Cedric Youngelman | The Bitcoin Matrix Podcast #123: Alexander Leishman on Building Bitcoin

Link to the YouTube (the timestamps are based on this):

Cedric Youngelman: Alexander Leishman is the founder, chief executive officer, and chief technology officer at River Financial. Mr. Leishman brings his deep expertise in software engineering, information security, and Bitcoin to River, where he oversees investor relations, corporate strategy, and engineering. Prior to co-founding River Financial, Alex most recently served on the investment and engineering teams at Polychain Capital and Polychain Labs, focusing on Bitcoin-related venture investments. Alex has previously served as an engineer at Airbnb’s security team, a management consultant for Deloitte, and first got deeply involved in the Bitcoin industry as an early engineer at MaiCoin, Taiwan’s largest digital asset exchange. Alex holds a degree in aerospace engineering from the University of Maryland and a master’s in computer science from Stanford University, where he helped teach the first Bitcoin class. Alex welcome to The Bitcoin Matrix. How are you?

Alex Leishman [1:22]: I’m doing great, thanks for having me on the show!

Cedric Youngelman: Yeah I’m super excited to chat! You have quite a background, and I’m really curious what did you think you were gonna do when you were growing up? What was your dream job then? Or what were some of the dream jobs?

Alex Leishman [1:38]: Once I was old enough to know what kind of careers were out there, I actually had — when I was in elementary school there was something in class they asked, What do we want to do? and I put down two answers: I put down aerospace engineer or chef. And I’m not a chef — not the worst cook in the world but not the best either — chose a different path, went and studied aerospace engineering in school, but quickly went down the economics rabbit hole and fell in love with Bitcoin, which set me on an entirely unexpected trajectory in life.

Cedric Youngelman: What was it like teaching the first Bitcoin class?

Alex Leishman [2:27]: Yeah so for context: I had moved to the Bay Area a year after graduating undergrad. So I moved out to San Francisco at the end of 2013 to pursue a career as a Bitcoin engineer. And I worked out there for about a year and a half, two years, working at a Bitcoin startup called MaiCoin and ended up deciding I wanted to go back to grad school to bolster my computer science background, because I wasn’t a computer science undergrad. And so I applied to Stanford, got in, and before I started I found out that Dan Boneh — the cryptography professor there — was planning to teach a Bitcoin class. And so I e-mailed him and said, Hey I’m going to be matriculating as a grad student and would love to help TA the class. And so back then actually there weren’t very many people in the CS department that A) knew anything about Bitcoin B) had any interest in it, and so I was actually one of the few students — especially in the grad program — who actually cared about it and so it was a good fit. There were a few other TAs — I helped develop the course, helped develop some of the assignments, worked out some of the bugs in the first iteration of a class, and then the class has been going on now for years and it’s one of the more popular classes in the computer science department at this point given the rise of crypto since then! Back then AI was all the rage — I mean it still is but back then this class had good enrollment, but everyone wanted to take all the ML classes. And I think starting in 2017 people really started wanting to take the crypto class, so that was cool to see.

Cedric Youngelman: Do you remember in the early days of this class — you had known about Bitcoin, but what was maybe some of the impressions of people who had never heard of Bitcoin? Or did everyone come into the class already hear about it? What was the attitude around it? Or the excitement level?

Alex Leishman [4:37]: It was very interesting seeing academia’s interest in Bitcoin, because the flavor of the interest was so dramatically different from what got me into Bitcoin. In academia the interest was from the technology perspective, and they really bought into the like, It’s the blockchain that’s interesting! kind of thing. Sound money was never something any computer science professor ever cared about. I don’t — sorry that’s probably too broad of a generalization.

Cedric Youngelman: I see what you’re getting at, though.

Alex Leishman: That’s not what drives them! So there was really none of that culture in the class. The class is a great class, but it was purely technological. So: such a big part of why I cared about Bitcoin really wasn’t something that a lot of students cared about either, and that was the biggest interesting thing for me. That said, I think it’s great that they teach it, but that was the biggest adjustment for me because I found: when all you can talk about is the technology in Bitcoin without understanding the higher-level reason, it feels very myopic. It feels like you’re missing so much important context of why this technology exists to begin with — the monetary aspects, the freedom aspects. That was probably the biggest surprise for me.

Cedric Youngelman: It’s very interesting that you put it that way, especially around the technology side — I can really see that now, especially the way Silicon Valley and the VC class has seeded a lot of De-Fi and ICOs and that kind of stuff. Blockchain, etc. Whereas before you’d mention that, I was kind of excited about the idea of Stanford having this Bitcoin class and maybe the really smart people at Stanford getting it the way — whatever you want to say about Google or Facebook — the founders of Google went to Stanford and their professors helped seed the company and they really recognized the power of the algorithm there, and you kind of talked about that. How did you come across Bitcoin? And to what you mentioned before, Why did you care?

Alex Leishman [7:10]: What actually got me into Bitcoin wasn’t really an interest in tech — I went down the economics rabbit hole in college and ended up reading about monetary policy and read The Denationalization of Money by Friedrich Hayek and started reading material questioning the idea of central banking at all! I had never been exposed to those ideas before and I just became fascinated by this. I had this goal of creating my own currency that the federal government couldn’t control — a private money — and building my own bank around my own private money. I was 20 — I didn’t know how I would accomplish that, but the idea of it was cool. Then in 2013 I was taking a Coursera class because I did want to beef up some of my programming skills, and Balaji Srinivasan was teaching a web engineering Coursera class that I was taking in my free time after work. And there was an app assignment to build a charity donation page using Bitcoin using the Coinbase API — Coinbase had been around for maybe a year at that point. And I was like, What is this? What is this Bitcoin thing? I think I had heard about it a year or two [before], but I didn’t put the pieces together in my head and was like, Oh, whatever. And then I started reading more about it — I needed to convince myself that this worked. I needed to convince myself that this was not some trivial toy that just wasn’t gonna be around. I think everyone’s had that moment with Bitcoin. I had my moment and I was like, Oh my gosh — I started putting the pieces together — this fulfills the prophecy! I have to work on this! This is amazing — this is going to totally change the world. I had already been planning to leave and move to the Bay Area, and this really gave me real purpose, and so by the end of 2013 I packed up my bags, moved to San Francisco — I didn’t have a job lined up but I know I want to work in Bitcoin — and that was the beginning of my Bitcoin story.

Cedric Youngelman: Where does it go from there? You end up in San Francisco — I lived in San Francisco ’03-’04, maybe ’04-’05. So: crazy town, you’ve got no job — how does it all start from there? Where’s it go from there?

Alex Leishman [10:07]: I enrolled at a programming boot camp and was crashing at a friend’s place and did this programming boot camp for two months to just get the basics of programming solidified, learn how web apps work — it’s a crash course — and flavored my focus around Bitcoin. And before I was in San Francisco, I assumed everyone in San Francisco would care about Bitcoin back then, because online there was a pretty vibrant community even back then. And I assumed that would be the talk of the town: of course everyone sees that this is the most amazing thing in the world — of course when I get San Francisco everyone will be working on this! I get there — no one cares. And I’m like, Okay. At first I was kind of bummed, but I found the Bitcoin meetup and I found the corps of people who did care. But then I realized — This is a huge opportunity! No one cares about this stuff right now! And I’m one of the few people around who’s a new engineer who’s starting to get to the point where I understand Bitcoin inside and out. And so it didn’t take long to get a Bitcoin startup job, and that’s really how I got my start.

Cedric Youngelman: And around that time I guess altcoins are coming out. What is your impression of them back then?

Alex Leishman [11:39]: Back then I played around with a lot of different altcoins. It was a different time then — there was something more authentic about the altcoin. Everything was just fun. There wasn’t serious money, really. Yeah, some people by then had gotten rich, but by and large this wasn’t some serious industry. Everyone was just kind of having fun and playing with things. And so yeah I had a Cryptsy account — I don’t know if anyone will remember Cryptsy — and there were all these ideas of people discovering what is this stuff going to be good for later? Datacoin, Peercoin —

Cedric Youngelman: Namecoin.

Alex Leishman: This guy Sunny ran Peercoin and it was the first time someone thought of a stake. And all these ideas back then were really cool and interesting to play with and so it was a fascinating time. But Bitcoin was always king and that was always clear. But then eventually you realize — playing with all the alts — Bitcoin’s really the only thing here that really matters. And so I had my exposure to all that, and then fast forward to the first ICO bubble of 2017 — I hadn’t paid attention to the ICO stuff much. And all of a sudden I get all these people asking me all these questions about what do you think about this token? And this token? People that have never been interested in Bitcoin before! I’m like, What are you asking this for? What is going on? And then all these people would ask me about these random tokens and these presales, and by then I was so far beyond the alt phase that I was like, What on Earth is happening here? What are people on about? It took me a while to be like, Lots of normal people are jumping into this now. I’ve seen this before, but it was just to a new order of magnitude. So I saw that happen and of course most of those people lost a lot of money — this was post-Ethereum. And then of course we’ve had our bubble since then. But that said, I’m not anti-experimentation. Look, if you want to create a coin, go ahead and create it. But that was my wake-up call for really seeing how easy it is to exploit the information asymmetry, is really what it comes down to. Information asymmetry is so exploitable for economic gain. Then the asymmetry specifically between people who really understand what Bitcoin is, what this is about, and people totally new to the space who it’s really easy to convince them of lots of things. And that wasn’t really obvious to me that that was such a big dynamic — until 2017.

Cedric Youngelman: I bring it up because now we’ve gone through another four years — maybe five years — since 2017, and another almost cycle up in terms of magnitude around these games played around altcoins. And I remember when I came in to 2017, honestly in the beginning I was speculating — I was very interested in this thing that was moving in price. I was learning about the qualities, but I got — from both a legacy financial perspective and a technological perspective — enamored with some of these other things: learning about them, what they can do. It’s even interesting — I was looking at a discussion on Twitter today about how even Satoshi I think was involved in Namecoin and looking at other things that timechain or blockchain technology can do. And the reason I bring that up is because you’ve chosen to build a Bitcoin-only company — a Bitcoin-focused company. So I’d love to hear what it’s been like building River: How did you set out? What were you doing right before River? And then how did you set out and build it?

Alex Leishman [16:20]: Before River I was at a fund called Polychain Capital. Polychain was really the first fund to really — I mean the irony is: Polychain actually really professionalized the token investing paradigm, and they’ve been incredibly successful. A great great firm. And it’s not that I believe all tokens are worthless and no one should ever do this or should have ever done that — it’s frankly: I just really care about Bitcoin! I care about the monetary revolution here. I’m just less interested in financializing up the stack. And experimentation with smart contracts and stuff — cool, that’s just not really what I care about that much. I do pay attention to it — I’m not clueless — I do know what’s going on, and some objectively fascinating stuff is happening. It’s just not something I really want to be building a whole lot of. That’s not a never thing, but it’s just: Where does my interest lie? And so this goes back to the early days of why I got into this to begin with! I always cared about creating a financial institution built natively around a new type of money, and creating a new type of bank built on money the government couldn’t control — that’s what I’ve been wanting to do for my entire adult life. And so that’s why I’m building River and that’s why it’s Bitcoin-only. Because I’m not building a trading platform to try and compete with Binance and Coinbase. If you want to do that, there’s plenty of other places to do that really well. I care about building a bank that accelerates the adoption of Bitcoin as the global reserve currency. And the opportunity I saw was that Coinbase was taking a — I thought Coinbase was going to do this. I thought Coinbase was going to build this Bitcoin bank. And Coinbase took a very different tack: Coinbase started adding lots of different assets and building a trading platform. And look: objectively, they’ve built a very successful company. They built a multi-billion dollar company around this, made insane amounts of money — objectively, it’s successful. I think Brian Armstrong is smart. I think he’s a good CEO. But they didn’t build what I wanted to see exist, which was this Bitcoin financial institution that spent its resources building the products that you could build if you focused exclusively on Bitcoin and poured all your money into building Bitcoin-native financial products. So the question is like, Okay well what does that really mean? What does that look like? And step one for us was actually kind of vanilla — it was: building a Bitcoin brokerage — build a solid on-ramp. It’s a lot harder than you think, especially back when we started River. Accepting a reversible payment rail for an irreversible money is actually a lot of work if you don’t want to go totally bankrupt. And so getting that right, building the service org around that, getting smart about how to scale that up was step one for us. And we focused on the higher end of the market to really position ourselves as a premier brand. And then we took the next step along our strategic arc last Fall by launching our mining product. So what does a multi-product Bitcoin financial institution look like? Well we’re building that out: first it was brokerage and really rock-solid custody, now it’s managed mining — so we make it as easy to mine Bitcoin as we do to buy Bitcoin. It’s not it’s not “cloud mining.” It is: our clients completely own their hardware, we host it for them, and our clients are basically purchasing a Bitcoin cash flow into their account. And that’s more of a pillar of products we want to build out over time, is other ways to put capital to work to build these Bitcoin cash flows around mining. We have a few more pillars of financial products that we want to build out — I’m not going to share our exact strategy, but we have some exciting stuff coming along. We definitely have stuff that we’re looking at doing regarding the Lightning Network. We are one of the biggest Lightning nodes, and I think the Lightning Network really opens the doors to another level of very fascinating financial products that we can offer our clients someday. And so that’s really what I mean when I talk about a Bitcoin financial institution: we can do all these things because my engineering team is not focused on constantly keeping up with adding the next token or supporting the next ETH fork — all of that stuff creates an enormous amount of work and technical debt to keep up with, and we don’t have to deal with any of that.

Cedric Youngelman: I agree with everything you said there and what I really love about this is the idea of a bank building on Bitcoin-native financial services, because I have a finance background and I think banking is great. And I love how you make the distinction between banking and central banking — very different things. How long has River been around? And what are the main functions of a Bitcoin bank right now?

Alex Leishman [22:16]: We’re about three and a half years old. And just for the lawyers: we are not officially a bank — we’re not a chartered federal bank. I’m using the term in a more colloquial sense of the word. We don’t market ourselves as a bank.

Cedric Youngelman: None of this is financial advice.

Alex Leishman [22:37]: That said: what is a bank in the traditional sense of the word? It’s a bank you keep your wealth in and they keep it safe and they offer other services around your wealth to help you build more wealth. And so I view our primary mission — the way we describe ourselves and our strategy — is: we build high-quality accessible financial products to help our clients build their Bitcoin wealth. Our mission is to help our clients build their Bitcoin wealth — accumulate more Bitcoin. That’s how we view our mission to our clients. That’s our North Star. And so brokerage is the first one: convert your income or your cash flow into Bitcoin — V1. Buying miners: acquiring miners, acquiring hashrate, buying Bitcoin cash flows — that’s another way to build your Bitcoin wealth. It has different risk/return profiles. People want options: people want to make different trade-offs to accumulate Bitcoin in different ways. And over time, there will be other ways to either accumulate more Bitcoin. One way to help our clients build their Bitcoin wealth is also to give them ways to put it to work without selling it. And so this is how we think about our roadmap, our strategy, and what we’re building out for our clients. We want to build the best place for people to have their Bitcoin. But that said, we want to build that financial institution you can trust but you don’t have to! The beautiful thing about Bitcoin is our clients can withdraw their wealth whenever they need to, whenever they want to. We want a big door in and a big door out. Having a big door out is a sign of a trustworthy institution: if you can leave whenever you want, it’s a high-trust signal — and trust is everything in this industry.

Cedric Youngelman: It’s very interesting around trust too — do you guys do collateralized loans around Bitcoin? And what is your view on that?

Alex Leishman [25:04]: We don’t do that — we don’t have that product offering right now. That said, it’s certainly something that it’s not lost to us the value of. Generally I think that collateralized lending is a very compelling product. I think that there’s a higher-level concept here which is not just the vanilla collateralized lending, click a button, get cash against your Bitcoin — it’s more like, What’s the higher-level need? People want their Bitcoin recognized as valuable collateral. You go to a normal bank today and you tell them, Hey I’d like this loan — here look: I have some substantial wealth. Let’s say you’re like, I’m worth $10 million dollars — Oh let’s talk! This is interesting to us! And then they they ask for your information — Oh $10 million of Bitcoin? Oh haha sorry, I thought you were talking about real money! And now ironically if those $10 million dollars were in Netflix shares that would have been okay, and so there’s an asymmetry here — there’s a gap in the market — and at a higher level, people middle to upper-end of the market have this substantial wealth in Bitcoin and normal financial institutions don’t recognize it. Therefore they can’t access the level of financial services that their peers — who have their wealth in other assets — can, and that’s basically the need that River wants to address over time.

Cedric Youngelman: Yeah I think collateralized loans are an important financial instrument. I think that it’s important everyone understands what risks they’re taking, and there’s various risks with collateralized loans whether they’re fully reserved, fractionally reserved — the counterparty risks not just with who you’re dealing with but then the counterparty risk of who you’re dealing with is dealing with. And I think all of those can be assuaged and dealt with and I think you can mitigate and figure out your own choices. But what do you think of what’s going on right now in terms of the market in terms of — I don’t know how to put it but liquidity, or I think BlockFi sums it up. I don’t know if the problem there is they’re collateralized loans — that’s not what I’m arguing — but that seems to be a main function of their business model. So what do you think of the contagion in the market and Celsius and Luna and a lot of this stuff?

Alex Leishman [27:48]: Yeah so most of that stuff is nothing that we ever want to get involved with. The collateralized lending that I think we’re both talking about is: you hold Bitcoin and you hold more Bitcoin than the dollars you lend out against it, and if they don’t pay it back the minute that it hits its margin call — boom, liquidated. It’s basically the safest possible loan in the world.

Cedric Youngelman: Right, extreme collateral.

Alex Leishman [28:11]: Yeah exactly. None of that is the reason this contagion happened. All this contagion was due to under-collateralized loans and trust with centralized lenders lending to friends or other “corporate” friends that they thought they could trust that had these “great, sterling” reputations — turns out they were potentially running all these funky investment schemes. I don’t want to call it a ponzi scheme yet — we don’t know exactly what went down, but certainly it didn’t end well. And I think most people lending to them had no idea how bad it really was, because if they did they almost certainly wouldn’t have loaned anything! So basically I think this whole contagion was a huge wake-up call for the industry. What we didn’t see was a lot of the more seasoned financial folks really get wrecked — some did, but a lot didn’t! A lot of the Wall Street firms that have started dipping their toes into this were very conservative the whole time and super risk-averse with their loan books, and those guys were okay. Because the thing is: there is stuff to learn from Wall Street! They’ve been through all this stuff before the last hundred years. They’ve seen these things play out — that’s why they have the controls in place that they do. Now I’m not calling for more regulation, but the controls at those firms don’t just exist because of regulations — they exist because they don’t want to go out of business. And so I think the crypto industry is just rapidly relearning some of the lessons that Wall Street learned in the last hundred years — and it needed to! So now, nobody’s gonna just lend — well I won’t say nobody — it’s gonna be a lot harder to borrow capital under-collateralized without having a very very thorough audit of your financial situation. No more legit firm is going to be lending nine-figures on reputation.

Cedric Youngelman: I would hope not! Well I shouldn’t say that, but yeah I think there’s some lessons learned here and I think your point is: some of these lessons have been learned before. Some people you can tell them, Don’t touch the stove — and they get it — and some people say, Well come on how hot could it be? You don’t know what you’re talking about!

Alex Leishman [30:48]: What’s interesting is: as much as there is a lot of funny business with De-Fi, this whole contagion thing showed that there’s a subset of De-Fi that’s actually interesting, because not a single depositor to Compound or Aave — or any of these collateralized lending protocols that don’t trust anybody — lost anything! It’s ruthless: you either put up all the collateral or you don’t. And if you hit your liquidation limit, you ruthlessly get wrecked and every depositor is protected. So it’s kind of funny: the depositors at the centralized firms like Celsius are the ones that got wiped out, but the depositors in De-Fi protocols actually didn’t — the collateralized lending protocols.

Cedric Youngelman: Which I think is a whole nother level of technical ability to deal with, so that was maybe the smarter retail money — not the dumb money, and not the majority of the money. I’m wondering: with being a Bitcoin-only company and everything that’s going on right now, is it harder for you to get credibility as a Bitcoin-only company? Do you think you’d have more credibility in this dumber money space — and not all of it’s dumb money, but — in Wall Street money, Silicon Valley money, who tend to maybe like the technology side of these things. Whatever you want to call it. But do you think you lose credibility? Or would have more credibility in some other facet? Is it harder being a Bitcoin-only company in that regard?

Alex Leishman [32:46]: Definitely. Short-term, we would have more credibility. Long-term, we would have less.

Cedric Youngelman: Yeah the phrase you made is: Brian Armstrong is selling out or whatever, but I would imagine when you’re dealing with some people whether you’re raising funds or like you mentioned even just banking services and dealing with the legacy system is probably harder as a Bitcoin-only company. Were there major hurdles in that regard? You see that a lot in other industries.

Alex Leishman [33:22]: I would say that difficulty is just being crypto. When we started, it wouldn’t have been easier for us to get a bank account if we also supported Ethereum. But really the difficulty is that the mainstream narrative is so multi-coin, is so crypto, that it certainly is a headwind. But like I said, our product strategy is: build financial products that help people accumulate Bitcoin. So at the end of the day, the bet is: lots of people are going to want better ways to get more Bitcoin. And if we can effectively execute on that strategy, it doesn’t really matter — the way I think about it is that for more and more people every year, Bitcoin is their unit of account — it’s how they measure their wealth. We want to help those people build their wealth. And the number of those people will keep growing every year. I deeply believe that we’re right — that Bitcoin is really the one true money out of all of this stuff. And if that theory is right, then we’re on the trajectory. It doesn’t mean altcoins won’t exist — I just see altcoins as a totally different category.

Cedric Youngelman: Yeah I agree.

Alex Leishman [34:45]: It’s like stocks. When people say, Why don’t you add altcoin trading to River? I’m like, Well I mean I could use that same argument for adding stock trading — it’s just not what we do!

Cedric Youngelman: Yeah and I think it really helps on the back end with engineering and security. And I mean I have a lot of ill will from my experience on Coinbase in 2017 because of the way they positioned other — well it could have been anything — other things that are not like Bitcoin, but in that regard I saw them as being equal or on the same playing field and I thought a lot about diversification, and unit bias fell in. Well I can’t buy a whole Bitcoin but I could buy a whole other Litecoin! And then actually I fell in with the bull run then so I was like, Oh I’m on to something here. So I want to know how you came up with the name, River? I think it’s brilliant.

Alex Leishman [36:11]: Well it wasn’t some stroke of genius! The story is a little bit less sexy: basically we originally had a different name — it’s called Alto Financial. And our domain was alto.financial — it’s kind of a crappy domain. And we got a cease and desist letter telling us we had to change our name or we were going to get sued. And we were a small company and didn’t want to deal with it — and also we weren’t in love with our name, anyways — so we were like, Let’s just bite the bullet. And we worked with this domain consultant who actually — it was great, because he wasn’t just a domain broker. He was like, I’ll help you find a name with a dot com! So that was like, If we’re gonna re-change our name, we’re gonna get the damn dot com. And so we went through this exercise of multiple iterations of: What kind of brand do you want? Here’s some different names. And then in one of those iterations I was like, Wait — river.com is available? There’s no way we can afford this, but let’s just see what it costs. Because I had looked at other names. I think it was atlas.com and they wanted $10 million or something ridiculous, and so I just assumed river.com would be like that. But it wasn’t! And it was a price that — it wasn’t cheap by any means, but also it wouldn’t break the bank. And I had known from a previous startup that I helped get off the ground that getting the dot com you love is absolutely worth it — 100% — so I knew immediately this was the name once we got the trademark and signed off from our lawyers. And yeah the rest is history.

Cedric Youngelman: What have you guys been doing in terms of Lightning? And I’d love to hear your take on the Lightning Network?

Alex Leishman [38:09]: I am very excited about the Lightning Network! We have a team of four very talented engineers focused full-time on our Lightning infrastructure and the future of Lightning a River. Yeah I have a lot of thoughts on Lightning: I think Lightning is going to be very very powerful long-term for really truly making Bitcoin a global currency. The Lightning Network is truly what’s necessary if Bitcoin is going to scale as a global currency. That said, I think that’s like end-vision — it’s going to be a long time before Bitcoin is a compelling medium of exchange in the developed world. We still have the dollar. For the foreseeable future, the dollar is going to be a great medium of exchange, and I think that anyone who says otherwise is just totally in denial. We all buy stuff with dollars — it works pretty well. And so what I’m excited about actually is Taro. Taro is the asset protocol that Lightning Labs has developed to issue assets on Bitcoin — similar to colored coins, but using Taproot and really next-generation, all the learnings over the last five or ten years. And Taro allows these assets to be also transacted on the Lightning Network. It’s going to open up a whole new number of degrees of freedom on the Lightning Network, where other assets beyond Bitcoin can transact. Because the Lightning Network is great for transacting, but the thing is: commerce is just still not done with Bitcoin. Yes, in some places in the developing world we’re seeing that grow and grow and I think that trend will continue in the developing world for sure. But I think really if you talk to most people in the developing world, they also just still kind of want dollars. And so dollars on Lightning is actually really interesting, because the way that this can work is: you don’t even need — with the Lightning Network you need these payment channels between all the parties so that you can transact in Bitcoin. Well with Taro, let’s say I wanted to pay you in a stablecoin on Lightning: I actually don’t need a path to you for that stablecoin. As long as I have a stablecoin path to a node and there’s a Bitcoin path to a gateway node that has a stablecoin path to you, I can pay you in dollars or the currency of your choice. But the transaction is being routed through the Bitcoin-native Lightning Network! So Bitcoin is almost fulfilling this vision here that Ripple wanted to have, where Bitcoin is the network and there’s this reserve currency, and at the edges you convert the currency of choice of the transactor, or the sender or the receiver. I’m really interested in the world that all the stuff that that unlocks. I think the devil’s in the details — there’s a lot left to build: we don’t know exactly what this looks like, there’s a lot left to figure out, the engineering is just really beginning here. But I think it’s a very interesting and compelling future.

Cedric Youngelman: A lot of what you said there made me think though of Liquid and atomic swaps and even I guess what they’re doing over at Strike. Is it ever hard for you to focus on just River? In terms of — I mean there’s just so many exciting areas to working in Bitcoin. And with your mind —

Alex Leishman [42:40]: Well my job is to pay attention to all the cool stuff happening so that I can see where the puck’s going and figure out how to best take advantage of that for River clients. Now what I haven’t talked about — and I don’t want to get into too much because a lot of this is still internal and secret — is all that I just said: How does that help River users? And how does that help us build financial products for River clients? I don’t wanna dig into that, but that’s the context that I care about this stuff in. And so it isn’t a distraction — it’s actually a really big pillar of our strategy. We’re one of the biggest Lightning nodes in the network because I’m skating to where the puck’s going.

Cedric Youngelman: What did you think of Facebook and Libra and their attempt at rolling out a token or a network or whatever you want to call it?

Alex Leishman [43:41]: I think one of my most controversial opinions especially in the Bitcoin industry — probably honestly in any group of people regardless of political affiliation — is: I think Mark Zuckerberg is a great CEO. No one’s perfect — I actually think he’s a great CEO. And I think Libra was a very inspired vision. I think it was a very cool idea of Facebook: this online world — an ecosystem — having their own currency. Now the reality is it was probably over-engineered. They went full down the crypto — they tried to get too crypto as opposed to really solving for the user. Like, what are the problems they’re trying to solve here? But I think by and large the real — and arguably they should have just used Bitcoin or Tether USDC. But really the regulators at the end of the day made it dead-on-arrival. You need the political capital to be able to [do this]. Congress just saw this and was like, No.

Cedric Youngelman: Yeah I just thought the one thing there is they were trying to do their own sort of unit versus a choice, well not in terms of ranked order but I mean worst-to-best would be to do a basket of currencies. I think their best bet would have been just do a synthetic dollar or their Facebook dollar with the euro dollar and just have a dollar-backed thing. And I think that would have been a great way for the United States then to use the monetary colonists and export the dollar to Facebook users outside the country. And then Facebook would have had the chance to serve their users, build this huge network for the dollar, and then they could always down the road change the game when they had more political currency and stronger rails. I think that was the only way they misplayed that. It’s very interesting what you said about Zuckerberg! I mean in terms of a public company he’s done a splendid job of growing that company into a behemoth — and I don’t use that word in a negative way. And not many CEOs get to do it from that age and for that long. I wonder then what do you think of Zuckerberg as a CEO compared to say the Winklevoss twins? They were kind of around in the beginning of Facebook, social media, and then have gone on to another billion dollar idea with both Bitcoin and probably even a third billion dollar idea with crypto — if they’ve made a billion off of Gemini.

Alex Leishman [46:45]: So look: I mean they’re extremely successful in their own right! I don’t know them and I don’t wouldn’t say anything bad about them — they’ve been extremely successful. That said, I don’t think it’s controversial to say objectively: Zuckerberg is a true founder CEO. The Winklevoss twins — it’s not obvious how involved they are in Gemini. They’re very clearly very sharp — they’re great at building wealth and have built a good company in Gemini, but Zuckerberg is in a league of really great CEOs who’ve truly built a world-changing company. I wouldn’t say Gemini’s a world changing company. And I consider that not even to be controversial — it’s just objectively true. And I think just as a CEO, just seeing everything that company’s been through — he’s steered the ship the whole way always generally with confidence. I don’t know — I kind of admire it.

Cedric Youngelman: Yeah I mean I get what you’re saying — that’s why I wanted to hear a little bit more. I know you have a strong interest in history. So where do you think we are in terms of the history of money right now?

Alex Leishman [48:12]: I have no idea. It’s a very chaotic thing, and part of the reason I believe so much in Bitcoin is because of what Friedrich Hayek calls the fatal conceit, that any single party can actually truly understand what’s going on and steer society in an optimal direction. But that said, I think we’re probably entering a new era here. The world order is shifting. I don’t think the dollar is ending tomorrow. I mean fiat currencies — it’s a relative game: the dollar is still stronger than every other world currency even given the inflation that we’ve seen. And the central bank, as painful as it might be to the economy, seems willing to tighten things up, which is probably what needs to happen. And so I think the dollar has still got a long while to go. I don’t know if that’s 10 years. I don’t know if that’s 50 years. I don’t know where that goes. But I do think Bitcoin is going to continue on its trajectory to become the reserve currency of the world. To become this pristine collateral. It’s possible there’s a world where Bitcoin is truly the reserve asset but it’s still not the unit of account but it’s backing things — it’s really underlying lots of other currencies. It’s also possible that what we see is actually a peaceful transition over time — countries just start to embrace it and use it as a base money. I honestly don’t know. All I feel confident in is that Bitcoin will continue on its current trajectory of growth, and I don’t know exactly how that plays out geopolitically or with central banks.

Cedric Youngelman: Is Bitcoin an American ideal?

Alex Leishman [50:28]: I think it is! I think it’s freedom money. It’s property rights that by and large cannot be trampled on. It’s the cheapest property rights to enforce to ever exist. We like to say you have a right to your life, liberty, and property, but even that is sort of at odds with the concept of freedom, because well who’s going to defend it for you? Someone’s got to defend your land. You’re going to pay the military. Like, the military will just serve you? What gives you that right? So there’s that whole rabbit hole. But Bitcoin’s this property that’s just mathematical. There’s not an army. You’re paying for it by just paying transaction fees and through some inflation. And so it’s almost truly a right to property that doesn’t force anyone else to do anything for you.

Cedric Youngelman: That’s what I love about it too. In terms of Bitcoin being a monetary revolution, do you think this takes 50 to 100 years? And I wonder in the sense of — because I see a world too where Bitcoin might just back things as a strategic reserve. And then I don’t think it permeates into culture as much in society and economics — in terms of maybe household economics, corporate economics — as much in that regard.

Alex Leishman [52:17]: I honestly have no idea in the timeline. I think it’s anyone’s guess. There’s so many unexpected things that can happen to either accelerate or delay that timeline. I would argue the response to COVID accelerated it. Who knows what’s next? Who knows what the next thing is? This is a weird tangent but I have this weird suspicion — and I could be totally wrong — but my weird, Why does no one else talk about this? kind of thing that I think could happen this century is: Japan really rises again. I think it’s a pretty out there opinion, but I could totally see — with the rise of China — nationalism in Japan sparking something in that culture. Which is still very homogeneous, and it’s the same culture that was there a hundred years ago! The people didn’t change. And so who knows these kinds of things? If China invades Taiwan, well the only other islands left are starting to get much closer. And so who knows what that could mean for the world? And again: I don’t know how this relates to Bitcoin exactly, but maybe it’s not Japan — maybe it’s some other country — but there’s going to be something that no one saw coming that happens here. And who knows what that precipitates?

Cedric Youngelman: That’s a really interesting example of externalities that can change the game. I think hyperinflation is one of those things. If we have hyperinflation, I think that changes the way we think about the dollar as a unit of account — or I’d hope it’d inspire people to. I’m starting to feel like 10% inflation is getting normalized. And I see it even in myself — I just went by the gas station the other day and it was down to four dollars and 40 cents and I was like, Oh that’s kind of cheap now. And the Overton window has been moved in terms of what I will now accept. And what that said to me right then there was like, Oh wow it’s gonna hit six bucks seven eight bucks and I’ll be okay with it because I’m now used to this volatility — this fluctuation around this commodity. So I think it would take 30%-40% inflation in the dollar. And to your points — I don’t think we’re anywhere near that. And I think that’s kind of been a little bit of a theme lately of just how long can things continue as is outside of the Bitcoin overlay? And like in terms of the way that Bitcoin humbles you, I think that it could take a lot longer in that regard. Has Bitcoin changed you? It seems Bitcoin’s right up your alley in terms of aerospace engineer, technology, monetary freedom, banking. Has it changed you in any way?

Alex Leishman [55:55]: I’m sure it has. It’s given me a lot of new friends. I mean it’s been the guiding light on this journey of starting a company, which has changed me tremendously. It’s an extremely humbling experience trying to build something from the ground up. Overall I would say yes — I feel blessed. I have a reason to wake up and work hard every day that’s bigger than me or bigger than my immediate family. It’s bigger than just my daily life. I have a true thing I believe in and can work on — and a lot of people don’t have that in their careers! And having that I think has certainly contributed to where I am today, and just feeling a tremendous level of fulfillment in what I do.

Cedric Youngelman: I appreciate that sentiment a lot — that’s another reason I do this show. I can’t tell you how much I’ve enjoyed this conversation, Alex. It’s been awesome. River — I’ve been a customer for a couple years now, and I really appreciate what you guys offer in the space because I can recommend River. It’s Bitcoin-only. What that means to me is: I’m not going to confuse anybody when I send them there and they’re going to get the highest service in terms of security and focus on the thing that we’re trying to acquire at that point and the brokerage services to what you’re talking about. And I love to see where you guys grow. I’m really excited about the mining aspect of things. I really like how you phrased it around Bitcoin cash flows, helping your clients, customers, users increase their Bitcoin wealth in various ways. I think it’s a really fascinating way to look at it. So this has been so awesome. Thank you so much. I’ll leave it to you for any parting words and to let people know where they can find you. And obviously it’s river.com, but anything else you want to share about River?

Alex Leishman: Thanks Cedric! Yeah it was great to be on the show. Thanks for having me. You can find me on Twitter at @leishman. River.com. Pay attention: we’ll be launching some cool stuff in the weeks and months to come. We work hard every day to help you build your Bitcoin wealth, so if that’s something you care about, having a River account is something you want to have.



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