River: A Bitcoin Brokerage Built From The Ground Up

Company Name: River

Founders: Alexander Leishman

Date of establishment: February 2019

Headquarters location: Columbus, OH

Amount of Bitcoin held in treasury: Proof of Reserves will be released soon

Number of employees: 50

Website: https://river.com/

Public or Private? Private

How do you make an exclusive bitcoin brokerage profitable? The answer is not complicated.

Provide the highest quality service to as many people as possible at a good price.

This is the strategy that Alexander Leishman and the River team use.

And River’s high-quality service depends heavily on staying true to what Leishman calls the “Bitcoin ethic,” underpinning the “not your keys, not your coins” philosophy.

“At River, we decided to take the slow, hard path that allowed us to build our own custody systems and actually hold our customers’ Bitcoin and operate as a financial institution,” Leishman told Bitcoin Magazine.

Building on a solid foundation is clearly important to Leishman, someone who operates from his own notable educational and professional background.

engineer

Leishman graduated with a bachelor’s degree in aerospace engineering and holds a master’s degree in computer science from Stanford.

His resume boasts experience from a robotics engineering intern to a cryptography researcher at Stanford to a software security engineer for Airbnb.

In so many words, he has remarkable technical skills – the kind you’d want someone who insures millions of dollars in bitcoin on behalf of clients to have.

And even with all his knowledge and experience, he’s still humble enough to be aware of the risk involved in what he’s doing.

“Our number one goal, above anything else, is always not to screw up,” Leishman said.

“People really underestimate that this doesn’t happen by default. You have to actively spend over 50% of your resources to limit entropy and make sure you’re always improving systems and procedures, building automation and building whatever you need to limit those risks and prevent new risks,” he added .

“That’s really where most of the work goes.”

These are serious words in an industry that has a reputation for exchanges crashing and/or losing client funds. And Leishman is aware of this.

“It seems like there aren’t a lot of trustworthy people in this industry,” Leishman said.

“We have seen even the most regulated trust companies fail. They will tell you we have this certification and this license and this and this and this. Then when it all comes out, you find out that this guy was getting people to deposit coins into a ledger that they lost the key to three years ago,” he added.

“That’s why we do things ourselves.”

Why Bitcoin?

Given how difficult it is to safely run a Bitcoin company, and the fact that with his credentials and experience, Leishman could make a good living in a number of fields, why did he gravitate to Bitcoin?

“The reason I got into Bitcoin was because I went to college,” Leishman recalled. “I started reading about the Austrian economy and eventually I read Denationalization of money by Friedrich Hayek.”

He was drawn to the idea of ​​challenging central banking as he became more aware of the dangers of centralized power structures of all kinds – from the Fed to supranational entities like the EU.

Before he invented bitcoin, Leishman wanted to create his own form of money that the government couldn’t control.

“I wanted to create commodity-backed money, but it would have been centralized,” he said.

“I couldn’t figure out how to do it without going to jail, and I didn’t know how to make a business out of it,” he added.

“When I came across Bitcoin, I said, ‘Oh my God, this is fulfilling the prophecy – this is going to change everything.’ I just knew I had to work at it.”

And he worked at it. After college, he completed a coding training course and then headed west to San Francisco to find work in what was then ground zero for the US Bitcoin industry.

Bitcoin and the Bay Area

“I didn’t have a job before I moved to the Bay Area,” Leishman recalled. “I moved there because that’s where all the Bitcoin stuff was happening back then and I wanted to be at the center of it.”

However, it didn’t take him long to find work. In March 2014, Leishman landed his first job in the Bitcoin space with a Taiwanese Bitcoin exchange called MaiCoin, which specialized in Bitcoin trading and payments.

At MaiCoin, Leishman identified and fixed security vulnerabilities and built APIs used for trading services.

Beyond his experience at MaiCoin, Leishman fondly remembers his time in the Bay Area.

“The culture was very different back then,” he said.

“There wasn’t really this concept of Bitcoin maximalism. No one was offended by the new coins because people would use these things to experiment with new ideas,” he added.

“It was much more free, more academic, like people could try ideas without the economic component and without creating as much of this dichotomy between crooks and legitimate people.”

From one angle, these might sound like strange words from someone running an all-bitcoin business. For another, one might imagine that Leishman learned more than a handful of first-hand lessons about why Bitcoin is different from all other crypto networks and assets during his time in San Francisco.

In addition, he said that “everyone knew that Bitcoin was king – no one was trying to get to it.”

After MaiCoin, Leishman completed his graduate studies at Stanford, where he worked as a teaching assistant for a course on Bitcoin and other cryptocurrencies taught by Dan Boneh, co-founder of the Stanford Computer Security Lab, and then built a secure infrastructure for asset management for Polychain. Capital, a crypto-hedge fund.

By early 2019, he was ready to start his own endeavor.

Building the River

Leveraging what he learned about cryptographic security and payments, Leishman set out to build a Bitcoin platform that not only featured a leading multisig security model for customer funds at its core, but also helped users more easily use bitcoin as a medium of exchange. through the Lightning Network, as River provides users with escrow Lightning wallets.

Leishman explained that building the entire infrastructure for River is what sets it apart from other companies like it. When brokerages use third-party custodians, they relinquish control over what they can offer their clients.

“They can just use whatever their third party decides to build,” Leishman said of exchanges that don’t build their own custody infrastructure. “And the third parties are all multi-coin custodians who rarely prioritize Bitcoin stuff.”

With Leishman at the helm wearing the hats of CEO and CTO, River has a distinct advantage in forging its own path.

“Thinking like a good engineer leads to a good business,” Leishman said.

“I am the person who runs the company. I know how to build what we need to build. I know how to ship what we need to serve our customers,” he added.

“For a company like ours, I think it’s the right archetype.”

More of the same – For now

While Bitcoin is becoming more popular as a store of value, Leishman believes we still have a ways to go before it becomes a more widely accepted medium of exchange.

Additionally, River’s bread and butter is its brokerage service.

“We make the most money from our bitcoin brokerage,” Leishman said.

He also noted that River makes money from its other services, such as running two major Lightning nodes, but that the revenue from those pales in comparison to what the company earns from its brokerage service, which River continues to improve it.

“We can always do more to simplify the process of signing up, buying and higher quality – and custody looks like you have all your security needs covered,” said Leishman.

“Also, where the hard work is, is interfacing with the fiat system. And so, the big trend that we’re moving towards in the next three to five years, in my opinion, is that Bitcoin will become, still growing, as a store of value,” he added.

“We are entering an era where people will save in dollars and Bitcoin, and the seamless flow between Bitcoin and fiat is where we are focused.”