After years of pie-in-the-sky dreams and pitches, crypto founders have become more realistic.
Perhaps that’s because of the market — investors are more willing to suspend disbelief when rates are low — or thanks to the industry’s well-known bad actors, but either way, those remaining are no longer promising to take over the world.
The one-time president of PayPal was the head of the failed stablecoin project at Facebook, now Meta, which was known as Libra and Diem at different points in its short existence. With an ultimate goal to be the go-to currency for the global financial system, it was, in hindsight, too ambitious, Marcus admits now.
Speaking to reporters at Andreessen Horowitz’s downtown Manhattan office, he explained how they were too “idealistic” with their original idea.
“If you’re dependent on one centralized stablecoin to do global payments, it’s a problem as we’ve experienced firsthand,” he said.
Now, his new startup Lightspark is working within the system — building on top of Bitcoin to connect, but not replace, governments and their local currencies. Investors, including well-known venture shops like a16z and Paradigm, have poured $175 million into the new company already.
Why Meta’s crypto project failed
In 2019 Meta unveiled plans to create a digital currency pegged to hard currencies including the US dollar. The idea was that people using Facebook Messenger and Whatsapp would be able to send cryptocurrency seamlessly around the world, which could later be be changed for local currencies.
Libra’s goal to make “everyone happy and it’ll be wonderful and everyone will agree,” Marcus said, couldn’t mesh with political realities.
“You don’t want a private company to become massive in controlling the unit of account and managing reserves at a single point of failure,” Marcus said.
“If you depeg and it’s a centralized company that’s managed privately, governments really don’t like that — they want to be in control of their unit of account, they want to be in control of their currency.”
The project was zealous, even for pie-in-the-sky crypto standards. Massive payment companies like Visa, regulators across the globe including the Securities and Exchange Commission, and politicians were going to have to work together and approve a radical transformation of global financial policy that was coming from a company known for scandal after scandal tied to user data and privacy.
Even Mark Zuckerberg admitted in his testimony to Congress on the project that his company might not be the “ideal messenger” for Libra. Regulatory roadblocks and concerns over Facebook’s data privacy eventually stalled the project.
Lightspark’s path forward
While Marcus is best known for his time spent at PayPal and Meta, he’s founded three companies that went on to be bought by competitors.
When he announced in a tweet in November 2021 that he was leaving Meta he added: “my entrepreneurial DNA has been nudging me for too many mornings in a row to continue ignoring it.”
With his new startup, Lightspark, Marcus plans to hypercharge the global payments system is simpler, or at least less grandiose.
Users will swap their local currency for bitcoin and then have it converted to the local currency of whichever country the capital is needed in. Marcus likens it to a software-as-a-service company; it makes revenue on transaction fees.
The Los Angeles-based company uses bitcoin as its “neutral internet money” for several reasons, mainly its liquidity and the regulatory clarity governments have provided on the digital currency. Plus, it is not tied to one particular country so there is less geopolitical mistrust.
Lightspark is using the best part of the crypto industry’s progress, said Christian Catalini, Marcus’s cofounder who previously worked at Facebook with him.
“The most valuable thing that’s been built has been the connection to legacy systems,” he said. Given bitcoin’s popularity around the world, exchanges in far-flung locales have the ability to transfer it to local currencies. It’s an area that JPMorgan is reportedly looking at too. Bloomberg reported earlier this month that the Wall Street bank was exploring a blockchain-based deposit token for faster cross-border payments and settlements.
Marcus and Catalini have signed up different exchanges like Bahrain-based Rain and crypto wallets and are hoping to have the first currency transfers go through later this year. Next year, Marcus said, the firm hopes to “seriously ramp it up.”
“Money is the last thing that doesn’t move over the internet.”
