After years of attempting to launch a stablecoin for Meta (formerly Facebook), David Marcus has adopted Bitcoin and its Lightning Network. The tech giant’s former lead on its failed Diem (formerly Libra) project has launched a new company, LightSpark, backed by the likes of Andreessen Horowitz (a16z), Paradigm, Coatue, and Matrix Partners.
LightSpark will develop backend infrastructure for businesses interested in using Bitcoin’s Lightning Network, which facilitates low fees through payment channels for small transactions like buying coffee. Developers created Lightning to take some of the data processing load off the Bitcoin blockchain, which has very limited storage space.
Lightspark’s closest competitors include Blockstream — Bitcoin’s largest infrastructure company. It operates Core Lightning, the biggest implementation of Lightning. Another rival, Strike, already operates a Lightning payments app in 200 countries. Cloud Lightning node provider Voltage is also a competitor, making it easier for Lightning users to spin up a hosted node.
LightSpark adopts Bitcoin after stablecoin failures
LightSpark’s founder, PayPal mafia member David Marcus, previously led Meta’s efforts to create a stablecoin.
It first aimed to create several coins for distinct regions of the world but soon abandoned the plan. Instead, it decided to focus on just one: Libra.
Meta’s Libra Association attracted big names when it unveiled in June 2019. Its members included MasterCard, PayPal, Stripe, Visa, eBay, Lyft, Uber, Spotify, and Andreessen Horowitz. However, the project soon encountered Congressional pushback. Regulators were concerned about a large corporation wielding such influence over a global economic project.
Legislators demanded hours of testimony from Meta’s founder Mark Zuckerberg and asked him to delay his stablecoin.
- High-profile members quickly abandoned the Libra Association.
- Meta also planned to release a crypto wallet called Calibra in 2020. It later renamed Calibra to Novi but it never launched.
- At the end of 2020, Meta attempted to scrub Libra’s tarnished name by rebranding to Diem.
Yet Diem continued to face regulatory issues. German Finance Minister Olaf Scholz called the project “a wolf in sheep’s clothing.”
“It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed,” he said. He also expressed strong opposition to a currency issued by private parties, saying that “we must do everything possible to make sure the currency monopoly remains in the hands of states,” (our emphasis).
After investing untold sums into Diem ⏤ Meta has a total research and development budget of $27 billion annually ⏤ the tech giant eventually gave up, selling Diem’s assets to Silvergate for a paltry $182 million.
Meta is currently testing a new feature that showcases NFTs in its sister social network, Instagram.
Edit 13:31 UTC, May 17: Clarified in headline and throughout copy Meta’s connection to David Marcus and LightSpark.