designed to do one thing and one thing well only, transmit human voice. But it had the reach required to actually be used for data. So smart people figured out a way to use the telephone network to transmit data. It was really hard. And for those of us who are old enough to remember this, it sounded like this.

That last part really brings me back. What happened here is that you [00:07:00] basically had two modems screaming at one another to try to find a frequency where they could actually get a handshake and transmit data over audio signals. And this is really hard to do. It's really hard to use a network that was not designed for this to transmit data.

And the telcos hated it. They hated it with a passion. They're like, what are you doing with my perfect telephone network? It's not meant for that use case. But next thing you know, is people actually started using it, and they started coming online. And when more people started coming online, more developers started building really good websites and services that solve people's problems.

In turn, it drove more users to come onto the network. And sure thing. The next thing is telco started becoming ISPs and selling the internet access. using the technology that they hated with a passion in the first place. And [00:08:00] then their network became IP enabled, and then phone calls are now moving, all of them are now moving on the internet with voice over IP.

This is what we call an infrastructure inversion. And for the people who worked on those hard problems of transmitting internet or data over phone lines at the time, I'm sure they're shocked by how big the internet has become today. But if they didn't do that, if they didn't figure out a way to reach people using the technology that they used at the time, the internet would have never happened.

And so the lesson here, which is a really important lesson, especially for people working in the crypto space or new chains or new networks, is that disruptive new technology has to live in a world designed for the technology it's about to replace. And this happened for many things. It happened with cars and roads, it happened with electricity and [00:09:00] Lightning.

It happened with a number of technologies. It always happens that way. And our take is it's really time for money to have its own infra inversion and for this to happen. And our core belief, something that we have a very strong conviction about, is that the only network that has achieved the level of decentralization and neutrality that is actually good enough to become the internet of money is Bitcoin.

And when you think about it, Bitcoin, when it was first invented, was actually invented as a means for digital payments, right? It was a peer to peer payment system. But it was very inefficient at moving money. But the one thing that people really got right were the incentives. And so when you think about the incentives that were built into the proof of work algorithm of Bitcoin, it drove miners to start buying GPUs and then ASICs and then buy power to actually start mining blocks [00:10:00] and have a chance at winning Bitcoin.

And gradually it got more and more people interested in it because of price appreciation and speculative value of Bitcoin. But also, for some people, as a hedge through money printing and massive inflation. The next thing you know is that you have millions of people caring about it and you have network effects that are profound, as such that it is truly, today, the most neutral form of digital money in existence.

And this concept of neutrality is really important. And let me explain why. All the payment systems in the world are either national or run by companies that are perceived to be national. Like PayPal, Visa, Mastercard are considered to be American companies. And while they work really well if you're staying within the same network, you can't really interoperate between them with any of those.

Because it's not like the U.S. is going to be comfortable using SEPA to [00:11:00] interface with PIX in Brazil. And so you need something that's neutral enough that it's going to be an acceptable choice to serve as an interop layer, an internet of money of sorts, between all of these payment systems that work quite well.

And what about other blockchains? There's lots of other blockchains that do things much better than Bitcoin, like in terms of speed of settlement. in terms of capabilities, smart contracts, in terms of new L2s that perform all kinds of different things. But the problem is those haven't achieved the level of decentralization and liquidity that Bitcoin has.

And when you think about this, for any of these logos or any one of those, I can name a person, a group of people, or a company that's actually leading the effort of that blockchain and that can be pressured into submission. And trust me, I know how it feels like. So what [00:12:00] about stablecoins now? So stablecoins serve a good purpose.

They serve a purpose of providing stable digital money as a mirror to our country's currencies. But the problem with stablecoins is that they're fully centralized. A company has to manage the reserve backing the stablecoin. And as such, it's also subject to pressure. But it does serve a purpose. And it does serve now a new purpose of offering mainly U.S. dollar denominated virtual bank accounts for people who can't have the real thing around the world. But who can tell which one of these stablecoins and blockchains are going to be around in 100 years? I don't know, and probably none, but I feel pretty good about making a bet that Bitcoin is still going to be around 100 years from now.

Why? Because there's no one you can influence, because it's reached escape velocity, because it has regulatory clarity, because it has the depth of [00:13:00] liquidity required. And so Bitcoin truly is the only network that is open, neutral, decentralized, and liquid enough to serve as a true internet of money. You may ask, okay, we have this conviction that Bitcoin is going to be that thing, and so why?

Why in the world isn't it moving trillions of dollars a day like SWIFT is? Why hasn't it won already? The first problem with Bitcoin is that it's pretty inefficient and slow. And this is why at Lightspark, a few years ago, we started working on Lightning. Lightning has solved two of the things that held Bitcoin back.

First of all the speed of settlement and average block time. If you wait in the mem pool, it’s like 30 minutes, like a block time is 10 minutes. But if there's a lot of congestion, it'll take on average 30 minutes. That's actually not effective at all if you want [00:14:00] to compete with modern day payment systems. Lightning has brought that down to about three and a half seconds. Has brought down cost of moving transactions onto Bitcoin from 5 to 0.01. So that's really cheap and it's really fast. But Lightning has been around for a few years, so why hasn't Lightning really taken off like crazy and taken over the world and moving trillions of dollars?

It was really hard for companies and businesses, exchanges, wallets, banks to implement Lightning. And the reason for that is that a channel based payment system design like Lightning is actually really hard to onboard on, to integrate, to operate and to manage. And that's why at Lightspark, we've been building Lightspark Connect that many of you in this room already use.

And so Lightspark Connect automates a lot of the aspects of Lightning through really good software and services. It automates channel [00:15:00] liquidity management, it figures out routing across channels, it automates node operations, and we have SDKs for every possible language you might need. And so we've reduced the barrier of entry in a really profound way for institutions to use Lightning. And it took a huge chunk of our two years of existence to actually achieve this because it's actually really hard. But I'm really glad we did because now Lightspark Connect is the leading enterprise grade entry point to the Lightning network for some of the biggest exchanges and institutions around the world.

So we've done this. We're convinced that Bitcoin is the network. We've made it fast and cheap and really easy to use with Lightspark Connect. So why hasn't it taken off yet? Because first of all, you need to move the currencies that people use for everyday use for their basket of goods and services.[00:16:00] 

And so how do we do that? That's when UMA is entering the scene. UMA is Universal Money Address. It's an open standard that we've built on top of LNURL, the Lightning Addressing Scheme, and that we've extended to move real currencies through existing regulated entities around the world. And Shreya from our engineering team will come up later and do a far better presentation about UMA than I can, so I'll just stay at the highest level.

But basically, think of UMA as email but for money. It allows for institutions to convert in and out of Bitcoin in real time and push the money through Lightning where it arrives on the other side and gets converted to the desired currency of the person or the institution wanting to receive it on the other side.

It's really a magical experience. But we needed to do a [00:17:00] little more than that if we wanted people to use the service where they're at. So we needed to make Bitcoin Lightning compatible with global banking and payment rails. And that's where Lightspark Extend comes in. Lightspark Extend performs that infra inversion that we talked about with existing payment rails.

So we can actually reach people where they're at. And let's look at what this looks like with our partner, Nubank. So this is a pilot that we started running a little bit, and I want to show you what it looks like. But first, if you don't know Nubank, Nubank is arguably the most successful neobank in the world, bar none.

They have over a hundred million customers in Brazil, Mexico, Colombia, and they're on fire. They're growing like crazy. And they have clients that are in Brazil and that are receiving and sending money to Nubank, between the U.S. and Brazil regularly. [00:18:00] So today, the alternative is the SWIFT wire transfer that we talked about, which would take three to five days to clear, would cost about $45 to $50, doesn't work on weekends and after hours again, still not.

And so let's look at what this looks like on Bitcoin and UMA. So back to Bob and Alice. So Bob is in Rio. He's sending money to Alice in New York. And so he goes to his new bank app, enters Alice's address, which is literally like an email address with a dollar sign before to signal it for money, then enters the amount he wants to send, in this case 1500 reais.

He sees the value of 1500 Reais in dollars that Alice is going to receive. On the next screen, he can see fees that he's going [00:19:00] to pay. And that's where the magic happens. Reais get converted to Bitcoin in real time, gets pushed on Lightning to the U.S. It arrives here, gets converted to U.S. dollars, by our partner Zero Hash, and pushed to RTP to Alice's bank account in real time.

We have many partners now that have UMA-enabled endpoints natively on the network in over 80 countries. So in over 80 countries, you can sign up for an UMA and have the benefits of sending and receiving money in real time that way. But there's more. I'm really excited to announce today that Lightspark Extend, this compatibility layer with Banking and Payments Rail, is going to come to Mexico before the end of this year.

So what that means is that users or bank customers in the U.S. are going to be able to send dollars to any bank account in Mexico that will [00:20:00] receive Mexican pesos in real time, 24/7. And the rate is going to be really competitive, and we're going to bring this worldwide next year. So for wallets, banks, and financial institutions, there are two ways to use UMA to bring it to your customers.

This technology is live. It's available today. The first way is if you can move Bitcoin, or if you can convert fiat currency to and from Bitcoin. You can use Lightspark Connect and our UMA SDKs. The second way is if you can't do Bitcoin and you're a bank, for instance, in the U.S. or soon in Mexico, and you want to offer UMA to your customers natively, we can support it with Extend.

And we or a partner of ours, some of them are in this room today, will be able to do that conversion for you. So we're very excited about this. Now, we could have stopped right here. We could have said, okay, this is great. [00:21:00] We've solved for this. We have a way to extend the network. We're done. But no, we want to make UMA really useful and powerful for developers and for others.

And so we've been working on bringing new capabilities to UMA that I'm really pumped to talk about today. The first one is UMA Request, a way for wallets and businesses to actually request money from other wallets. So let's imagine you're a business and you want to create a request to a person.

It doesn't matter which currency the other wallet is denominated in or is using and the currency you're using, you can move money around, or it can be between two people, you can just type a new address and request a specific amount. And the person will receive a push notification and we'll be able to complete that request on their wallets.

The other one that I'm really particularly excited about is UMA Auth. So Auth is basically OAuth for money. And it's [00:22:00] actually built on OAuth and Nostr Wallet Connect and extended the two. And it will allow for people on UMA to delegate push and pull of funds from and to their wallets with user-set limits.

This is going to enable so many new types of applications. For instance, you'll be able to connect your favorite wallet or bank account to your messaging app or to your email account and make those transactional. So you'll be able to send messages and money seamlessly. You'll be able to connect it to games to send and receive money from games.

You'll be able to do content to find new monetization models for content creators or do e-commerce and just type your address and use Request to get a notification to pay that merchant online seamlessly. You'll be able to do live tipping as a stream is going on. For the first time. If [00:23:00] you're using other chains, you can't do that.

And other protocols, you cannot do that in this crypto world of ours. Which is request and invoicing. And subscriptions. The subscription model is basically you connect your UMA Auth, you set a limit, say $10 a month or whatever it is, and then that publisher, that service can actually pull that amount from your wallet on a regular basis natively without you having to intervene at all.

So that's actually really brand new. So to recap, we've established that it's time for an infrastructure inversion for money. That Bitcoin is the only network that can actually perform that most crucial inversion. That with Lightspark Connect, we've brought technologies and services that allows for the largest financial services players and exchanges around the world to use Lightning easily.

That with UMA, [00:24:00] we are enabling people to move the fiat currencies that they use for their everyday needs. That with Extend, we're making the whole thing compatible with payment rails, existing payment rails, and banking rails, the same way that the internet had to do it with phone lines back in the day.

And this is where we are, about two and a half years into our journey at Lightspark. And these are all tools and capabilities that we bring to all of you, and in some cases we've built with all of you, and that can be used and deployed and put in the hands of consumers and businesses all around the world today.

But there's still two things that are missing for Bitcoin to win decisively. The first one is that Lightning really doesn't work well for self custody wallets, and we've sadly reached a conclusion that it'll never work. And the reason it cannot work is because you have to open channels on Bitcoin L1 and put liquidity in front of every single [00:25:00] wallet.

So if you have billions of wallets, it'll never scale. And the other is that Bitcoin doesn't support stablecoins yet. And while you don't want your payment system to depend on stablecoins, you want to figure out a way to do it. So there's one more thing that we do want to talk to you about today. And it's something that we've been hard at work on and that I'm really excited to talk to you about.

So we've been building a thing called Spark. So Spark is a brand new Bitcoin L2.

And it's purpose built for payments. It's super high performance. It's massively scalable and it's fully Lightning compatible. So let me explain this a little bit further, but Kevin, our CTO will come up and do a full session on it this morning. So you'll have in depth knowledge by the time we [00:26:00] reach lunch.

So the first thing that Spark does well is self custody wallets. So as I talked about before. It's really hard to do self custody with Lightning and Bitcoin. You can do the self custody wallet on L1, but then you're like completely trapped with 10 minute block times and the likes and very high fees.

So you can't compete with Ethereum, L2s and other chains that are high performance. So Spark enables self custody wallets to send and receive Bitcoin in real time at virtually no fee. And you can integrate it and interoperate it fully with exchanges on Lightning. So let's say that I'm using my favorite exchange, say Coinbase, I can go and buy Bitcoin, and now move it to my self custody wallet, in real time, at almost no fee, and I can [00:27:00] move $5 worth of Bitcoin to my self custody wallet in real time, which right now the fees would actually be higher than moving that amount to your self custody wallet or hardware wallet.

So this is really going to change the way that Bitcoin moves. It's going to make it faster, more efficient, and really competitive with other chains. The other thing that Spark will do is support stablecoins natively. So you'll be able, as a stablecoin issuer, to issue stablecoins on top of Bitcoin for the very first time and move stablecoins on top of the network at almost virtually no cost in real time in the most efficient way possible.

Of course, all of this is interoperable with UMA. So if you're on a Spark wallet, you can send and receive with UMA or become an UMA enabled endpoint on Spark as well. Consider this as an extension to Bitcoin, which basically [00:28:00] is what we believe is the last missing piece of the puzzle that will make Bitcoin truly, from a capability standpoint, competitive with every other blockchain with the benefit of being the most neutral form of money in the world and the most neutral network.

So this is it. This is it. We have, I think, collectively gotten to the point where you can use Bitcoin as the most competitive and efficient way to move value on the internet. in the best possible and cheapest way. So in this room today, we have companies that we're so incredibly happy to have. And together, all of you are live in over 140 plus countries, and you reach over 300 million people.

And so what if we actually put all of your reach, the connectivity you have with people with payment systems, with deposits with banks, [00:29:00] together on this network. We believe it would create something we call a money grid, which we shamelessly stole from one of our investors, Ribbit without attribution.

Ah, and so the money grid is this idea that you can move money, just like you move anything else on the internet, all the way to the end, fully interoperable with existing payment systems and rails. And so this is actually something that we're really excited about. Because we think it can completely change the game for people and businesses all around the world that are completely trapped with the inefficiencies of the current system.

And so we've put together a little preview of what that might look like and I'm really excited to share it with you. 

Can an American business pay a German client in euros at 9pm on Saturday? Oh, it's done already. Okay, but can a Spanish video creator cash out a tip from South [00:30:00] Africa before the stream's even up?

Oh, it happened all the way back here. How are these payments and millions upon millions of other instant global payments possible? The Money Grid. The Money Grid is an always on, low cost, universal payment network that will unlock an entire planet of possibilities for businesses, consumers, AI agents, everyone.

Because it's built on Bitcoin and the Lightning Network, which makes the Money Grid the easiest, fastest, and cheapest way to move money ever. No bank hours, holidays, crazy fees, none of the roadblocks that keep yours and everyone's money from moving freely. It's like the internet, but for money. And that opens up a lot of opportunities.

A business paying all its suppliers no matter where they are, daily, in any currency, with one click. Sending and receiving money between any wallet or account, all day, every day. Getting paid every minute you work or every mile you drive. Splitting a tab without worrying about multiple [00:31:00] currencies and multiple apps.

Sending money like you send a text or an email. Not in days, but in seconds. Imagine the world's GDP getting lifted as all the money that's just stuck suddenly isn't. And there's even more yet to be invented. The money grid is where completely new products and services will make your entire financial system work better for everyone, everywhere. every day. So come build it with us. 

Get on the money grid with Lightspark.

So this is something that I wake up every day feeling excited to get to work on, and that I personally have decided to dedicate the rest of my life working on until we collectively see it through. I think that it's a huge business opportunity, whether you're an exchange or bank or wallet.

Build this and be on it early on and offer it to your customers. But it's also a mission that I feel needs [00:32:00] to be complete. We need to figure out how to move money natively on the internet and we can do it together with everything we talked about. So now I'm going to pass it on to Shreya and she's going to talk to you about UMA in more detail and thank you for being here again.