We are fortunate.
The overall stock market is correcting now, with the Dow Jones Industrial Average shedding roughly three thousand points in twenty-one days. 1 The financial pundits on mainstream media have provided a number of reasons for the decline, most notably the current government shutdown that's taken place over the holidays.
However, December's precipitous decline was just the latest since the market reached its all-time high in early October, and it signals that a bear market might be ahead for those that own traditional securities and financial instruments:
The cryptomarket by contrast has already faced its own music in 2018, and now has immense compressed energy, much like a coiled spring that has been pushed down to its minimum space.
Even while the cryptomarket was shrinking, however, the large investors and financial companies knew better, and were pouring massive capital into new platforms and services to cater to crypto-curious investors; Stuttgart's crypto exchange in Germany is one of the most high profile examples of this trend. In addition to these traditional players, ordinary crypto investors continued to fund ICOs whose sole purpose was to create new crypto trading platforms.
This optimism in the face of 2018's market downturn speaks to the recognition by those with clear insight into the immense value represented by the innovation of crypto-assets. Citizens of the world now have a censorship-resistant choice for personal finance; one that is decentralized, relies on no central authority, and can cross borders as easily as a weather system.
Every cryptocurrency has access to at least one 'use case' by definition: A unit of stored value.
Yes, this use case has proved incredibly volatile since crypto was first traded, but crypto-assets continue to make forward progress, regularly taking 'three steps forward and two steps back.'
The recent trend has seen the cryptomarket throw its support squarely behind the one crypto-asset with a trillion-dollar potential as a bridge currency. In addition to its imminent use by banks as regulatory clarity sharpens into focus, other use cases have suddenly taken the stage alongside cross-border value transfer, propelling XRP to an increasing market share as Bitcoin's luster continues to fade.
Utility-driven demand has taken center stage, and all eyes are on XRP.
General Crypto News
In the United States, the trading of crypto-assets results in capital gains treatment. This policy has been in place in the US since I can remember (I began trading crypto in 2013).
However, some crypto traders in the United Kingdom claimed that they haven't received clear guidance from "Her Majesty's Revenue and Customs," which is, essentially, the equivalent of the IRS. 2 3
That changed on December 19th, however, with a formal publication of guidance for individuals, with regards to treatment of crypto-assets.
It was refreshing to read the one-page summary, as tax guidance can sometimes be difficult to apprehend at first glance. This publication from the UK's HMRC was clear, however, and demonstrated a consistent treatment of tax policy with the United States. After defining the term "crypto-asset," the document gave examples of different situations where either income tax rates or capital gains tax rates apply. For those interested in learning more, you can access the HMRC Policy Paper here: Cryptoassets for individuals
The biggest news for Ripple over the last few days was the announcement of a massive new client, Cebuana Lhuillier.
Cebuana Lhuillier is one of the largest money transmitters in the Philippines, and it has an intriguing history; the company started out humbly, as a series of four money services branches in the mid-1980s, and then quickly expanded into a much larger company that handles remittance, insurance, bill payment, corporate payouts, collections, and pawn shops. 4 Their own Twitter account describes the business as a "microfinancial institution."
On December 22nd, it was announced that Cebuana Lhuillier had partnered with Ripple, and planned to immediately implement Ripple's xCurrent solution for money transmission. 5 Their CEO and President, Jean Henri Lhuillier, was quoted as saying:
“Using xCurrent will improve efficiency on how we provide service to our clients. This will also highlight Cebuana Lhuillier’s commitment to further innovate and evolve—true to our reputation as best-in-class in our industry.”
This statement from their CEO is a testament that money transmitters are now looking to leverage Ripple technology to help them compete in a global market; for Ripple, the addition of Cebuana Lhuillier to its customer list is a perfect fit with its strategy to continue expansion into the largest worldwide remittance corridors.
In terms of "money received via money transmission," the Philippines is the 3rd largest "receiver country" in 2018 so far, following India and China. 6
I predict we'll be seeing many more of these announcements in 2019 as other high-volume corridor participants look for a strategic means to compete in the money transmitter market.
National Bank of Kuwait
National Bank of Kuwait (NBK for short) was first announced as a member of RippleNet in late May of this year, within three days of the Kuwait Finance House (KFH) also announcing their RippleNet membership. 10
The two successive announcements energized the XRP fan base, and indicated that Ripple was obtaining traction with its payments solution(s) in the Middle East market, which also happens to be a high-volume corridor for remittances.
On December 26th, NBK announced that they'd built a new application using Ripple's xCurrent platform: 11
NBK indicated on their website - linked from their announcement tweet - that their new service is available 24x7, and will settle in real-time.
It's a great milestone for Ripple, as this adds to the growing number of mobile and Internet-based remittance services using xCurrent for both domestic and international payment; applications 'built on Ripple' now include services in Europe, Japan, the Philippines, South Korea, Thailand, Singapore, Brazil, and now the Middle East.
Ripple's network extends the world over, and it's difficult to identify any continent or significant remittance corridor where the network hasn't yet reached.
Hot Chips is an annual conference that started in 1989 in Silicon Valley, focusing originally on the hardware underlying high-performance technology. The conference has continued its traditional focus on hardware, but also seeks to enlighten attendees on how this tech is being used in real devices, applications, and other capacities. In addition, the gathering offers educational presentations on high-profile contemporary technology topics. 7
The organization that plans the conference curates the content on its site and on YouTube, including what it terms 'tutorials' on complex topics.
On Sunday, August 19th of this year, two tutorials were added to the series, one of which covered the XRP Ledger. For the tutorial, Yana Novikova, Senior Product Manager at Ripple, gave a presentation that covered how Ripple's xRapid solution uses XRP:
The presentation may be from August, but BankXRP correctly identified it as an overlooked example of a great Ripple technology overview. Yana Novikova does a great job of explaining xRapid's value to RippleNet customers, starting at about the 5:30 mark:
"Not all of our network participants have access to cheap liquidity in order to process global payments, especially in emerging corridors.
So, using XRP and xRapid, those participants of our network ... can source this liquidity through XRP, thus eliminating expensive intermediaries in FX transactions, and reducing the transaction cost.
xRapid has two value propositions: First of all, it allows our customers to source liquidity on demand, through digital assets ... The second value proposition is that it eliminates the need for a pre-funded nostro account."
The example she used was intuitive as well; in the following diagram, she indicated that the sender organization only needs to have US Dollars at the originating exchange to make the process work:
In addition to her explanation of the business side of the XRP Ledger and how it is used by Ripple, she also dove into the more technical details of how consensus works. Using direct comparisons to how Bitcoin operates from a validation perspective, Yana Novikova compared how XRP enforces double-spend prevention and how it orders transactions, along with how its key differences resulted in spectacular performance metrics.
In addition, she covered most of the main features of the XRP Ledger, including the issuance of counter-party assets and other topics.
Another fascinating part for me was the question-and-answer session at the end of the video, because some attendees were not crypto-aware prior to her presentation, and you could sense that their curiosity had been piqued. A few of the comments were evidence that there is much work to be done in educating the public about why and how decentralized digital assets are such a profound innovation.
I'd classify this video as a resource to share with others that may be interested in cryptocurrency; it provides a good, thirty-minute overview of XRP and how it is used by Ripple, as well as how XRP is different from Bitcoin. Here is the link if you'd like to copy and paste it into a text message or other platform: https://www.youtube.com/watch?v=lEazq8aYylI#action=share
Hack Harvard was a competition recently sponsored and conducted by Harvard, where various four-person student teams from around the United States competed to win monetary prizes.
The top winner for the '2018 Award for Best Interledger Protocol API' in the competition was Michael Rizzo, a computer science major from Stony Brook University on Long Island, New York. Other members of his team included: Srivatsan Raveendran, John Safy, and Mark Khaimov. 8 9 Their winning entry was an application that rewards users for exercising.
The application's name is Steppr, and it works by linking your FitBit device to the Steppr web browser, to automatically track the number of steps walked each day. The website created by Michael's team indicates:
"our back-end interacts with Ripple to process and transfer money into the user's wallet. Our ultimate goal with the project is to improve quality of life by promoting health."
Although the team jokingly states on their site that "It works! We're going to make you all rich (if you go for a walk)," the initial implementation transfers payments at a rate of $0.00001 per step taken. To get a feel for how much that would be for a moderately active person, multiply that amount by approximately 10,000 steps, and you arrive at about 10 cents per day.
Regardless of the amount, however, it's a great idea, and I imagine that there are quite a few people that may want to sign up for the service. Earning even that small amount could significantly defray the cost of a new pair of running shoes for an individual. I'd love to see this become one of Ripple's charitable endeavors, as it would benefit peoples' health, and also serve to disburse XRP to a wide variety of users that may have no other exposure to cryptocurrency.
I have a feeling that this is one of many ideas that we may see from Xpring initiatives in 2019.
The Ripple Drop: Episode 8 (Holiday Edition)
Episode 8 of the Ripple Drop, Ripple's video series featuring company news, insider perspectives, and updates from various members of the Ripple leadership team, was released on December 26th:
Reinhard Cate provided an introduction that set the stage for the video, indicating that he'd be looking back on the accomplishments of 2018 as well as providing a preview of the new year.
The first update was regarding milestones with RippleNet, and the update was provided by Marcus Treacher, Ripple's SVP of Customer Success:
Question (Reinhard Cate): "What kind of things have they (Ripple's customers) been able to do with RippleNet for those end-users?"
Answer (Marcus Treacher): "A good example is One Pay FX. One Pay FX is being rolled out by Santander, really worldwide; and Ripple is driving that solution. What we are now doing, is using that know-how, that learning, to help them very quickly develop winning propositions for their own apps and their own instant banking services.
And what that's doing, it's creating a true global network. And that's starting to bring the Internet of Value to life."
The video then shifted to a quick interview with Asheesh Birla, Ripple's SVP of Product, where Reinhard Cate asked him about his perspective on 2018:
Question (Reinhard Cate): "What has the product team at Ripple accomplished this year?"
Answer (Asheesh Birla): "We wanted to make all the products work better with each other.
What I mean by that is, xCurrent, the product that we've been out selling in the market for three plus years ... we made that work with xRapid. And why that's such a big deal, is that you don't need to have the expensive capital tied up in Mexico; you can use xRapid for on-demand liquidity, instantly sourcing liquidity ... delivering your payment into Mexico.
One of the really exciting things about xRapid, is that not only did we get the product launched, technically, but we got it live; in Mexico; and we got it live in the Philippines as well."
This update was confirmation from Ripple that both of these high-volume corridors are now in place for the solution that uses XRP for payment settlement; I'm looking forward to the coming weeks when we'll be able to see organic, growing levels of volume as xRapid continues to prove its cost savings through real-world use.
Binance is the largest crypto exchange in the world, clocking in at 1.2 billion dollars in (adjusted) average daily volume. 12
Binance has rocketed upwards in fame in the past year and half, surpassing all other exchanges in popularity and growth, with its owner and CEO, Changpeng Zhao, or 'CZ' as he's commonly referred to by those in the cryptomarkets, beginning to play a pivotal leadership role in high-volume trading of digital assets.
Binance has carried XRP for a long time - it was one of the 'early wave' of exchanges to list XRP, and in May of this year, they added a USDT pairing directly to XRP, enabling traders to easily take a stablecoin position without having to resort to trading for a proof-of-work token like Bitcoin. 13
Since that time, there has been an effort in the XRP Community, started by @C3_Nik and @RipplePandaXRP (Twitter avatars), to lobby Binance to add more pairings for XRP and use it as a 'base' currency.
The effort successfully garnered the attention of CZ, and on December 23rd, he announced that Binance would be adding two additional trading pairs for XRP:
In a follow-up to a request for clarification, he then noted that XRP is now considered a 'quote currency' on Binance, which he then equated to the term 'base currency:'
The news of XRP's elevated status on Binance was received with enthusiasm by the market, and causal or not, the trading volume for XRP spiked and resulted in a rally.
The current pairings on Binance can be summarized as follows:
- XRP / BTC Bitcoin
- XRP / ETH Ethereum
- XRP / BNB Binance Coin
- XRP / PAX Paxos Standard Token
Previous Stablecoin Pairings
- XRP / USDT USD Tether
- XRP / TUSD True USD
- XRP / USDC USD Coin
New base pairings
- TRX / XRP TRON
- XZC / XRP Zcoin
CZ didn't indicate if more pairings would be immediately forthcoming, and noted that the new base pairings could be found under a re-labeled GUI element now called "ALTS" market. It was an interesting move that lumps XRP in with Ethereum, in opposition to Bitcoin.
This move may need to be re-visited by developers if XRP's upward trajectory continues unabated, however, or if material levels of utility-driven demand begin to result in elevated price levels. If XRP takes the top spot, it may necessitate exchanges making some alterations in how they list the trading choices. Already, many exchanges are using XRP as a base currency, due to its ability to settle in roughly three seconds with deterministic finality.
As a point of comparison, Bitcoin takes up to an hour to achieve six confirmations, and even after six confirmations, settlement is still considered probabilistic, meaning that settlement is never 100% certain.
This move by Binance to use XRP as a base currency is a milestone for those that support it, and is a major win. Expressions of gratitude poured in on CZ's communications over the Holidays, with some wondering what other pairings would eventually be added to the list. There are also some XRP fans that are speculating on whether Binance may eventually choose to participate as an xRapid partner; it's unknown what requirements Ripple has for choosing xRapid exchanges, but my guess is that KYC and AML components must be in place.
CZ's announcement was an exciting surprise during the Western Holiday season, and it will be interesting to watch if Binance and Ripple agree on an xRapid partnership at some point in the future.
CryptoBridge is a decentralized exchange that was funded via their coin, known as "BridgeCoin," starting in mid-2017. 14
The exchange has been in operation throughout 2018, and they are currently ranked 138th worldwide, with daily volume totaling in the neighborhood of $600,000 per day. 15 On December 21st, the exchange formally announced that they plan on adding XRP as one of their crypto choices: 16
For those wondering, a "decentralized" exchange is one that has no central point of failure or vulnerability; it normally involves each trader running a full version of a platform either on a mobile application or local wallet of some kind, although some have a web-based capability as well. In addition, most decentralized exchanges do not support KYC or AML checks, asking only for a user ID and password, and typically have only limited support for users.
If you're interested in learning more, CryptoBridge has published a series of video tutorials to guide their user base.
Neteller is an online and mobile money transmitter business and crypto platform based in the United Kingdom, with offices in Europe, Canada, and the United States. The company started out as a money transmitter business in 1999, and has transformed into a modern service comprising fiat money or crypto-asset transmission to other Neteller members, whether they be vendors or other Neteller customers. Neteller is also a flexible on-ramp for conversion of fiat money to cryptocurrency. 17
One of their benefits to customers is the wide variety of deposit types that their application supports. Once a user has funded their wallet, they can directly purchase cryptocurrency via the platform, send the crypto to other Neteller members, or spend the crypto at any vendor that accepts Neteller payments.
Earlier this month on December 4th, the team announced that they'd added support for direct purchase and custody of XRP in their wallet and app:
These types of crypto integrations with mainstream finance are becoming more popular, as they allow crypto owners and investors to support the everyday use of their preferred cryptocurrency at local businesses. I have no doubt that Neteller's customer rolls will increase with the addition of XRP on their platform.
BTCEXA is an Australian crypto exchange that went live in mid-2018, with a specific focus on what they term "low market cap cryptocurrencies." 18 I'm guessing that this is one site where new coin projects can turn to ask about initial listings, although I also observe that the exchange supports the larger market cap coins as well. 19
On December 24th, the site announced that they'd made a decision to list XRP as a base pairing on their exchange:
After the change, the site now operates with four base pairings: USDT, BTC, ETH, and XRP.
A number of sites are now making efforts to add XRP as a base pairing for a variety of reasons, including its raw speed of settlement, global liquidity, and growing adoption by mainstream businesses.
It's not clear how much daily volume BTCEXA currently commands, however, as they are not listed at Coinmarketcap or Coingecko. Nevertheless, these are the beginning years for crypto, and I foresee steady global growth in trading; it's one more exchange that incrementally extends XRP's liquidity.
EO.Finance is a new crypto exchange based in Estonia that was funded by an initial coin offering that ran from July through August of this year. 20
The exchange allows customers to buy crypto with credit cards, bank cards, and direct bank transfers. It's an online exchange and mobile wallet and crypto trading platform, which also provides a debit card that members can use to make purchases in the currency of their choice. 21
On December 15th, the exchange announced that they'd added XRP support to their platform, reminding new customers that they can purchase XRP with both credit and debit cards. 22 23
The site is relatively new, so they are not yet listed on the two aggregator sites I checked; however, like other ICO-funded exchanges in the space, they are motivated to compete for customers, and this exchange doesn't seem as reluctant as other exchanges to allow deposit via credit card. It will be interesting to see if their approaches gain traction with other major exchanges that have, so far, instituted special withdrawal rules for crypto purchased with credit.
I applaud their decision to list XRP and hopefully their approach to managing risk associated with credit-financed crypto purchases works out to both the benefit of the consumer as well as the exchange.
It's been a busy few days for crypto exchanges and platforms rushing to add support for XRP, either at their launch, or as a new base pairing. The last one on my list is an application called Voyager.
The Voyager platform is not yet live, but they've announced their beta release along with a small promotion to garner an initial set of customers. 24
The application is set to open to Canadian residents in the third quarter of 2019, but will be available for US residents as soon as January. 25
The mobile application is much like other crypto trading platforms. The user is required to download and install the application as a first step, and then must hook up a bank account. Once that is completed, their trading account can then be funded and they're ready to trade crypto. One of Voyager's selling points is how it searches multiple exchanges for the best price before locking in the trade.
The application will support what looks to be a moderate number of cryptocurrencies at launch, including XRP.
The other interesting point that some may find interesting is that one of the founders of Voyager is an ex-Uber and ex-E-Trade executive: Stephen Ehrlich. 26 He indicated that the initial roll-out will include fiat support, along with its associated functions of KYC during account verification:
"We put a lot of credibility into the know-your-customer process, and we are making sure we are abiding by existing broker-dealer rules."
It's an interesting career shift for Stephen Ehrlich, and it also exemplifies just how much interest the cryptomarket continues to attract from more traditional modes of retail investing.
To participate in the beta release or to sign up for initial access, you can check with the site here: investvoyager.com
Which Economy Do You Prefer?
Despite the cryptomarket's current stunted size, there now exists two distinct economies in the world: one that has historically catered its opportunities to those already swimming in wealth, and one that represents what (arguably) is the single greatest innovation in the democratization of finance and property rights.
One of these two economies represents the future of global trade, finance, and even inter-generational wealth; the other will either join this new model of business or will be relegated to the dusty corners of a museum.
Everything around us is changing; Ripple is helping banks modernize and adapt to this new mode of value transfer. Entire new industries are springing up that acknowledge some of their customers' preference to 'never leave crypto,' completely abandoning the initial goal of cashing out of an investment.
Given XRP's potential to transform the global economy, it's no wonder they're preferring to avoid fiat currency altogether.
And even for those that still regard crypto merely as 'an investment,' the staying power of the underlying technology has clearly made an impression on even the most skeptical analysts. While fear, uncertainty and doubt now grip the traditional financial markets, those of us that have weathered similar storms in crypto in 2018 have no doubt what the future holds.
Sources and Credits:
Cover Art: Thank you to John Schnobrich and Ferran Fusalba Rosello