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Coin Stories with Natalie Brunell
David Marcus: How Bitcoin Becomes the Internet of Money (and Beats Gold)
00:43:17
Natalie Brunell and David Marcus, Co-Founder & CEO of Lightspark, former PayPal President and Meta executive, talk about why Bitcoin will become the Internet of Money and why it’s still massively undervalued compared to gold. Topics...
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- [00:00]
David Marcus
I think for now, the dollar is here to stay. I think bitcoin is a great escape valve, is the greatest escape valve ever. And to your point, I think it's massively undervalued compared to gold. Like, there's a reason there's an appreciation of gold by people and institutions. Looking at the way that our fiscal approach to how we continue printing and are not responsible, you know, that makes me very bullish on the value of Bitcoin over the long run.
- [00:32]
Host (possibly Marty Bent)
Hey, everyone. Welcome back to the show. Joining me this week in person is David Marcus, CEO of lightspark. And, David, it's so great to see you. I've been wanting to talk to you again for a while. First of all, how are you?
- [00:42]
David Marcus
Great, Great. Nice to be back on the show.
- [00:44]
Host (possibly Marty Bent)
Yeah, thank you. I mean, the first time around, you shared your whole backstory about how you built lightspark. You came from a meta background where you were trying to build Libra, their payments network, and then you were also president of PayPal. So for those that maybe missed that episode, can you just give us a quick summary of, you know, sort of your background and what caused you to build lightspark?
- [01:04]
David Marcus
Sure. Well, I mean, I was always in payments, and the last startup I did was called Zong, and I sold it to PayPal, then through a series of twists and turns, ended up running PayPal, then left PayPal to join Meta to run messaging. And so that was my four year of sabbatical from payments, doing something else. And then I got really frustrated with the fact that the way that money moved didn't change at all. And so I tried to go back at it with Libra, which was met with the fate that we now know about and lots of learnings. And that pushed me to decide to build an open payment network on top of Bitcoin, because that's truly the only form of neutral money and decentralized money that will withstand the pressure of changing the way that money moves in a. In a really profound way for the world.
- [01:52]
Host (possibly Marty Bent)
Well, let's break down why the payments aspect of Bitcoin is so important, because I feel like, especially lately, the focus has been on the store of value part of Bitcoin that's so important, that fixes the money. But you've chosen to focus on Bitcoin as a medium of exchange. Why?
- [02:09]
David Marcus
Well, we believe that Bitcoin is the only neutral digital form of money that's decentralized enough to actually be an open Internet for money. And. And we believe that the store of value phase is absolutely essential. For us to be able to actually build a utility phase of Bitcoin on top of it. And the reason for that is if it's not valuable enough, then all of the institutions are not holding it. It's not accepted by everyone the way that it is today. And so it was a prerequisite step. That took the time it took. But now that every institution, like the large institutions, whether it's BlackRock, Fidelity or others, are actually supporting Bitcoin, we have ETFs, we have Nation states that are building positions in Bitcoin. It's legitimized enough that we can actually really start building payment utility on top of it. And that's what we've been hard at work at lightspark for the last three years.
- [03:05]
Host (possibly Marty Bent)
What do you say to people who believe that Bitcoin threatens the dollar and therefore they in power will not allow it to be a payments network?
- [03:15]
David Marcus
Well, I think Bitcoin doesn't threaten the dollar or any stable good fiat currency. Bad currency is a different story. But if you have a good stable currency like the dollar, people don't want to use Bitcoin for everyday purchases because it's volatile. And people want to actually benefit from appreciation of Bitcoin and they don't want to spend it. They don't want to be the Bitcoin pizza guy. Just that in nature is not a good medium of exchange. So the way we use Bitcoin is in the background, like TCP IP packets for money. And so basically you can send dollars from a US bank account to someone in Mexico receiving Mexican peso in their Mexican bank account, or someone anywhere in the world for that matter, in their local currency. And basically the settlement asset is Bitcoin in between. So you go dollar, bitcoin, Mexican peso, and it's invisible to people using it. And that's the way we use Bitcoin on top of Lightning and Spark now, and also enable stablecoin issuance on top of Bitcoin. And we can talk about that later. To facilitate global payments, Coinstories is proudly.
- [04:24]
Coin Stories Announcer/Producer
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- [05:59]
Host (possibly Marty Bent)
Okay, I can't wait to talk to you about Spark. But first let's just set the scene here for those listening who maybe are a little bit newer to Bitcoin or what is the Lightning Network? How do you explain it simply to someone who's just getting to understand this technology?
- [06:11]
David Marcus
So the Lightning Network is a layer two on top of Bitcoin that uses channel payment system. So basically you open payment channels with counterparties to be able to pay one another at a low cost in real time.
- [06:24]
Host (possibly Marty Bent)
Kind of like opening up a tab at a bar, right?
- [06:26]
David Marcus
Yeah, a little bit. And and you know, it gets a little more complicated because you open channels or tabs with multiple people and then it's a transient channel so you actually a path so you go through multiple people and hops to actually get to your destination. So the great thing about lightning is there's zero new trust assumptions or almost zero new trust assumptions compared to Bitcoin L1 and it makes it faster and cheaper to move Bitcoin. The downside of the Lightning Network is that it really doesn't work well for self custody because you need to park liquidity in front of that channel to receive a payment, which is kind of really not intuitive for people and really not economical. If you want to actually build billions of endpoints and you need to position liquidity in front of every wallet or use a lightning service provider that is, you know, some would argue money transmission to actually facilitate payments to lightning. And so that's why we built Spark. That enables us to actually extend the capabilities of lightning. By making Spark backward compatible with lightning, we. But it's not a channel based payment system. So you can actually spin up billions of wallets and receive Bitcoin and stablecoins in real time at a very low cost on top of Bitcoin. And it has minimal new trust assumptions. So it's not as trustless as lightning, but we believe it's trustless enough and has unilateral exits to layer one. So meaning you can transact on Spark and if you want to exit the network at any given point in time, you can pull a ripcord and, and no one can prevent you from recovering your funds on L1, which we believe is the right balance of utility and trustlessness.
- [08:06]
Host (possibly Marty Bent)
Okay, so you just launched Spark and again we have this layer one which is the Bitcoin blockchain layer two we have lightning. This is a separate layer two that's just backwards compatible with lightning. Right. And you're going to be allowing for faster, cheaper payments, more scalability. Right. Let's first focus on the stablecoin aspect because we are hearing a lot about stablecoins, the genius act, all the hype. But right now most stable coins are on other blockchains, which is why some of the Bitcoin maxis are like we don't like stable coins, we don't like things built on other blockchains. You have a lot of experience with why things might not work with a non maybe as decentralized layer, maybe one that has a little bit a different consensus mechanism than proof of work. So can you speak to that specifically and how stablecoins will be operating on top of Bitcoin?
- [08:55]
David Marcus
Yeah, sure. So first of all, I had like a schizophrenic journey with stablecoins on top of Bitcoin because stablecoins by nature are a centralized thing. Like there has to be a company that manages the reserves and basically when it mints a new unit of a stablecoin has to put a dollar in the reserve. And it's a process that requires a centralized corporation to manage the thing, which I don't like because I don't like a single throat to choke where governments and regulators that don't like it or established players like the banking industry in Some parts of the world can actually call a CEO and tell them to stop doing a thing and they have to stop. There's no way you can call Satoshi Nakamoto and ask him, her, them to actually do something.
- [09:42]
Host (possibly Marty Bent)
Wish we could.
- [09:43]
David Marcus
That's the beauty. I mean, I wish we could. It's actually better that way. Stablecoins, now that they've become an inevitable reality of how you make money digital and the horses left the barn on this one, then my thinking and our thinking here has been how do we make it actually a little more trustless than moving a stablecoin on top of something that's also insufficiently decentralized, like an Ethel 2 or something like that. The way we've approached it is we figured that if we built it on top of Bitcoin without the use of a separate token needed to pay for gas for transactions, and you still benefited from unilateral exits to layer one, then it would confer to the network. The settlement rails themselves a more trustless nature. And so more open, more decentralized, more trustless settlement layer on top of which stablecoins can actually move in real time at a super low cost without the need of having a third party token to pay for fees. You pay the fees in the stablecoin you're transmitting, which is like basically very similar to all the tradfi payment systems.
- [11:03]
Host (possibly Marty Bent)
So stablecoins are going to be issued increasingly probably by banks. Right. They are already issued by private companies like Tether. Would they essentially have to transfer what they're currently built on, which is these other blockchains, to something like Spark? And how do you see that happening when there's so much network effect that has essentially already happened with the others?
- [11:22]
David Marcus
Yeah, it's a great question. And what we're seeing right now is that a lot of issuers are issuing on a number of different networks. So you look at usdt, they're live on Tron, they're live on Solana, they're live on EVM chains. You have USDT0 with layer zero being used to actually move liquidity around those chains in a seamless way. So you can expect similar things to happen on Spark. We have our first stablecoin issued by Braille Flashnet Magic Eden on top of Spark, which is called usdb, that is live right now and moving on the network. And we have a bunch more that are working on issuing. And so you can expect Spark to be one of the other networks where stablecoins will appear. And because we have a competitive advantage in Terms of cost. Like, it'll cost less than a cent at scale to move a stablecoin in real time, less than a second, less than a cent. And you'll have unilateral exits to Bitcoin L1, where if you don't trust the network participants, you can always get your balance out, which is, I think, something that will confer a lot more trust on top of it being cheaper and faster. So we think it's going to be a really compelling option for all of the stablecoin issuers that want to issue on top of Bitcoin. And then we have a few more capabilities that we're going to bring Live one is something we call stable change, which is like how you marry stablecoins with interchange. And interchange is a key success component of every payment network. Like if you look at Visa and MasterCard, et cetera, which are arguably very successful payment networks, they all have interchange that allows issuers to actually charge a fee for people transmitting their own stablecoin at the issuer level, but also disperse value to merchants for adoption or to consumers for rewards. And so that's going to be built in, also in spark, giving issuers more revenue opportunities than just the yield on the reserve, but also more opportunities to really kickstart an ecosystem around their own stablecoins.
- [13:32]
Host (possibly Marty Bent)
But what if someone's listening to this and going, wait a second, I thought the benefit of Bitcoin is we're not going to have these intermediaries and all these fees and gatekeepers that are taking a slice from everyone. How do you respond to that? Because it sounds like we're kind of reinventing the current system with Visa, where sometimes merchants are paying a huge amount of fees. And that really cuts in sometimes.
- [13:52]
David Marcus
Yeah, I mean, that's, that's just a capability for stablecoins. So we think that, you know, if stablecoins are here to stay, which they are, then we need to give tools for stablecoin issuers to actually have a business model that actually resists the test of times. I think right now we're in a high interest rate environment. When the interest rates come down, you're going to see a lot of issuers not actually really making a lot of money. And so then it's like, how do you actually do this? And then at some point we'll figure out how to pay yield back to consumers. And so if you're paying yield to consumers, interest rates are lower and you're trying to incentivize payments. Use cases for stablecoins like mainstream payments Use cases for stablecoins. These are capabilities that you need. Of course, if you're moving bitcoin, that's a different story. Bitcoin will always be cheap and real time on top of spark. And that price can't change, right? It's $0.01. And you can move sats in real time to a self custody wallet at any given point in time. And that's the base settlement layer for everything else we do. So if you're sending dollar to someone receiving again Mexican Peso or Euros on the other side, then the fees are going to be the fees to actually pull from FedNow in the US and push to SEPA Instant in Europe and the FX which actually using bitcoin in between can be very competitive. And those are going to be the fees that you're going to pay on top of the 1 cent. But that's it, right?
- [15:23]
Host (possibly Marty Bent)
Nothing like the crazy remittance fees that we're seeing in Fiat. So how far away are we from the big, too big to fail banks issuing their own stablecoins like the J.P. morgan, Wells Fargo?
- [15:34]
David Marcus
Well, I think some of them are already doing it. Like JP Morgan has a US Stablecoin that they use for their institutional counterparties to move value around. I think you're going to see a lot of depositors like a lot of banks issuing their stablecoins. Then the problem is going to be okay, what problem are you trying to solve? I think that's the bigger problem right now that no one talks about about stablecoins. It's like everyone's excited about having a stablecoin. Everyone's excited about issuing their own stable coins, but they're not really focused on what problem am I actually going to solve for whom. Right? And I think USDT is very focused on that. Like they have a brand, they have a solid execution in terms of helping people have a dollar bank account when they can't have the real thing. And they're very good at that. I think in the US it's more of an institutional use case because everyone already has a US dollar balance in the US and so it's more of an institutional off hour settlement thing than like a consumer play in the US Unless you want to send stablecoins from the US to someone else that prefers to have a dollar balance than their local currency balance.
- [16:45]
Host (possibly Marty Bent)
Well, you bring up a great point because when I travel I meet people who use tether and tether's been a lifeline. Stablecoins in general have been a lifeline because it gives them access to the dollar and they sometimes save in dollars, sometimes they'll save in bitcoin. But here I never meet Americans who are using stable coins. So do you see that changing as stablecoins grow and proliferate and we have like these major American banks or possibly corporations issuing them, or do you think there'll always be more on the margin and more of the international use case?
- [17:15]
David Marcus
I think it depends. It's like, you know, I, I always go back to what is the problem you're fixing for whom? And in the US like maybe it's paying higher yield, although that's under attack by the big banks right now. So on Coinbase you can have USDC paying you 10% yield up to a certain amount, but is it going to be more competition from the banks that will have to pay more interest on deposits? Anyways, what is the thing that stablecoin actually solves fundamentally for American consumers? I'm not sure right now. And of course for Defi, it's, you know, it's basically the money market fund for Defi. Great, fine, if you're trading. But if you're in domestic payments in the U.S. payments are free. Like I can send you Venmo Zelle whatever you want. Right now it's free. So there's not much, much to be fixed on, on payments, domestic payments, use cases. I think there's all kinds of, of companies trying to basically just remove the interchange charged by the visas and it's generally not visa. It's like the issuers and acquiring, issuing and acquiring banks that are charging most of the fees that are trying to change that. But I'm not sure stablecoins are the way to do that unless you have massive network effects with a specific stablecoin with merchants and consumers, which is hard to start. So we'll see.
- [18:45]
Host (possibly Marty Bent)
This is fascinating because I'm seeing so many more conversations, especially with some of the macro analysts out there saying that there's almost like a platform plan in motion to help us address our debt by creating more demand for our Treasuries through stablecoins. I think that Russian minister who I've mentioned on the show a couple times, so my audience will know it, you know, he talked about how America has this plan to use the crypto cloud to reset the debt and use it via stablecoins and then Bitcoin sort of behind the scenes as the store of value. Right. Can you talk about that? Do you agree?
- [19:20]
David Marcus
I mean, look, this is a dollarization play. It's like how do you extend the hegemony of the dollar to many more nations, to many more consumers that currently don't have access to dollars. So if you add another 500 million billion people holding dollars instead of their local currencies, which has a whole lot of geopolitical implications, then you bring in more revenue for America and number of people holding US Treas think that's a very valid strategy if you're looking at it from the American point of view. I think a lot of other nations are not that excited about that idea, so we'll have to see how it plays out. And also remember that the operators of the US dollar stablecoins are companies that you can influence. Back to the point about the beauty of the neutrality of Bitcoin. So in Europe right now, if you talk to Christine Lagarde or if you talk to anyone else, they're actually pretty animated about the US Dollar taking hold in Europe as a store of value and unit of account and supplanting the euro and preventing them from operating their own monetary policy in the way that they want. And I've experienced that firsthand with Libra. It's not a pleasant ending when that.
- [20:40]
Coin Stories Announcer/Producer
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- [22:30]
Host (possibly Marty Bent)
It's just so fascinating because it seems like everything really is shifting at the core. Like the dollar was the core of the system. That's the way it was created ever since 1971. And everyone had to trust, right? We had to put the trust in the United States not to debase too much. But we have been, we took advantage of that. And so people are de dollarizing. They're no longer holding the US Treasuries. Gold has been on a total tear. I think bitcoin's undervalued compared to gold.
- [22:57]
David Marcus
Completely agree.
- [22:58]
Host (possibly Marty Bent)
It's going to rip after. Would love to get your your thoughts on that. But how do you see this ultimately maybe playing out? Because no one I think likes the idea of a reset. The dollar is going to die. Oh my gosh, that sounds like panic. Right? A huge crash is around the corner. I'm going to lose everything. I feel like things are more gradual. Right. How is this all going to play out? To maybe remove the dollar from that unipolar position that it's had for a very long time to both the benefit and the detriment of many people.
- [23:30]
Coin Stories Announcer/Producer
And how are we going to shift.
- [23:31]
Host (possibly Marty Bent)
To something that's maybe more multipolar, multi currency neutral reserve asset, maybe gold and bitcoin?
- [23:40]
David Marcus
It's a great question. I mean, look, when we started Libra, we were naive enough to think that we could create sort of basket of currencies that would actually have the dollar be the largest portion of it, but then have the euro, et cetera. And the thinking was we can actually create a synthetic basket that actually represents the the world today in terms of its economic contributions and values and what people want to hold and also appease a lot of the different countries. And we were so wrong because the reality is doing that really basically inflamed the whole world. Everyone agreed that this thing needed to die instantly. So that's a success metric. Enabling all of the central bankers to agree on one thing for once. But look, I think for now the dollar is here to stay. I think bitcoin is a great escape valve, is the greatest escape valve ever. And to your point, I think it's massively undervalued compared to gold. There's a reason there's an appreciation of gold by people and institutions looking at the way that our fiscal approach to how we continue printing and are not responsible. And that makes me very bullish on the value of bitcoin over the long run. But I think for everyday transactions, the dollar or the euro or the Japanese yen or even the Mexican peso, which is a very good currency actually, or the Brazilian real or the rupee is going to continue being the currencies that are going to be used for everyday transactions. And then the question is, is the future basically of banking and money storage a sort of thing where you have a local currency if it's a good one, or a US Stablecoin if it's not a good one, as your checking account balance, and then you have a savings balance, which is Bitcoin. And how do you make those super fungible, really easy to move between payment systems and countries and currencies so that you can really, as a consumer or as a business, have balances in all of the currencies that actually matter. And bitcoin.
- [26:04]
Host (possibly Marty Bent)
I've heard a lot of people talking about tokenization of real world assets lately. And so something else I was reading about with Spark is that it enables tokenizing assets as well.
- [26:14]
Coin Stories Announcer/Producer
Can you speak to that?
- [26:14]
Host (possibly Marty Bent)
And maybe let's break down simply this idea of tokenization because the average person might hear that and think, well, what's wrong with stocks? I mean, yes, maybe they don't trade 247 right now, but like techno technically, what, what is tokenization solving for?
- [26:29]
David Marcus
Yeah, I think tokenization basically serves as a way to make something that's not really fully digital that you can use in small subatomic units of the thing you own easily into something that you can actually use in that way. So if you have real estate property, if you tokenize that real estate property, then suddenly people can own one millionth of that thing because the you can actually break it down onto the real subatomic unit that you would design it to be, not the actual value of the physical units. Another good example of that is the tokenization of stocks. If you want to own a stock of Berkshire Hathaway, one stock is expensive. If you have a tokenized version of Berkshire Hathaway you can own $0.01 of it if you want, which you can't do of the the stock because the stock price per share is much higher. And so I think it's an interesting thing. What we're seeing on Spark is really interesting because the tokenization capability was really designed to support stablecoin payments because we're a payments company. And what's been happening is actually that you have a bunch of companies now starting to build meme coin, launchpads and all kinds of different things because you support tokenization and fast swaps on top of Spark. And so we're seeing an explosion of wallets and launchpads and all of these things that are happening that were not by design but are happening on the network. And a nice side effect it has for us is that it creates hundreds of thousands of wallets, soon to be millions, tens of millions, hundreds of millions of wallets for people wanting to trade and get on the network. And they have a bitcoin balance on Spark and they have a stablecoin balance on Spark. And now they become endpoints on a payment network as well as trading endpoints on top of those exchanges.
- [28:25]
Host (possibly Marty Bent)
So this is interesting because when I used to hear tokenization, I would cringe a little bit because it was always built on these other blockchains. And you would hear big names like Larry Fink going on CNBC talking about how everything's going to be tokenized. But the way you're describing it, especially built on top of bitcoin, it almost sounds like it's democratizing and decentralizing access really around the world to being able to own fractions of assets. Because one thing that I always found amazing about bitcoin is it's accessible to literally the whole world. It has a total addressable market of 8 billion people. And you could be in a developing country and you could own just a fraction of bitcoin. Right. You can't own a fraction of a Miami beachfront property or a fraction of stocks in another country. But this essentially allows you to be able to do that and invest around the world 24. 7.
- [29:11]
David Marcus
Yeah, I mean, yes, absolutely. This is actually a way for third parties. This is again, not our focus, but it's a permissionless network. So our opinion doesn't count into what people build on top of it. It's open source, it's permissionless, it runs. People can build stuff. Like you had those launch pads and playgrounds and all of those marketplaces, amms that are being built on top of Spark. We didn't decide that it's just happening. And so the same can be true for all kinds of different assets that you would want to tokenize for the first time on bitcoin. And again, you have like, the distinct difference between this and another blockchain is that at any given point in time, you're going to have the ability to unilaterally exit to Bitcoin L1. So the trust that you have in Bitcoin L1 and the fact that no one corporation, person, group, consortium, foundation can actually mess with your funds is actually still valid for anything that you issue on Spark, which really is. Is why it actually matters on top of being cheap and fast.
- [30:12]
Coin Stories Announcer/Producer
So where do you think we are.
- [30:13]
Host (possibly Marty Bent)
Right now in terms of adoption? Because whenever I go outside of the bitcoin ecosystem and our bitcoin events and conferences, I encounter people daily that are like, bitcoin. I'm too late. It's this. It's going to be hacked by Quantum. What do you say to people? And where do you think we are in terms of the cycle?
- [30:31]
David Marcus
Yeah, it's kind of interesting. I was in New York yesterday and I was speaking on a panel that was put together by Citadel securities about digital assets. And one of my co panelists asked the room, it was like about 450 people that are some of the world's largest institutional investors that are clients of Citadel. And we asked them, he asked them how many people own bitcoin? And I was shocked. Actually the majority of the room owned bitcoin and those are very tradfi people. And then the same question was, how many of you own eth. Not that many. It was clearly at least half that or if not a quarter of that. And then the next question was, how many of you have played with stablecoins? And it was like maybe a tenth of the room, if that. And then the next question was, who bought a meme coin or a token of any sort? And it was one guy. And so it's kind of flowing down. But almost everyone owned bitcoin, which is kind of really interesting. It's. And this is a room that. And the reason I'm mentioning that, because this is a room that traditionally would have been very resistant to bitcoin or be part of companies that would be very antagonistic to bitcoin. And now the times have changed so profoundly. So I think, you know, it's still early because to your point, if you ask most people in the street if they own bitcoin, probably the vast majority still don't. And that's Exciting, because if we have, you know, it's still in the hundreds of millions, low hundreds of millions of unique older holders, I think at this point. So the upside is just so massive.
- [32:07]
Host (possibly Marty Bent)
That's true. I mean, the people that do hold Bitcoin, though, a lot of them do not want to spend it. And so you focusing so much on the lightning network and the payments component, how important is liquidity? Like, do you encourage people to use Bitcoin and you know, how do you, what's your value proposition for that when it's the best performing asset and everyone just wants to hoard it?
- [32:28]
David Marcus
Yeah. So this is such a great question because this is also something that's misunderstood about the way that we build the product. So right now you can, if you're not a SOFI bank account client, if you don't have a bank account with SoFi, you can actually go on SoFi, open a bank account and have a checking account and have dollars. And then because now they're on the network, you can start sending money abroad using the Bitcoin network without ever knowing as a consumer that you're using the Bitcoin network. So you're sending a dollar balance to someone in Mexico again and you don't know it's powered by Bitcoin. And it all fades in the background. And we really believe that the Internet freed information and Bitcoin is going to free money. And like the Internet, it's invisible. It's a concept, you understand it, but you're not thinking about the Internet as a thing, you're just using it. And we think Bitcoin will be the same once all of the banks and the financial institutions and all of the endpoints that can move value are actually connected on the network. And that's what we're focused on is like bringing all of these institutions to the network in a variety of different ways, depending on their capabilities, to reach every last point where money needs to go on the bitcoin network.
- [33:47]
Host (possibly Marty Bent)
So I had Matt Pines on my show recently and one of the things he said is if Bitcoin is only a store of value, it has failed.
- [33:53]
Coin Stories Announcer/Producer
Do you agree with that?
- [33:54]
David Marcus
Yeah, I fully agree. Yeah. But I think we need to unpack that. It's like it needs to be a store value for the network to be secure, trusted and all of that. So it's a prerequisite step for it to become what Satoshi wanted it to be, which is everyday payments. Now, on the way to everyday payments. There are two ways to think about this. One is actually Using Bitcoin, the unit of account for everyday payments. I think we're far from that for the reasons we discussed. But I think using Bitcoin as a neutral settlement network and asset to move between fiat currencies and to move stablecoins, this is happening now. And in the next five years it's going to become mainstream in a massive way. And I think it's going to start moving trillions of dollars of value every year on top of the Bitcoin network. And I think when that happens, Bitcoin will have fully entered its utility phase and in some cases people will start receiving and sending payment denominated in Bitcoin and then, you know, time will do its thing.
- [34:52]
Host (possibly Marty Bent)
Okay, so 25 years from now, the year is 2050. Describe to me how Bitcoin is being used. Are we able to peer to peer exchange? Is everything monitored and surveilled and sort of going through intermediaries that have built on top of Bitcoin, on top of, you know, L2s? What does Bitcoin look like 25 years from now?
- [35:13]
David Marcus
So it's, it's actually all of these things. I think the reality is you need both self custody wallets that are fully trustless or as trustless as possible with a unilateral exit to Bitcoin L1 so that you don't have someone or some entity that you depend on to get your funds out. If there's an issue, and that's one part of the thing, then banks are still going to be around or something that functions like a bank that is capable of lending. And if you need to lend, you have to have deposits. And so that will still need to exist. And I think banks will still need to be regulated. And so if banks are regulated, then for them to move money on the network, they need to meet their compliance obligations. And the question is, how far out can we move the cursor in terms of getting the banks, the banking industry, the banking regulators and the payments regulators to start being comfortable for banks to start sending money to self custody wallets up to certain limits? Have we solved portable ID so that you can have a self custody wallet, but you can have a KYC token of sorts where for transactions above a certain limit, you can receive those payments from banks and regulated financial institutions? All of these are problems that we collectively need to solve for the network to work to its max capacity and max utility. And I think we will. By then it's just going to be the same way that you have cash and accounts, you'll have different accounts which will have different capabilities. And depending on where you are in the world, you'll always have an ability to have a store of balance with digital money in it. And Bitcoin will definitely be there, either as an asset or as an underlying settlement network. And Bitcoin by then will have absolutely 100% won and become the Internet of Money, where all of the money in the world actually moves.
- [37:09]
Host (possibly Marty Bent)
Well said. With everyone's mind on AI, is there an AI component to this, like the micropayments and AIs actually paying each other as well?
- [37:17]
David Marcus
Yeah, for sure, for sure. I mean, look, I think commerce interfaces are going to change. We're not going to have websites and apps with payment buttons. You're going to have a conversational interface and you're going to ask your AI agent, hey, buy me some really cool Bitcoin earrings. And it's just going to go find them and buy them for you and you're going to delegate an amount that the agent is going to be able to spend and it's going to go and spend it. And of course, all of this needs to run on real time networks. That's decentralized. If I'm an AI today, like if I'm an AI instance or agent, and you would ask me to choose whether I'd want to move value on top of a network that's controlled by humans or controlled by code, and AI will always pick the latter, which is Bitcoin. That's the thing. And so how do you make it actually move value for merchants, et cetera, in the actual currency that they need at the lowest cost in the most efficient way? And if you do that, Bitcoin then becomes also the settlement layer for AI agents.
- [38:16]
Host (possibly Marty Bent)
Okay, so before we wrap up, anything else you want to share about Spark?
- [38:20]
David Marcus
No Spark. I think we have stable coins, scalable Bitcoin wallets. I think the one thing we could talk about as well is this new product that we announced, which is called Grid, which is, you know, you can go and find out more about it@grid lightspark.com but basically I'll link that. Basically we've unbundled all of the capabilities that we've built over the last three years so that developers can now start to use Bitcoin as a settlement network for all kinds of things that weren't possible before. So as a business, you can open an account with us, you can deposit dollars, and now with a simple API call, you can either beam those dollars to someone in Europe that wants to receive euros to An Iban in real time, it'll happen and settle on top of Bitcoin. You can do that and send bitcoin to a wallet that you just spin up. You can send stablecoins and you can do that globally in 70 plus countries where you want to move money in real time all the way to the bank account that's connected to the domestic real time payment trail of that country using the bitcoin network. So we think this is a massively powerful step for developers all around the world that will have the ability to now build money movement apps for payouts, for pay ins, for, you know, cross border remittances, for bank to bank transfers and treasury management for all kinds of different applications using Bitcoin at the core.
- [39:51]
Host (possibly Marty Bent)
I mean it sounds like a world where central banks are not as powerful, where something like the Swift network is not as needed. Am I right?
- [39:59]
David Marcus
The Swift network definitely. Like if you look at Swift and correspondent banking that takes three to five days to clear and cost $50 a pop to actually move money, can't work Friday after 5pm or on weekends. Then yes, that's definitely the thing that's the most at risk. I think the central banks, if you look at a fiat to fiat transfer, they will control their countries currencies and payments capabilities. And those payments capabilities to their credit have evolved quite a bit. So domestic real time payment rails are now really prevalent everywhere and it works really well and it's cheap. And so using those as the last mile, they can control their own destiny in their own countries. And then bitcoin can be used as an interoperability layer between all of these countries and kurds currencies and payment systems.
- [40:44]
Host (possibly Marty Bent)
Fascinating. Okay, well before I let you go, everyone's got these massive price predictions for 2030. I'm talking a million, 1.5 million, 2 million. I'm going to be honest, I have a hard time believing it. I think about four years ago, 2021, when we had hit the last all time high before we had our crypto winter and we've only really doubled from there in four years. So you guys are telling me that in four years we're going to 6x from here. Can you talk to me about where you anticipate Bitcoin's price in the next couple years?
- [41:17]
David Marcus
I can tell you one thing, I'm decent at directional predictions, I'm terrible at timing them. Yeah, so it might be five years, but it might also be, you know, 10 years, I don't know. But I think bitcoin will be More valuable than gold. And at today's gold price, it's, you know, $1.3 million a bitcoin, then it'll.
- [41:36]
Host (possibly Marty Bent)
Have a higher market cap than gold.
- [41:37]
David Marcus
Oh, yeah. Over time, for sure. I think. I mean, it's such a much better version of gold. Like, you know, I mean, when the first gold ETFs were launched, they started mining more gold. You can't do that with bitcoin.
- [41:47]
Host (possibly Marty Bent)
Right.
- [41:48]
David Marcus
And so I think bitcoin is so much better. Has actually, I think a lot of people, including recently Christine Lagarde, was saying, like, bitcoin has no intrinsic value, but, like, you know, the general tale that people tell about the gold intrinsic values that you can wear as jewelry. I mean, come on, seriously, like, you know, under the underlying scarcity of bitcoin, secured by code is the intrinsic value. This is the only thing that's deflationary by nature. And so I think it's a better version than gold. It's digital. You can move it around. It's way more fungible than gold that you wear as jewelry. And so I think it'll be worth more than gold, for sure.
- [42:24]
Host (possibly Marty Bent)
You can wear your bitcoin. Don't worry.
- [42:26]
Coin Stories Announcer/Producer
Thank you so much, David.
- [42:27]
Host (possibly Marty Bent)
It's always great to talk to you. I love following you. You make me feel super bullish and you have such institutional experience, so it gives you a lot of credibility as well. I know a lot of people are very grateful that you're a bitcoin coiner in this space fighting the good fight. So thanks for joining me and thanks for allowing me to be here in your office.
- [42:42]
David Marcus
Thank you.
- [42:43]
Coin Stories Announcer/Producer
Thank you so much for checking out this episode of Coin Stories. Make sure you're subscribed to the show so you don't miss any new episodes. And if you can, turn on those notifications and leave us a positive review, they really help the show grow organically with new listeners. We have a free weekly newsletter. You can sign up@the newsblock.substack.com this show is for educational and entertainment purposes only. Nothing should constitute as official investment advice, and you should always do your own research. I'm always open to feedback and guest suggestions, so please feel free to reach out@infoalkingbitcoin.com I'll see you next time.