UMA Extend turns bank accounts into a target for a Lightning transaction.

A huge thunderstorm close to Port Hedland (Western Australia) lighting bushfires everywhere. I have waited for this photo since a long time. Bild von Diamond T Design via flickr.com. Lizenz: Public Domain

LightSpark aims to make the Lightning network more professional. With a new feature, it seeks to connect the off-chain Bitcoin network with banks. However, this has little to do with Bitcoin itself.

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Light Spark, the Lightning startup founded by David Marcus, formerly of PayPal and Facebook, is introducing a new feature: „UMA Extend„. This allows users and businesses to connect a bank account with the Lightning network to receive Lightning payments directly to the account.

UMA Extend is built on the „Universal Money Address“ (UMA) – an email-like address for Lightning transactions developed by Light Spark. LightSpark’s vision is to make Lightning not only the payment network for Bitcoin but for all currencies.

With UMA, users get an email-like address they can link with a wallet, banks, or exchanges. The sent money, regardless of currency, is first converted into Bitcoin, then transferred over the Lightning network and re-converted into the target currency if different.

According to LightSpark, UMA is already available in 120 countries. Companies like Coins.ph in the Philippines, Ripio in Latin America, YouHodler in Europe, and many others are already using UMA. Exchanges like Coinbase have already integrated LightSpark’s software, which should make the step to UMA Extend relatively easy.

How UMA Extend works under the hood is not detailed in Light Spark’s announcement. However, some details are revealed, from which more can be inferred: those who want to use the service must first sign up for a UMA address. This means comprehensive registration, providing a phone number for two-factor authentication, and verifying with an ID. They can then link their bank account – presumably without the bank’s knowledge – and automatically receive money over Lightning. The payment flows through the Bitcoin wallet and the conversion service by Zero Hash, a partner of Light Spark.

Institutions like exchanges that want to send fiat money via Lightning using the UMA protocol – which is likely attractive, especially for cross-border customers – must already have a Lightning integration in place. Thus, the prerequisites are relatively high, and the hurdles for users, such as verification, are likely to make UMA unappealing to them.

However, the service could be interesting for businesses, especially those wanting to send money globally, or accelerate and automate transactions to banks.

Of course, all this has little to do with the original properties of Bitcoin. Bitcoin is neither the currency being sent, nor are users anonymous or pseudonymous, nor are intermediaries eliminated. It is merely about moving money from one bank to another, with Bitcoin being nothing more than a necessary obstacle in the way.