Stark's work aims to reshape the way Bitcoin operates, but whether her vision can truly be realized on a global scale remains to be seen.

Written by: Thejaswini M A

Translated by: Block unicorn

Introduction

On a Tuesday in March 2023, a trademark lawsuit hit.

Elizabeth Stark watched helplessly as her company's biggest product launch plan fell apart. Lightning Labs had spent years developing the "Taro" protocol, allowing people to send stablecoins over the Bitcoin Lightning Network. The technology was ready, the community was excited, and key partners were prepared.

Then, a judge issued a temporary restraining order. Tari Labs claimed they owned the "Taro" trademark. Lightning Labs had to stop using the name immediately. No further development announcements or marketing could be made.

Renaming to "Taproot Assets" took weeks. Months of momentum evaporated overnight; partners had to explain the name change to confused customers. Some questioned whether Lightning Labs had conducted adequate trademark research before launching such a significant initiative.

But Stark pressed on. The technology continued to develop under the new name, even as competitors gained an advantage during the forced pause.

She built one of the most important infrastructure companies in Bitcoin. Stark's work aims to reshape the way Bitcoin operates, but whether her vision can truly be realized on a global scale remains to be seen.

Before Elizabeth Stark built Bitcoin infrastructure, she learned how to fight against opponents far more powerful than trademark holders.

Resisting Bad Regulation

Harvard Law School, 2011. Stark organized a grassroots movement to stop two bipartisan bills from passing in Congress.

SOPA and PIPA would allow copyright holders to force websites suspected of infringement offline.

What are they?

SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act) are proposed U.S. laws aimed at combating online piracy by allowing copyright owners to force suspected infringing websites offline. These bills would allow the blocking of websites from obtaining advertising, payment processing, and search engine services. This could shut down websites even outside U.S. jurisdiction. Many feared these laws would lead to widespread internet censorship, harming legitimate websites and free speech.

Social media platforms, search engines, and user-generated content sites would face ongoing legal threats. Most tech companies were hesitant to directly oppose this legislation, fearing backlash from lawmakers.

Stark co-founded the Harvard Free Culture Group and helped coordinate campus protests. The message she conveyed was that these bills would make platforms liable for user content they could not monitor, effectively destroying the internet.

"This isn't a battle between Google and Hollywood," she explained, "but a battle between 15 million internet users and Hollywood."

Wikipedia went dark for 24 hours. Reddit shut down. Protesters flooded Congress's phone lines. Within days, lawmakers abandoned the bills. SOPA and PIPA died in committee hearings.

This movement made Stark realize that sometimes you can't defeat institutions through traditional channels, but you can make their preferred solutions politically impossible.

During law school, she also founded the Open Video Alliance and organized the first Open Video Conference. The inaugural event attracted 9,000 participants, proving there was a demand for alternatives to traditional media "gatekeepers." However, organizing conferences and fighting bad legislation seemed overly passive. After graduating, Stark held academic positions at Stanford and Yale, teaching how the internet reshapes society and the economy. She studied digital rights and collaborated with policy organizations to develop better frameworks around emerging technologies.

Policy solutions always lag behind technological change. By the time lawmakers understand new technologies well enough to regulate them properly, those technologies have already evolved into something else.

What if you could build technology to resist bad regulation from the start?

The Bitcoin War

In 2015, the Bitcoin community was fighting for its future.

The "block size war" had been ongoing for months. Bitcoin could only process about seven transactions per second, far from enough to compete with traditional payment networks. One faction wanted to increase the block size to accommodate more transactions. The other wanted to keep the blocks smaller to maintain decentralization.

This debate was existential. Would Bitcoin remain decentralized, or would it be controlled by mining companies and corporate interests?

Elizabeth Stark watched this struggle with interest. She had seen similar battles in internet governance, where technical decisions often involved politics. But Bitcoin was different. There was no central authority to impose a solution. The community had to reach consensus through code and economic incentives.

As the debate intensified, developers proposed a different approach: building a second-layer network on top of Bitcoin that could handle millions of transactions per second while maintaining the security of the base layer.

This was the Lightning Network.

Users would not need to record every transaction on the Bitcoin blockchain; instead, they could open payment channels and settle multiple transactions off-chain. Only the opening and closing of channels would require blockchain transactions.

These channels could connect to one another. If Alice had a channel with Bob, and Bob had a channel with Carol, Alice could pay Carol through Bob. The network would form an interconnected system of payment channels, processing instant, low-fee transactions.

Stark saw the potential but also the challenges. The Lightning Network was still theoretical. The technology required complex cryptographic protocols and had not yet been tested on a large scale. Most Bitcoin users did not understand why a second-layer solution was necessary.

In 2016, she co-founded Lightning Labs with programmer Olaoluwa Osuntokun. The timing was risky, but Stark's lessons from activism were that the best time to build alternatives is before everyone realizes they need them.

Building Infrastructure

Lightning Labs released the first Lightning Network beta in 2018. The software was not perfect; channels often failed, liquidity management was confusing, and most wallets did not integrate the technology correctly.

But it worked. Users could open channels, make instant payments, and close channels without waiting for blockchain confirmations. Early adopters were primarily developers who understood the technology's potential.

Stark wanted to serve the billions without reliable financial services. Her team focused on the real problems faced by actual users.

How to manage channel liquidity to avoid payment failures? Lightning Loop allowed users to move funds between channels and the blockchain without closing the channels, addressing some liquidity issues but not all.

How to create a liquidity market? Lightning Pool established a market for people to buy and sell channel capacity, although adoption remained limited to advanced users.

How to run the Lightning Network on mobile devices without affecting battery life? Neutrino enabled privacy-preserving light clients, but this technology was still too complex for mainstream applications.

Each product targeted specific infrastructure issues. Progress was slow; the Lightning Network remained difficult for non-technical users. Channel management required ongoing attention. Payments often failed due to routing paths lacking sufficient liquidity.

But the foundation was strengthening. Mainstream wallets began integrating the Lightning Network. Payment processors started offering Lightning services. The network grew from dozens of nodes to thousands, although most capacity remained concentrated in a few large nodes.

Critics pointed out that the Lightning Network's hub-and-spoke topology was not as decentralized as advertised. They questioned whether the technology could scale without being controlled by major payment processors. Stark acknowledged these concerns but believed the Lightning Network was still in its early stages; as the technology matured, better solutions would emerge.

The Stakes of Stablecoins

By 2022, stablecoin trading volumes surged. Tether and USDC had annual trading volumes exceeding $1 trillion, surpassing many traditional payment networks. However, most stablecoins operated on Ethereum and other blockchains that were not as secure as Bitcoin.

Stark saw an opportunity. Lightning Labs raised $70 million to develop what would later become Taproot Assets, a protocol for issuing and transferring stablecoins on Bitcoin. The technology leveraged Bitcoin's Taproot upgrade to embed asset data within regular transactions, making stablecoin transfers appear like ordinary Bitcoin payments.

These assets could move through the Lightning Network. Users could instantly send dollars, euros, or other assets while benefiting from Bitcoin's security. Each stablecoin transaction would route through Bitcoin liquidity, potentially increasing demand for Bitcoin and generating fees for node operators.

"We want to dollarize Bitcoin," Stark explained, although it remains unclear whether people truly want their dollars to be dollarized in Bitcoin.

Why? While the technology supports the use of dollar-pegged stablecoins on Bitcoin, the broad user base for stablecoins primarily remains on Ethereum and other more mature ecosystems, where infrastructure, liquidity, and developer activity are deeper, making Bitcoin stablecoins still a niche market.

Bitcoin maximalists sometimes question the necessity of adding non-Bitcoin assets to Bitcoin, reflecting ideological hesitance or a preference to keep Bitcoin as pure "digital gold" rather than a multi-asset settlement layer.

Users in emerging and inflationary markets need stablecoins to maintain stability, but adoption on the Bitcoin Lightning Network must overcome complexity, liquidity, and user experience barriers compared to established stablecoin tracks. The market is still determining the product-market fit for stablecoins on the Lightning Network, so the demand for large-scale "dollarization of Bitcoin" is aspirational but not yet certain.

However, the trademark dispute forced "Taro" to be renamed to Taproot Assets, but development work continued. By 2024, Lightning Labs had launched Taproot Assets and began processing real stablecoin transactions. Bridging services moved USDT from Ethereum to the Bitcoin Lightning Network; users could send dollars at a cost of just a few cents.

But adoption rates were limited. Most stablecoin users remained in the more developed ecosystem of Ethereum. Bitcoin maximalists questioned whether it was necessary or desirable to bring other assets into Bitcoin. While the technology was feasible, the product-market fit remained elusive.

The Problem of Network Effects

Today, Lightning Labs operates critical Bitcoin infrastructure by developing and maintaining LND (Lightning Network Daemon). LND is the primary software implementation of the Lightning Network, supporting most of Bitcoin's second-layer payment channels. But Elizabeth Stark's grand vision remains unproven. She envisions building a "currency internet" that allows financial services to operate globally without government or corporate permission.

In theory, the comparison to internet protocols is reasonable. Just as anyone can build websites and applications on internet protocols, anyone can build financial services on the Lightning protocol. The network would be open, interoperable, and censorship-resistant.

But the network is only valuable when people use it. The Lightning Network is adopted fastest in countries with unstable currencies or unreliable banking systems, but even there, the number of users is only in the thousands, not millions. Remittance companies are trying to use the Lightning Network, but most of their business still relies on traditional channels.

Stark's team is dedicated to integrating AI for autonomous payments, privacy improvements, and providing educational resources for developers. Each advancement is technically impressive, but mainstream adoption always seems to be just out of reach.

"Bitcoin is a movement," Stark says. "Everyone here is participating in building a whole new financial system."

This movement does exist, but its impact on ordinary people remains limited. Theoretically, the Lightning Network can handle thousands of transactions per second; but in reality, most people are still using credit cards and bank transfers. Whether Bitcoin payments can become as natural as sending emails depends on whether the long-standing user experience issues can be resolved.

However, the Lightning Network is still far from Stark's vision of being "as simple as sending an email." Managing channel liquidity is like being your own bank's operations department—you need to constantly monitor whether there are sufficient funds at both ends of the payment channel, or else transactions will fail. When liquidity is insufficient along the routing path, payment routing can be interrupted, and this happens more frequently than you might expect. Setting up the Lightning Network still requires reading documentation and understanding concepts like "inbound capacity." Most people just want to click a button to transfer money, not become amateur liquidity managers.

Lightning Labs has invested $70 million in developing Taproot Assets, improving node software, and trying to persuade developers to build Lightning applications. Taproot Assets aims to allow stablecoins and other tokens to flow through Lightning channels, which could make sense if people really want to send stablecoins through Bitcoin infrastructure rather than using existing stablecoin networks. They are also working to make the LND software more user-friendly and trying to educate developers on why they should care about the Lightning Network. Whether these efforts can enable ordinary people to actually use the Lightning Network for everyday payments remains an unknown.

The technology is feasible, but "feasible" and "good enough for ordinary people" are two different things.

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