Hold on, is River Financial connected to the Bitcoin tale in El Salvador? How long ago is that? The reputable financial institution is now handling Lightning transactions for the Chivo Wallet. While it is a positive move, it carries a seemingly needless counter party risk. Why is El Salvador not managing this internally? Will River Financial also make the Chivo Wallet easier to use?
River Financial revealed the information in a Twitter thread introducing RLS: River Lightning Services, their new offering. “RLS is proud to power LN transactions for El Salvador’s Chivo wallet,” they declared without much fanfare. They provided a link to the official product website, wherein the notable clients’ section prominently features the Chivo logo. The business makes it clear on the website exactly what the product does:
“Without having to manage any Lightning infrastructure yourself, River Lightning Services (RLS) is the quickest and easiest API for enabling Bitcoin Lightning Network deposits and withdrawals in your product.”
That seems ideal for shops, businesses, and companies. But is it suitable for an entire nation? Perhaps it isn’t, but at least it’s not the mystery surrounding the Chivo Wallet project in the past. Did Algorand play a role, and if so, how? There were many rumors, but no one was certain. As of late, we are aware that River Financial is handling the Lightning side of things. An established business that manages some of the more prominent nodes on the Lightning Network.
What Is The RLS of River Financial?
River Financial CEO Alex Leishman asserts that “bitcoin is beginning to cross the chasm from a store of value to a transactional currency” while introducing the new custodial product. And El Salvador is the ideal location to test that hypothesis. “The first financial institution in the United States to support Lightning Network deposits and withdrawals for clients,” according to River Financial, was its statement. The new product is built upon the infrastructure they developed.
We developed a public API for this infrastructure last year after realizing that other companies wishing to incorporate Lightning functionality into their apps might find our operational know-how and infrastructure helpful. We have since onboarded some fantastic organizations to use this API. We are pleased to have powered Lightning transactions for El Salvador’s Chivo wallet for nearly a year.
So, for the past year, River Financial has been handling Chivo’s Lightning transactions? Interesting. Returning to RLS, River Financial issues a dire warning, stating that they will support dollars and other assets over Lightning as the Taro project matures, starting “with Bitcoin.” The business continues by outlining the inner workings of the product:
“You are given an account you can fund and sweep from on-chain upon joining RLS. Making an API call with an invoice that must be paid is all that is required to process LN withdrawals. You can easily create deposit invoices, and we’ll send a webhook to your system to let you know when an invoice has been paid.
BTC price chart for 10/14/2022 on FTX | Source: BTC/USD on TradingView.com
The Peril
To put it bluntly, River Financial is an American business. A financially compliant business that would have to abide by every directive from the US government. The funds belonging to each Salvadoran who utilizes the Chivo Wallet are under the custody of that company. By putting all of their citizens’ Bitcoin within the US government’s purview, President Bukele and his Bitcoin team run the risk of censorship and confiscation merely for ease of use.
Thanks to the Bitcoin network’s design, the Salvadoran government can do it internally. El Salvador can control its Lightning nodes and should do so. It matters to have sovereignty.
However, take tiny steps. River Financial now controls them, which is a step forward but could be better. El Salvador should be creating its internal teams and structures. “Continue to ship new features to give our customers access to the latest features the Lightning Network has to offer,” asserts River Financial in the interim. Something that, to be honest, none of the governments are willing to undertake.
But they ought to be ready to take ownership of their keys.
