Bitcoin's Lightning Network is hard to use. PayPal's ex-president has a solution, and a replacement for SEN & Signet

Quick Take

  • Lightspark, David Marcus’s new startup, revealed its product suite on Tuesday.
  • It’s building on top of the Bitcoin network, specifically a Layer-2 protocol known as the Lightning Network.
  • Building out the requisite tools to make the Lightning network easier to use is a better path than relying on alternative blockchains because of Bitcoin’s relative size and more secure regulatory footing. 

If you can't beat 'em, join 'em. 

That's the underpinning philosophy of former PayPal President David Marcus's approach to the cryptocurrency market, and his new startup Lightspark, after a tumultuous career in the space that included an attempt by Facebook to launch its own digital coin. 

"We're very focused on rails and not assets," Marcus, who most recently led Facebook's payments division, Novi, said in an interview with The Block. "We learned this through all of our last adventures," the Paris-born entrepreneur said with a mischievous grin, alluding to his much-publicized attempt to launch Meta's Libra (later called Diem) before it was squashed by stateside regulators. 

His new startup — which revealed its product suite on Tuesday — is building on top of the Bitcoin network, specifically a Layer-2 protocol known as the Lightning Network. In Marcus's view, building out the requisite tools to make the Lightning network easier to use is a better path than relying on alternative blockchains because of Bitcoin's relative size and more secure regulatory footing. 

Lightspark raised about $173 million last year at a valuation of almost $1 billion at the time, according to a person familiar with the matter who declined to be named.

Lightspark's platform overhauls the process by which market participants connect to Lightning, which requires users to establish peer-to-peer payment channels off-chain. The firm emerged from stealth in May when it announced a fundraise with backing from a16z Crypto, Paradigm, Coatue and Matrix Partners.

Lightning Woes

Despite being heralded by proponents as a way to scale Bitcoin and support cheaper and faster payments through the cryptocurrency network, Lightning has failed to gain much traction relative to the broader market.

The network's capacity currently sits at $158 million, which – when compared to DeFi protocols — would rank 53rd in terms total value locked. Much of Lightning's potential is being held back by the clunky and time-consuming process of node management and engaging with the Lightning Network, Marcus said.

"It was a lot like the early days of the internet," said co-founder James Everingham, who most recently worked as vice president of engineering for Novi. "I wanted to run a web server I had to go find code, download it, build it, tweak it to get it to work with my specific server." 

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