At Lightspark Sync, the first conference of Lightspark partners on Thursday, the company announced new products and features that will allow users to make global payments in both bitcoin and fiat.
The company announced that it has launched the alpha version of Spark, a Bitcoin Layer 2 that works with lightning and makes it cheaper for users to ride on the non-storable Bitcoin layer.
The company also announced new capabilities for UMA, the company’s open-source payment solution that makes sending money as easy as sending an email.
With UMA Extend, the Lightning Network can act as a bridge between traditional banks around the world, while with UMA Auth and the UMA application, UMA users can tip, pay subscription fees and pay vendors within the apps.
Spark – Bitcoin Layer 2 of Lightspark
Spark is a Layer 2 protocol for Bitcoin that uses statechain technology. In short, users can hold fractions of bitcoin off-chain, and transfer them by sending private keys to other users (rather than signing transactions with the keys).
Lightspark created Spark to better support users’ onboarding to the Lightning Network, which typically requires on-chain purchases at each payment channel and capping a certain amount of bitcoin at these channels so users can send and receive transactions.
Layer 2 was born primarily from the frustration the Lightspark team experienced in trying to create a non-maintainable Lightning wallet for users.
“Private wallets for lightning, especially at scale, can’t work,” Lightspark CTO Kevin Hurley told Bitcoin Magazine.
“If you open channels for billions of users, the costs will go through the roof, and you will fill the space for blocks. It just doesn’t make sense and you are blocking the money for every single user,” he added.
Hurley also shared that Lightspark doesn’t want to wait for approval of Bitcoin opcodes (like CheckTemplateVerify or TapleafUpdateVerify) which would make it cheaper to open new lightning channels. Lightspark wanted to give users the option of not saving immediately.
So, they created Spark, a Bitcoin Layer 2 that offers users cheap, fast payments and permissionless withdrawals, integrated one-way to the base layer of Bitcoin. It also enables offline receiving, or the ability to receive bitcoin even when your device is offline.
Apart from statechains, Spark also uses atomic switching technology. Its design is similar to the Mercury Layer in that it enables the transfer of ownership of Bitcoin UTXOs off-chain while benefiting from fast and fee-free transactions, according to Hurley.
“Mercury has a lot of primary limitations that we’re going through,” Hurley explained.
“On Mercury, for example, you can only transfer complete UTXOs. You have perfect time bombs where you have to return to the chain in a certain perfect time. Therefore, you can only do so many transactions. Also, we pull different pieces like transactions connected to Ark, for example, but, apart from that, we are not like Ark at all,” he explained.
“I think it’s hard to compare it to something else, because it draws on so many different things, and I think the exchange we chose to make is different than a lot of others might choose to make.”
Besides bitcoin, it is also possible to mine and spend stablecoins on Spark. Or you can issue stablecoins with Taproot, LRC-20 or RGB assets in the base layer and transfer them to Spark.
The unique dimension of Spark, however, is that the assets at layer 2 are all UMA-enabled.
“Now you can have non-blocking users sending directly to the bank accounts of UMA Extend users,” said Hurley, talking about some of the new functionality of UMA addresses.
IF Expand
UMA Extend integrates the Lightning Network with traditional banking systems, allowing users to make international bank transfers in seconds. With this new technology, UMA Extend users can send any other UMA Extend user an instant instant cross-border payment from one bank to another using lightning as easily as sending an email.
“It’s designed to facilitate the flow of money in any currency,” Nicolas Cabrera, VP of Product at Lightspark, told Bitcoin Magazine. “I could be in Brazil sending my local currency, the Brazilian real, to a user based in Europe who wants to receive euros or someone in the US who wants to receive USD.”
Brazilian reals leave the sender’s bank account, are converted to sats by the bank (or an entity like Zero Hash, if banks can’t touch crypto), and are received by the recipient’s bank, which converts back to euros, USD of whatever currency the recipient has in his bank account. All of this happens within 30 seconds or so, a big change compared to the two to three days it usually takes for international money transfers to be processed.
“This is the first time to connect the Lightning Network to traditional banking channels and banking systems,” said Cabrera.
UMA Extend uses Real Time Payments (RTP), which enables real-time payments for federally insured depository institutions in the United States, and similar services in other countries where UMA Extend is available. All US banks use RTP Extend support. Currently, Lightspark partners support virtual and fiat methods in 44 fiat currencies in more than 100 countries.
Traditional financial institutions involved in this exchange will set transaction fees, which usually vary between 0.25% and 0.5% – much cheaper than the 6.35% customers usually pay to make international currency payments through traditional financial lines.
Those interested in using UMA Extend can do so via this link.
UMA Auth
At this event, Lightspark also introduced UMA Auth. The technology uses OAuth (Open Authentication) technology (backend technology where a website gives you the option to log in to a third-party application or website via Google or Facebook), an open standard authentication protocol that gives users secure access to a website or application.
UMA Auth is built using Nostr Wallet Connect (NWC), a protocol developed by the team at Alby. NWC now supports UMA features such as multi-currency transactions and client application registration.
“We wanted to expand the coverage of UMA beyond wallets to applications,” Shreya Vissamsetti, a member of the Lightspark engineering team working on UMA, told Bitcoin Magazine.
“UMA Auth is a new extension on top of UMA that allows you to integrate payments directly with the application. The idea is that it is very similar to OAuth, but for money,” he added.
“All you have to do is enter your UMA address and we’ll connect you to your Lightspark wallet directly from the app. That gives the app access to connect to your wallet and withdraw money from the app.”
UMA Auth allows users to do everything from tagging their favorite artists to paying subscription fees to paying a friend with their favorite messaging app.
“Say I’m listening to Taylor Swift,” Vissamsetti began.
“I can link my UMA account, and if my favorite song is playing, I can just click a button and send him a very small tip,” he explained.
“Giving a tip is one of the important things we follow with this product,” said Cabrera. “Lightning is also a good base for us because it allows sending small amounts of money.”
UMA application
UMA Request is another new feature of UMA, which allows any UMA user to request payment from another UMA user.
Merchants can use the UMA Application to request payments via an invoice, which comes in the form of a QR code, for a product sold or a service provided. The UMA application also supports zero-sum invoices, where invoice recipients can pay any amount they like.
“Previously with UMA, the sender started paying, but we turned it around,” Vissamsetti said.
Another highlight of the UMA application is that it ensures that both parties involved in the transaction receive a record of the transaction.
The UMA application makes online shopping – especially across borders – easier and cheaper than using credit cards.
Moving Forward
Lightspark CEO David Marcus, former president of PayPal, believes that it is only a matter of time until more banks and platforms come to adapt to new technologies such as UMA Extend, UMA Auth and UMA Request.
“At the end of the day, if you build a highly efficient network that makes the movement of money around the world faster, cheaper, in real time 24/7 with no blackouts, that’s where the money will flow and the financial system and ecosystem players will need to adapt to that,” Marcus told Bitcoin Magazine.
Regarding Spark, the Lightspark team is looking for feedback from users on how to improve the product.
“We will fully cooperate with the community,” said Hurley.
“We want to be completely transparent, open source. Anyone can test it, make their own versions if they want,” he added.
“We want this to be a collaborative thing where the community joins in, where hopefully they submit pull requests and help find things they want to improve.”
Christina Smedley, founder and Chief Marketing and Comms Officer at Lightspark, echoed Hurley’s words as she discussed both Spark’s new functionality and UMA.
“We are trying [onboard] the next billion or a few billion,” Smedley told Bitcoin Magazine, “so it’s really important that what we do is open and community-led.”
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