River: A Bitcoin Brokerage Built From The Ground Up
Company Name: River
Founders: Alexander Leishman
Date Founded: February 2019
Location of Headquarters: Columbus, OH
Amount of Bitcoin Held in Treasury: Proof of reserves launching soon
Number of Employees: 50
Website: https://river.com/
Public or Private? Private
How do you make a bitcoin-only brokerage profitable? The answer isn’t complicated.
You offer the highest quality services to as many people as possible for a good price.
This is the strategy Alexander Leishman and the team at River employ.
And River’s high-quality services largely hinge on staying true to what Leishman calls “the Bitcoin ethos,” at the core of which is the “not your keys, not your coins” philosophy.
“At River, we decided to take the slow, hard way, which allowed us to build our own custody systems and actually custody our clients’ Bitcoin and operate as a financial institution,” Leishman told Bitcoin Magazine.
Building on a strong foundation is clearly important to Leishman, someone who operates from his own notable educational and professional base.
The Engineer
Leishman completed an undergraduate degree in aerospace engineering and holds a master’s degree in computer science from Stanford.
His résumé boasts of experience ranging from a robotics engineering intern to a cryptography researcher at Stanford to a software security engineer for Airbnb.
In so many words, he has notable technical abilities — the type you’d want someone who secures millions of dollars in bitcoin on behalf of clients to have.
And even with all of his knowledge and experience, he’s still humble enough to be mindful of the risk involved in what he does.
“Our number one focus above all else is always don’t fuck up,” said Leishman.
“People really underestimate that that doesn’t happen by default. You have to actively spend 50 plus percent of your resources to contain entropy and make sure you’re always improving systems and procedures, building the automation and building everything you need to contain those risks and preempt new risks,” he added.
“That’s actually what the majority of the work goes into.”
These are sobering words in an industry that has a reputation for exchanges going bust and/or losing client funds. And Leishman is aware of this.
“It turns out in this industry there aren’t a whole lot of trustworthy people,” said Leishman.
“We’ve seen even the most regulated trust companies go bust. They’ll tell you, we have this certification and this license and this, this and this. Then, when it all comes out, you find out this guy was having people deposit coins to 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 toward Bitcoin?
“The reason that I got into Bitcoin was because I went down the economics rabbit hole on the side in college,” recalled Leishman. “I started reading about Austrian economics and eventually read The 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 types — from The Fed to supranational entities like the EU.
Before finding bitcoin, Leishman wanted to create his own form of money that the government couldn’t control.
“I wanted to create a commodity-backed money, but it would have been centralized,” he said.
“I couldn’t really 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 was like ‘My gosh this fulfills the prophecy — this is going to change everything.’ I just knew I had to work on it.”
And work on it he did. After college, he completed a coding bootcamp and then headed west to San Francisco to find work in what was then ground zero for the Bitcoin industry in the US.
Bitcoin And The Bay Area
“I didn’t have a job before I moved to the Bay Area,” recalled Leishman. “I moved there because back then that’s where all the Bitcoin stuff was happening, and I wanted to be in the center of it.”
It didn’t take him long to find work, though. 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 merchant services.
Beyond his experience at MaiCoin, Leishman remembers his time in the Bay Area fondly.
“The culture was very different back then,” he said.
“There wasn’t really this concept of Bitcoin maximalism. No one was offended by new coins because people would basically 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 this dichotomy between scammers and legit people as much.”
From one angle, these might sound like strange words from someone who runs a bitcoin-only business. From another, one might imagine that Leishman learned more than a handful of lessons firsthand about why Bitcoin is different from all other crypto networks and assets during his time in San Francisco.
Plus, he said that “everyone knew Bitcoin was king — no one was trying to come at 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 Stanford’s Computer Security Lab, and then built secure infrastructure for asset management for Polychain Capital, a crypto hedge fund.
By early 2019, he was ready to start his own endeavor.
Building River
Harnessing what he’d learned about crypto security and payments, Leishman set out to build a Bitcoin platform that not only featured a top-notch multisig security model for client funds at its core but also helped users more readily utilize bitcoin as a medium of exchange via the Lightning Network, as River provides users with custodial Lightning wallets.
Leishman explained building out all of the infrastructure for River is what distinguishes it from other companies like it. When brokerages use third-party custodians they give up control over what they can offer their clients.
“They can only use whatever their third-party decides to build,” said Leishman of exchanges that don’t build their own custodial infrastructure. “And the third parties are all multi-coin custodians that 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,” said Leishman.
“I’m the person leading the company. I know how to build what we need to build. I know how to ship what we need to ship to serve our customers,” he added.
“For a company like ours, I think it is the right archetype.”
More Of The Same — For Now
While Bitcoin is becoming more popular as a store of value, Leishman thinks we still have a ways to go before it becomes a more widely accepted medium of exchange.
Plus, River’s bread and butter is its brokerage service.
“We make most of our money on our bitcoin brokerage,” Leishman said.
He also noted that River makes money off of its other services, like running two major Lightning nodes, but that the revenue produced from this pales in comparison to what the company earns from its brokerage service, which River continues to work to improve.
“There’s always more that we can be doing to make the process simpler and higher quality to sign up, buy — and custody feels like you have all your security needs covered,” Leishman said.
“Also, really where the hard work is, is the interface with the fiat system. And so the big trend that we’re leaning into in the next three to five years, in my opinion, is that Bitcoin is going to become, still growing as a store of value,” he added.
“We’re entering an era where people are going to be saving in dollars and Bitcoin, and the seamless back and forth between Bitcoin and fiat is where we’re focused.”
