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  • Writer's pictureDavid Manion

River Financial Is Powering The Chivo Wallet’s Lightning Transactions. Why?

Wait a minute, is River Financial involved in El Salvador’s bitcoin story? Since when? Apparently, the highly respected financial institution is now processing the Chivo Wallet’s Lightning transactions. Which seems like a step in the right direction, but also comes with seemingly unnecessary counterparty risk. Why isn’t El Salvador handling the operation internally? And, will River Financial improve the Chivo Wallet’s usability?

In a Twitter thread announcing RLS: River Lightning Services, its new product, River Financial dropped the bomb. Without any fanfare, they stated, “RLS is proud to power LN transactions for El Salvador’s Chivo wallet.” They linked to the product’s official site, which contains a Chivo logo in the prominent clients’ section. On the site, the company clarifies exactly what the product does:

“River Lightning Services (RLS) is the fastest, simplest API for enabling Bitcoin Lightning Network deposits and withdrawals in your product without running any Lightning infrastructure yourself.”

That sounds perfect for companies, businesses, shops. Is it appropriate for a whole country, though? Maybe it isn’t, but it’s much better than the mystery that used to surround the Chivo Wallet project. Was Algorand involved in any way, and if so, why? Rumors flew, but nobody knew for sure. Nowadays, we know River Financial is taking care of the Lightning side of things. A company with a favorable reputation that runs some of the larger nodes on the Lightning Network.

What Is River Financial’s RLS?

Presenting the new custodial product, River Financial CEO Alex Leishman claims that “bitcoin is beginning to cross the chasm from a store of value to a transactional currency.” And what better place to test that theory than El Salvador? For its part, River Financial was “the first financial institution in the United States to support Lightning Network deposits and withdrawals for clients.” The infrastructure they developed is the basis for the new product.

“Last year we realized that this infrastructure and our operational expertise might be useful for other firms looking to integrate Lightning functionality into their applications, so we covertly built a public API for it. Since then, we have onboarded some incredible organizations to this API. One of these is El Salvador’s Chivo wallet, for whom we have been proudly powering Lightning transactions for almost a year.”

So, River Financial has been processing Chivo’s Lightning transactions for a year now? Interesting. Back to RLS, River Financial threatens the world saying that they’ll start “with Bitcoin and eventually supporting dollars and other assets over Lightning as the Taro project matures.” And then, the company explains how the product works beneath the hood:

“When onboarding with RLS you are given an account that you can fund to and sweep from on-chain. Processing LN withdrawals is as easy as making an API call with an invoice to be paid. You can easily generate invoices for deposits and we will notify your system via webhook when an invoice is paid.”

The Risk

Let’s not beat around the bush, River Financial is an American company. A fully compliant financial company that would have to follow every order from the US government. That company has custody of all of the funds from every Salvadoran that uses the Chivo Wallet. President Bukele and his bitcoin team are putting all of their citizens’ BTC within reach of the US government, risking censorship and seizure. Just for convenience.

The bitcoin network is built in a way that allows the Salvadoran government to do it internally. El Salvador can and should hold their own keys and run their own Lightning nodes. Sovereignty is important.

On the other hand, baby steps. They’re now in River Financial’s hands; which is not ideal, but it’s progress. Hopefully, El Salvador is building its own internal structures and teams.

Meanwhile, River Financial promises to “continue to ship new features to give our customers access to the latest features the Lightning Network has to offer.” Something that, let’s be honest, no government is prepared to do.

They should be prepared to hold their own keys, though.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


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