To preface this submission I would like to say that I’m not a blogger nor am I a journalist. What I am though is immensely inspired and it is based on that inspiration that I want to share some of my recent thoughts and observations with the community.
When I initially invested into digital assets, it would be a lie to say that I did so with any motives beyond turning a profit. Equally so, it would be a lie to say that today I do not still hold onto a hope for profits. There are however two criticals follow up statements that need to be shared.
The longer I have been fortunate enough to be exposed to blockchain, DLT and crypto the more certainty I have that we are on the cusp of fundamental changes that will impact humanity for decades and generations to come.
I came for the profit and I still want some … but Im hooked on the tech.
We often get lost in the noise of Crypto-Twitter and wonder why nothing is unfolding the way we want it to or as fast as we want it to when in fact the evidence would point to a crescendo slowly but certainly reaching its climax.
Regulatory Framework and the Impact on Ripple Partnerships:
If you can tolerate the lack of landscape view, somewhat shaky mobile and generally poor visual quality of the video I recorded at the recent 2018 Singapore Fintech Festival (https://twitter.com/EDadoun/status/1061892259862335488) then you’ll hear Brad Garlinghouse state the following.
“I probably spend 20% of my time flying around the meeting with Central Banks, meeting with local regulatory agencies in order to provide that clarity. When we sign up a bank whether its a bank in Kuwait, Abu Dhabi, Thailand, Philippines … they aren’t going live until their regulator is saying yes, either implicitly or explicitly, getting approval to go live.”
These countries are not mentioned by coincidence. Throughout the Gulf and Asia Pacific regions we are seeing regulators take a proactive approach towards creating frameworks that allow for the confident engagement with blockchain and more specifically with digital assets by both the banking community and the private sector.
As XRP investors and fans of Ripple we should take this as an immensely exciting piece of information. Ripple has been widely quoted as stating they have 100+ customers with signed “production contracts” and an increasing frequency of new ones being signed. What we have is an increasingly large foundation of partners in place that, just as we are seeing in the Gulf and Asia Pacific regions, will become more vocal and more active once local regulations permit them to do so.
In short, on the one hand Ripple builds the RippleNet ecosystem and on the other hand Ripple engages with Central Banks as well as regulatory bodies to enable those within RippleNet to thrive.
IMF Support and the Central Banks:
As has been widely reported Christine Lagarde, Managing Director of the IMF, shared what may very well be remembered as a milestone speech. You can read the full transcript at https://www.imf.org/en/News/Articles/2018/11/13/sp111418-winds-of-change-the-case-for-new-digital-currency.
Amongst many fascinating statements, two in particular stood out to me.
“What if, instead, central banks entered a partnership with the private sector—banks and other financial institutions—and said: you interface with the customer, you store their wealth, you offer interest, advice, loans. But when it comes time to transact, we take over. This partnership could take various forms. Banks and other financial firms, including startups, could manage the digital currency. Much like banks which currently distribute cash. Or, individuals could hold regular deposits with financial firms, but transactions would ultimately get settled in digital currency between firms."
“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”
So the Central Banks will take note of this and get to work, right? Wrong. The Central Banks have been at work for quite some time and they are starting to go beyond conceptual discussions.
Enter the Central Bank of Canada, the Monetary Authority of Singapore (MAS) and the South Africa Reserve Bank with their Projects Jasper, Ubin and Khokha.
The 2018 Singapore Fintech Festival was bombarded with proof of concept demonstrations from all three. Progress was the name of the game.
More details can be viewed here (https://twitter.com/EDadoun/status/1061906823232385025), here (https://twitter.com/EDadoun/status/1062181138981019649), here (https://twitter.com/EDadoun/status/1062183840431562753), here (https://twitter.com/EDadoun/status/1062208501328429063) and here (https://twitter.com/EDadoun/status/1062224589005062145).
It’s a lot and it’s technical but it’s real and none of it happened overnight. These are multiple year projects that involve some of the largest Central Banks in the world.
Personally I enjoyed the below panel discussion more than the demos themselves as we were treated to comments from representatives of the Central Bank of Canada, Bank of England and MAS.
I’ll come back later to the work these Central Banks have been doing and some of the commentary from the panel discussion.
Domestic & Regional Networks:
Concern and curiosity can often be observed within the XRP community whenever another payment or settlement project pops up in the blockchain arena. Is it a RippleNet competitor? Is Ripple involved? We’re not asking the right questions.
From approximately 23:20 - 24:41 of the above shared panel discussion Tok Wee Kee, Assistant Director of MAS, can be heard saying the following.
“They are issued by a separate party. In this scenario you have two different parties each running their own networks. How do you ensure that this buying and selling happens atomically, reducing settlement risk … that is where we see value because when you have multiple different networks run by different parties that’s really where the value is.
There is no super central bank issuing a single central currency that all of us use and because of that there is no ability for all of us to be on a single network.
Its possible to interconnect using traditional systems but our traditional systems have always been designed for a small group of users within a small geographic location. It's not designed to allow for this kind of interoperability. This is where we see a DLT system could potentially solve some of these inefficiencies”.
We are starting to see the formation of these domestic and regional networks as we speak. Whether it’s the Japan / Korea consortium of banks, Project Jasper / Ubin / Khokha, MoneyTap in Japan, discussions amongst Gulf banking entities, Santander payment apps for Latin America, the SpeedSend app from the newly minted RippleNet partner CIMB (https://ripple.com/insights/cimb-group-joins-ripplenet-to-power-instant-payments-across-asean/) and others the point is clear that multiple parties are all building similar systems for their regions of interest and influence.
As an aside before we continue, if you have made it this far into this blog then let me take a moment to reference you to a deep dive on what’s happening in one of those regions as well as what a proper blog should look like. Please re-visit https://xrpcommunity.blog/ripples-in-the-dunes/ for an in depth look at what is happening in the Gulf and how it relates to Ripples efforts there.
Coming back to my point, we have networks popping up all over the world both domestically and regionally and these networks will need to communicate with one another.
Whether it’s through official news such as the recent bridge established between Japan and Brazil (http://www.bk.mufg.jp/global/newsroom/news2018/pdf/newse1109.pdf) or through more subtle information such as the items made available to the public by SBI and Ripple during the recent Fintech Festival in Singapore, things are becoming clear.
Ripple distributed documentation detailing what they are calling “XCurrent 4.0” which includes a variety of feature updates.
Without diving into each item, let’s just focus on #6. In short, any partner using XCurrent now has access to XRapid and everyone in the XRP community knows what XRapid can make use of.
What does this have to do with connecting networks? Lets check out what SBI had on display for the event attendees. Its shared above but its gorgeous and worth another look.
MoneyTap, the domestic payment system being championed by SBI, will link up to foreign banking systems via XCurrent. This is perhaps the first but to think it will be the last would be nothing short of comical.
Directly and through the Interledger Protocol, Ripple has been championing interoperability between networks and blockchains since day 1. We are now starting to see exactly what and how that interoperability will be achieved. Many projects are playing a regional game but Ripple is playing and executing a global one.
So what does it all mean?
We often say that regulations must come first and only then will the banks and financial institutions come. We’ve had it wrong this whole time.
It is all happening simultaneously and while the prices may periodically not look as rosy as we all hope for, the reality of the situation has never been more beautiful.
All the parties involved are working towards the same common goal and we are starting to see tangible progress across the board.
Those of us in the XRP community should rest assured. There is no need to guess as Ripple, the IMF, banks and others are no longer being shy about what’s coming. The future is being painted for all of us to see.
As is often shared amongst the more dedicated members of the XRPChat community, allow me to remind you all of what Ripple and its partners were doing the night before Swell 2018.
“On the eve of Swell, representatives from MUFG Bank, Bank of America Merrill Lynch, WestPac, Standard Chartered, Banco Santander, Siam Commercial Bank, American Express, and SBI met at our headquarters in to discuss the rules that govern RippleNet, our global payments network. These rules are critical to ensuring standardization across the network as it scales rapidly”
I would be arrogant to suggest that the grand vision is crystal clear to me. What is clear to me though is that the enormity of what is occurring all around us and the progress being made is on full display for anyone willing to take a moment to zoom out of the daily price swings and simply … look.