People pride themselves as being independent thinkers; you see it on their profile pages at times, listed proudly if they've managed to make an investment in an asset, business or stock that later proved to be successful, silencing the naysayers. You can sense their satisfaction in some of these statements or comments, especially ones that proclaim themselves as a "contrarian investor."
Yes - I am guilty of this pride as well, and I managed to spot XRP among the choices early on in my fascination with cryptocurrency. While most traders were only interested in Bitcoin, I was already exploring other, more modern solutions that didn't involve wasteful mining to secure the network. I took it upon myself to locate the one that seemed to be a stand-out. After having a brief fascination with proof-of-stake systems, I stumbled upon something completely unique and unprecedented; XRP.
That's a story for another day...
What about your story, and the rest of the people on the planet? Have they discovered crypto-assets, and are they able to easily access and invest their money in these new financial instruments, or is the bar still too high? Some analysts point out that the market remains far smaller than other, more established asset classes:
The small size of the crypto market would seem to suggest that the G20 was correct in saying that it doesn't pose any significant threat to the larger global economy.
But other evidence suggests that, despite its small (current) stature, the concept of crypto-assets has now taken root in the minds of world leaders across the globe. In the past three months, I've blogged about the OECD, the IMF, the G20, and a multitude of nationally-scoped legislative bodies that have been giving blockchain technology - and their associated cryptocurrencies - some very serious attention from the standpoint of regulation and policy.
These organizations don't have time to waste on flights of fancy. No, no... these are organizations that consider real financial innovations and trends as they promise to transform the way in which global commerce operates and moves, and they've been looking very closely at blockchain technology, with one stand-out company in the mix most of the time, if not in name, then by description.
Perhaps my own high regard for XRP and the company championing its use is no longer considered contrarian.
General Crypto News
The G20 is an organization that serves to provide a forum for collaborative policy and decision-making among the world's largest central banks from around the world. Its goal is to enhance financial stability on a global scale; one of its sub-organizations is known as the "Financial Stability Board," whose responsibility it is to promote: 1 2
"... global financial stability by coordinating the development of regulatory, supervisory and other financial sector policies and conducts outreach to non-member countries. It achieves cooperation and consistency through a three-stage process, including monitoring implementation of agreed policies."
The document's assessment of crypto-assets was mixed, and seemingly based most of its conclusions on the limitations of the one crypto-asset that is often confused as representing 'all of crypto:' Bitcoin. Without naming it, the document laments the lack of scalability, the problem of code governance, and lack of long-term viability of energy-intensive crypto 'mining.'
All of these are problems with the old proof-of-work crypto networks such as Bitcoin and Ethereum, and do not apply to the modern digital assets such as XRP.
The document doesn't mention XRP by name, but interestingly, it backs off of its negative assessment of crypto-assets in one area of commerce specifically, almost unconsciously acknowledging its own shortcomings in analysis. In reference to international settlement, the Financial Stability Board indicated:
"These conditions can change as technological advances can conceivably resolve scalability and anonymity issues. In particular, the use of crypto-assets to effect cross-currency international payments may become an option where current payment or banking services are less convenient or are slow and/or expensive.
It remains to be seen whether emerging markets, especially remittance - receiving countries facing relatively high costs of cross-border payments, might consider using crypto-assets as an alternative to traditional correspondent banking services."
The FSB is focused on any issue that could affect financial stability, and I think they correctly identified the cross-border value transfer use case as one fertile area where crypto-assets - and specifically XRP in my opinion - could provide substantial value.
The European Parliament is an organization that participates in a multi-member body responsible for governing the European Union. Although it cannot author legislation, it can approve it and does provide input to the EU legislative process, along with the European Council and Commission. The European Parliament provides a forum for interaction of all the EU countries, and contains 751 members. 5 6
The resolution praised the potential of DLT to do several things that the organization supports: 9
- improve transaction cost efficiency by removing intermediaries and intermediation costs, as well as increasing transaction transparency
- empowerment of citizens by giving them the opportunity to control their own data
- democratize data and improve trust and transparency, providing a secure and efficient route for the execution of transactions
- significantly improve key sectors of the economy
- transform and democratize the energy markets by allowing households to produce environment-friendly energy and exchange it on a peer-to-peer basis
- support the electrification of poor rural communities through alternative payment and donation mechanisms
- smart contracts are an important element enabled by the DLT and can act as a key enabler of decentralized applications
- SMEs can benefit from disintermediation by reducing transaction costs, intermediation costs and red tape
- the regulatory approach toward DLT should be innovation-friendly and based on the principle of technology neutrality
Do some of these terms sound familiar? The call for regulatory certainty... the focus on small-and-medium-size enterprises... the reduction of intermediary costs... Some would have you believe that this language is a coincidence, but it appears that global leaders are paying very close attention to what Ripple has been saying, and the SWELL conference has provided yet another avenue for Ripple to highlight the facts around its innovative technology.
Innovation adoption is not a straight line, and it instead happens in dramatic bursts of insight, leadership, and usage that will take observers by surprise, no matter how many times we've seen examples of it in the past.
Ripple's legacy competitor, SWIFT, is hosting its annual SIBOS conference in Sydney, Australia this year, from Monday, October 22nd, through Thursday, October 25th. 10
Like the previous three years, Ripple is listed as an exhibitor, providing a presence at the correspondence banking conference. 11 12 Ripple will be focusing on its general RippleNet membership at its location: 13
Banks that are current customers of SWIFT may start to examine RippleNet membership not only as a strong alternative to SWIFT messaging in some circumstances, but also as a compliment to their existing SWIFT capabilities. Just like in the case of different operating systems or different cell phone providers, it's not necessarily a mutually-exclusive choice for banks; I predict that an increasing number of international banks attending SIBOS will be stopping by the Ripple location to talk about RippleNet membership and what it has to offer.
PreMoney is a series of conferences that caters to venture capitalists and the projects that are vying for their funding. 14 Its latest conference took place on October 2nd, 2018 in San Francisco. 15 It featured Ethan Beard, Ripple's Senior Vice President of Xpring, participating as a panelist in "Investing in Blockchain," along with the following individuals:
- Boris Wertz, Founding Partner, Version One Ventures
- Jordan Clifford, Co-Founder, Scalar Capital
- Bonnie Cheung, Venture Partner, 500 Startups
The session was moderated by Tomio Geron from the Wall Street Journal:
Ethan Beard provided some great commentary during the session, and it started with his introduction of Ripple, and also his Xpring initiative:
"With Xpring, we're focused on the broader XRP ecosystem.
Ripple, as a company, focuses on the Internet of Value - helping money move as easily as data. Our core business being 'helping banks move money - mainly across border' and we've got great momentum there. At the same time, we think XRP and the XRP Ledger has a lot of use cases 'above and beyond' what's going on in the banking world. And so, with Xpring, we're actually looking to identify, amplify, and help those projects take off and get off the board."
His introduction fit the overall subject matter of the conference perfectly, and I wondered if there were perhaps some other Xpring projects that may have been added to his list throughout the conference.
The description of the SXSW Conference evokes the concept of a "Ted Talk" in the form of a multi-day conference. I know I'm probably over-simplifying it, but here is how the conference defines itself: 16
"The SXSW Conference provides an opportunity for global professionals at every level to participate, network, and advance their careers."
The conference is organized into different 'tracks' where people can focus on the content that pertains to their own career path or area of interest, and organizes the presentations and panel discussions accordingly. The next conference is slated for March 8 - 16, 2019; but this one is notable for those that follow XRP, because David Schwartz, Ripple's Chief Technology Officer, will be on stage with Sara Silverstein from Business Insider. The conference described the session as follows: 17
"Known as “JoelKatz,” David Schwartz is the Chief Technology Officer at Ripple and a respected voice in the digital currency community. Schwartz developed encrypted cloud storage and enterprise messaging systems for organizations like CNN and the National Security Agency (NSA). Schwartz will be in conversation with Sara Silverstein, Editor-At-Large and Executive Producer for Business Insider."
Money Tap went live on October 3rd. It is the mobile application - available on both Android and IOS - that was created by the Japanese Banking Consortium (JBC). The JBC is a large group of banks representing 80% of all banking assets in Japan. 18
Money Tap allows individual users to pay directly from their bank account to any other business or bank in real-time. It is available 24 X 7, the entire year, whereas the current domestic payments system in Japan - the Zengin System - only supports real-time transfers until roughly 3 p.m. each day. 19 In addition, there are no fees to use Money Tap for transfers less than a threshhold amount - currently set at approximately $900. 20
On October 8th, Takashi Okita, CEO of SBI Ripple Asia sat down for an interview with Emily Parker of Longhash, a blockchain technology media company. 21
Here's a couple of quotes from Takashi Okita about the Money Tap application and its potential impact:
“In Japan, domestic inter-bank payments is not a very good experience. The banking network is not 24 hours a day, it’s less than 10 hours a day, five days a week. The banks charge around $3 for inter-bank transactions, so if I’m sending you $3, I have to send the bank another $3...
If I’m transferring $5 to you to buy coffee at Starbucks, I never use the banking system, I’ll just give you cash. ”
“The current inter-bank transfer system is a very centralized system, because you need to invest a lot of money to keep it reliable. Blockchain-based payments don’t require that same level of centralization.”
These quotes from Takashi Okita underscore the need for an additional choice that can support more convenient and real-time mobile payments in Japan, and signals his - and SBI Ripple Asia's - intent to follow through on the roll-out of Money Tap to more banks within the JBC in the coming weeks.
Currently, the focus of Money Tap is clearly on domestic payments within Japan, but eventually, as more and more customers ask for additional features, they may look at connecting the application up to the larger global RippleNet network to facilitate international transactions.
Arabnet Kuwait Conference
Arabnet is a media company that caters to digital businesses and entrepreneurship in the Middle East and North Africa (MENA) region of the world. 22 It hosted a conference recently in Kuwait, known as the "Arabnet Kuwait Conference," from October 7-9. The keynote speaker was Waleed Mandani, the Chief Officer for the Kuwait Finance House's (KFH) Retail & Private Banking Group. 23 The KFH became a customer of RippleNet in May of this year. 24
In his keynote address, Waleed Mandani talked about blockchain trends and digitization, as well as the potential for these trends to transform payments. An article covering his address in the Arab Times Online noted that: 25
"With blockchain, KFH initiated a landmark agreement with RippleNet for remittance services, and (was) the first in Kuwait (to have a) successful pilot transaction conducted recently."
While we knew already that KFH was a member of RippleNet, it's good to see that they're making progress as an early adopter of Ripple's xCurrent; and perhaps they will consider adding xRapid into the mix for cross-border settlement. Thanks to @BankXRP (Twitter handle) for noticing this coverage of Waleed Mandani's keynote address.
Turning Invoices into digital Assets
In previous blogs, I've talked about the potential of Ripple technology to unlock unused value that exists in dormant assets. One of these assets is 'accounts receivable' for organizations.
It sounds unlikely, right? Here is the problem in today's world: A vendor completes a task for a company, and then bills that company for the completed work (or delivered product). It then has an asset (accounts receivable) sitting on its books, but currently there is no way to spend or invest this value prior to the settlement of the invoice.
In a new document from International Finance Corporation (IFC), the company describes the developing idea behind invoice securitization. 26 The idea is to somehow use blockchain tech to document these receivables and then be able to tokenize them and resell them to other interested parties in exchange for immediate, liquid value in the form of a crypto-asset or redeemable fiat token:
"According to the Global Trade Review, a number of institutions including Standard Chartered Bank, DBS Bank, and Infocomm Development Authority of Singapore are discussing the possibility of developing a blockchain-based invoice trading platform.
It is based on Ripple’s distributed ledger technology for tracking invoices, backing loans to suppliers, and reducing the risk of invoice duplication while maintaining client confidentiality. Such a platform would allow banks to convert invoices into digital assets on a distributed ledger."
The securitization of invoices is technically a derivative instrument, and it could be represented by either a token on the XRP Ledger, or a combination of a Codius smart contract and redeemable token. In any case, the article signals a sudden interest by banks in the creation of these new derivative products using blockchain technology. The first banks or financial institutions to champion this use of Ripple technology will also be the first ones to reap the benefits.
Note: Thank you to BankXRP (Twitter handle) for sharing the sources for this story.
One metric to examine when researching digital assets is social media presence, and just the general 'noise' level on social media. I've heard that some sophisticated trading bots will actually gauge this metric when determining demand pressure over time. One XRP fan decided to analyze the latest Google trend charts for searches about keywords related to the XRP ecosystem, and posted his results on XRP Chat. 27
He observed an increase in searches associated, predictably, with the SWELL conference at the beginning of October.
In addition, he analyzed search patterns by geographic region and looked at some specific countries as well, and noticed a few surprising trends: XRP-related searches exceeded that of Bitcoin for some time frames and countries. Some of those countries included the UAE (United Arab Emirates), Japan, South Korea, Netherlands, Belgium, Switzerland, Denmark, United States, United Kingdom, France, Ireland, Norway and Singapore. It's an impressive list of crypto trend-setting countries, and it speaks to the increasing level of interest in the crypto asset that will eventually ascend to the throne.
WietseWind's Message to Elon Musk
Earlier in this blog, there were two fascinating - and very specific - references from the European Parliament about the benefits they identified with distributed ledger technology (DLT). It said: 28
- DLT can transform and democratize the energy markets by allowing households to produce environment-friendly energy and exchange it on a peer-to-peer basis
- DLT can support the electrification of poor rural communities through alternative payment and donation mechanisms
The European Parliament was talking about something truly innovative from a public policy standpoint - the generation of electricity by households. They see DLT as enabling this idea, and foresee that energy could be bought and sold in a decentralized fashion.
It seems that the most prolific XRP Community developer was paying attention to this idea, and decided to be one of the first innovators to solve this problem. Approximately one month ago, WietseWind released his blog about how anybody could construct an ILP-enabled light switch. This can have several applications for businesses and those in the IOT and sharing economy industry, as any electrical device could potentially track decentralized payments. In addition, the fact that he successfully connected an ILP node to an electrical grid proves the concept of being able to sell the power itself using ILP.
His blog was a fantastic contribution to the resources available for the XRP ecosystem of community developers.
On a related note, Elon Musk sent out a tweet recently in response to the Intergovernmental Panel on Climate Change (IPCC). Spotting an opportunity, WietseWind sent this response to Elon Musk:
Will Elon see the response? Unknown; but this is a powerful example of how small ideas can quickly develop into globally-impacting solutions to intractable problems like global warming.
XRP Global Currency Pairings
XRP's largest use case is its use in sourcing liquidity for cross-border transactions. Its use as a bridge asset and as a replacement for Nostro account holdings for banks and other financial institutions promises to power demand.
Each of those currencies can be used to deliver value to those that hold bank accounts denominated in the various mediums of exchange. To gauge XRP's reach in the major national currencies used in global commerce, one XRP fan, Leonidas (Twitter handle) researched various sources and created a list of XRP pairings that currently exist on exchanges. Note that this is different on the built-in decentralized exchange for XRP, because XRP's DEX uses gateway-created tokens to represent any redeemable asset that can be issued by a bank, exchange, or individual that runs a gateway on the network.
Here's his tweet - and image, that contains his findings:
This list of thirty-one world currencies represents the highest-volume corridors in Europe, Asia, North & South America, and the Middle East. While more of the lesser-used world currencies are also available through OTC trades and other avenues, this list signifies the truly global nature of XRP liquidity as financial institutions seek to adopt XRP to transfer value across borders.
Mercado Bitcoin is a crypto exchange, founded in 2011, that is one of the largest on-ramps to crypto-assets in Brazil. Customers must transfer their reals (deposits denominated in the Brazilian national currency) to Mercado and then purchase a variety of crypto-assets. Customers can also transform crypto-assets in the opposite direction, exchanging them for reals after they are done using, trading, or holding their crypto-assets.
While the exchange started by trading only Bitcoin, they recently made the (wise) choice to include XRP for their customers:
The exchange is expanding its services, and is also entering the mobile application space and has deployed an Android version of its exchange. 32 This is a great development for the ecosystem: South America now has one more significant on-ramp for those wishing to purchase XRP.
XRP is No Longer a Contrarian Investment
Even though most of the major international regulatory and financial organizations have been introduced to Distributed Ledger Technology (DLT), they are just now starting to learn that 'crypto-assets' are not represented any longer by archaic proof-of-work systems that consume more electricity than some countries.
Instead, they are being introduced to the concept of truly scalable digital assets that can easily support global commerce and transform currencies as value moves across borders.
Ripple, the biggest company building on the XRP Ledger, has long championed its use as a digital asset used in cross-border payments. Their Multi Hop feature on RippleNet has shown - and demonstrated - that xRapid can be used in combination with institutions that are still reluctant to wade into directly using digital assets.
It's an approach that was created by Ripple to speed adoption even in a climate of regulatory uncertainty; the adoption of digital assets is well-nigh inevitable. The banking industry doesn't have the luxury of waiting on the sidelines as their fearless competitors quickly absorb their market share of customers. Now the pressure is on, and they must act quickly.
The world has shown that it is turning its collective attention to crypto-assets and what they imply. They are decentralized, they don't rely on any counterparty, and they are trust-less forms of value transfer that treat geographic borders as ephemeral human constructs.
Crypto-assets have arrived on the world stage, and no longer can we truly call them contrarian investments; especially the one destined to carry the world's value around the globe - the one specifically designed for its utilitarian purpose: XRP.
Sources and Credits:
Cover Art: Thank you to Samuel Zeller
- https://www.sibos.com/exhibitors/2017 https://www.sibos.com/exhibitors/2016