Crypto and XRP: Next Generation Money

Hodor

Hodor

I blog about Ripple & XRP. FULL DISCLOSURE: All views are my own. I do not work for Ripple; I am not a professional financial analyst, and the majority of my crypto holdings are XRP.

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Why did we become enamored with cryptocurrency?

It's truly a global phenomenon that transcends borders and continents.   There is something about the idea behind it that appeals to all of us - something that, although intangible, possesses the ability to spark the imagination and draw us in.

For me, I remember reading about it first in a Wired magazine article in 2011, and having three reactions:

  • Skepticism
  • Suspicion
  • Wonderment

I was fascinated yet unmotivated, and didn't react with any particular desire to acquire these tokens - after all, even if I could get thousands, what do I use them for, and who would want them?

Well, that was 2011, and most of us are familiar with what came after that point;  worldwide fascination with a trust-less, no-counter-party asset that could be traded online from your computer.   So why did it catch on?

Look at real currency, and the loss of trust in its value by the citizens that use it.   Yes, we use it to store and trade for tangible items, but what does it represent?   The 'full faith and credit' of the country that issued it?   And that in turn is usually based on that country's ability to collect taxes, which is in turn paid in ...  you guessed it ...  that same currency.

Is it easier for people to understand the concept of nationally-issued currency, or is it easier for people to understand why an asset with limited quantity might increase in value over time?   Up until the 20th century, money issued in the United States was always backed by a specific amount of precious metal, and that was a concept that people could understand - after all, precious metal is limited, and the value tends to be stable.

But the United States - and most other governments - have now started to issue currency based on very difficult-to-understand concepts, and have even admitted to 'just printing more' to help the national economy.   While the economic concepts are fundamental - a larger money supply tends to loosen credit blockages and boost exports - those that wish to store their earned value are the ones that watch helplessly as their national currency diminishes in its buying power.  

Cryptocurrency may be extraordinarily volatile, but its supply is based on code;  code that is centered on the science of cryptography.   This assurance of limited supply is a noteworthy difference.  

It doesn't just stop there:  Cryptocurrency is decentralized.   Even if one national government wanted to 'outlaw' it, they couldn't.   For example, the servers on which the XRP Ledger runs are located throughout the world, run by members of the XRP community, businesses, educational institutions, and governmental organizations.   It's impossible to stop, and it is international in scope.   No matter which country you are in, as long as you can gain access to the Internet, you have access to your XRP - or whatever crypto-asset you own.

When you hear skepticism from icons of finance, you should ask yourself a question:  Do they really 'get it' from your perspective, or are they heavily invested in fiat currency and its debt instruments?   Always ask yourself about motivations behind dramatic statements from these influential people, no matter how respected their opinions might be in the mainstream press.   Let critical thinking be your guide, as well as history.

Crypto-assets are not 'going away' and they will inevitably supplant national currencies for specific use cases for which they are better-suited.  

Ripple News

One week ago, Cory Johnson, Ripple's Chief Strategist, sat down with Breaker Mag, an online magazine that covers new topics in fintech, including blockchain technology. 1   Mark Yarm from Breaker ran the interview with Cory Johnson, and it spanned a variety of topics on XRP and Ripple technology.  2

I really liked what Cory Johnson had to say about decentralization, the difference between XRP and Ripple (the company), and the current state of crypto reporting.  

But the big news involved comments he made about the current administration (executive administration in the United States).   Here are the questions and answers:

Question (Mark Yam from Breaker):  Do you have a sense of what the Trump administration thinks about a product like Ripple?

Answer (Cory Johnson):   When I started to meet with people in government and regulators, I had very low expectations.  I have been truly amazed at the open-mindedness, number one.  And number two, the smart questions, sometimes even tough questions.  There’s clearly a lot of homework going on.  The White House in particular seems to be thinking about what it means to have 80 percent of bitcoin mining taking place in China and a majority of Ether mining taking place in China.  When you look at XRP, there is no mining, so from a foreign-control aspect or from an environmental aspect, XRP is a very different beast.  And in conversations we’ve had with the administration, they seem to get that and think that might matter.  

Question (Mark Yam from Breaker):  How high up in the administration have you gone, as far as talks go?

Answer (Cory Johnson):   I’m Episcopalian, and the joke is we don’t talk about God or money, but we have lots of both.  So we haven’t said who we’ve talked to.  But we’re in regular talks throughout Washington, and we meet with regulators as well as politicians.  We’ve got a whole team that’s devoted to doing that, not just in the US, but worldwide.  Our regulatory team, they jump on planes like their pants are on fire.  

For those that have studied the ongoing centralization of mining for Bitcoin and Ethereum, these comments reflect geopolitical reality.   Most of the large mining operations for Bitcoin are based in China.   Like it or not, this is a trend that has been identified by many mainstream news outlets as Bitcoin's role in crypto continues to fade.  Is this observation going to be a driving factor in US policy?

It's difficult to say, but Cory Johnson's observations about the location of Bitcoin and Ethereum mining are based on hard data.  

Mojaloop

Ripple and the Bill and Melinda Gates Foundation - and an assortment of other influential fintech companies such as Dwolla, ModusBox, Software Group and Crosslake Technologies - all teamed up in 2017 to construct the first version of Mojaloop, a set of tools for enabling mobile payments.  3  4

These forward-thinking companies and nonprofits joined their efforts to solve a problem;  including the world's unbanked population in the new digital economy.  

Mojaloop has one main goal:  to assist new or existing mobile networks in joining their applications and services to the worldwide banking system in a very low-cost way, using standardized payment formats such as ILP.   Other stakeholders that will benefit from Mojaloop include financial services companies, government regulators, and of course, the un-banked end-users it hopes to reach.  

On October 17th, nearly one year after the initial announcement of Mojaloop, Miller Abel, the Deputy Director and Principal Technologist at the Bill & Melinda Gates Foundation, sent out this tweet in advance of his participation in the Github Universe Conference5 in San Francisco:

Mojaloop Tweet

He then followed up that tweet with several more, to clarify some of the questions that filtered through after his initial communication:

Miller Abel Tweet

While we already knew that ILP was probably the 'backbone' of the new Mojaloop technology, I did not foresee a tie-in with Coil.   In the tweet(s), Miller Abel credits the Coil team with helping on a draft specification for inter-connecting different Mojaloop instances using ILP.  

This is an outstanding update, and it indicates that, in my estimation, the Coil team is helping to follow-through with the Mojaloop project to update it for the latest version of ILP.   Perhaps I'm oversimplifying it, but I'm guessing that's the case, and also that the Bill and Melinda Gates Foundation is looking to move this project forward; hence Miller Abel's attendance at Github Universe on Thursday, October 18th:

Miller Abel Github Universe

This project has the right ingredients for widespread adoption, and it's targeting a massive global population of un-banked people that, ironically, may have access to a mobile device, but no access to banking.  

SIBOS

SWIFT's annual conference, SIBOS, is scheduled to run from October 22nd to October 25th in Sydney, Australia.  6   Each year for the last three years, Ripple has attended the conference to provide a opportunity for members of the old correspondence banking network to access an introduction to newer blockchain technology.  

This year is no exception, and Ripple is sending Dilip Rao to the conference:

Dilip Rao Tweets

I can think of no better person to discuss the potential behind membership in RippleNet than Dilip Rao, as he seems well-versed and authoritative in all the Ripple solutions.   It will be interesting to hear back from him and others at SIBOS;  some banks may be dragging their feet to new blockchain technology, but the time is quickly approaching where, if they do not engage with Ripple, they'll be giving up material numbers of customers to those institutions that can process inter-bank transfers in real-time.  

Moneynetint

Moneynetint is a UK-based company that offers a variety of services, centered around its core business of handling foreign exchange trades and currency conversion for customers. 7  It also offers an e-wallet, debit card, and merchant tools for use in check-out.   It caters to both personal and business users.  

To handle their ForEx conversions and trades, the company recently indicated that they'd completed an integration of Ripple technology, and were now members of RippleNet, Ripple's network of banks, remittance processors, and corporates who have implemented one or more Ripple solutions.  8  9

Ripple's Director of Account Management, Nadeem Ladki, had this to say about Moneynetint:

“Their ability to now facilitate payouts in Israeli New Shekel – in addition to Euros – on behalf of other RippleNet members is another big step in expanding the overall network.  By leveraging Ripple’s blockchain technology, Moneynetint will now be able to simplify and reduce the FX conversion rates for their customers, increase the speed of settlement and offer services to new markets that would otherwise have been too difficult or too costly to reach in the past.”

This comment has become almost common-place for those of us that closely follow news of Ripple technology deployments.   However, an intangible benefit for institutions that join RippleNet is an accelerated process of forging new banking relationships, which is an aspect that, even though more subtle, may prove to be a deciding factor for small-and-medium sized corporates, banks, and remittance processors.   The Chief Executive of Moneynetint had this to say about that topic:

“The processes of interfacing and approval between financial institutions, previously taking months or even years are now significantly reduced to a matter of days to a few weeks.”

This is an important note, and demonstrates how, once a certain critical mass of RippleNet members has been achieved, momentum will only increase worldwide for Ripple solution adoption, expanding the potential reach of XRP even more.  

MoneyMatch

Moneymatch is a remittance company based in Malaysia.  10   They indicate that they were recently founded in October of 2017, and have already sent 200 million MYR (Maylasian Ringgit) to over fifty different countries worldwide.  11

On October 15th, the company announced that they'd just completed their initial tests using RippleNet, and specifically the xVia solution.   They indicated that the first transaction they processed through RippleNet traversed from Malaysia to Spain, followed by other transactions to Germany, Latvia, and Ireland.  

The CEO of MoneyMatch, Adrian Yap, indicated that his company is:

" ...  capable of integrating into the Ripple blockchain and performing a live legitimate international money transfer from Malaysia to Europe ..."

You can sense the excitement in this comment, as the company can now achieve real-time settlement instead of having to settle for SWIFT's slow, multi-day service.   It's one more remittance company to join onto the quickly-growing RippleNet network.  

Coil News

Many that follow XRP are familiar with both Coil and kingblue_XRP's fund-raising campaign for St Jude Children's Hospital.  

Coil is a company that is enabling content creators on the Internet to be paid automatically by those that have signed up for the "Coil" service.   Content creators first have to 'Coil-enable' their website by linking their URL to their account, and then by installing a few lines of script on their website.  

Users that have paid for Coil membership will then automatically donate a small amount of money to these websites as they browse or read them.   It's a fairly straight-forward concept that will enable some content creators to fund their operations without resorting to invasive web advertising.  

How does this pertain to charitable organizations like St Jude?

On October 10th, Alpha Research Omega (Twitter handle) customized their site to donate half of their Coil earnings to a 'secondary Coil receiver:'

Alpha Research Omega tweet

The net result of this code customization is that it sets an example that anybody can follow;  it isn't restricted to St Jude, although that is a very worthy cause if you're thinking about donating some of your XRP.   Instead, it can be used for any account with an XRP Tip Bot address, including other individuals or organizations.  

My thanks goes to Alpha Research Omega for publishing this technique, as well as for donating half of his Coil earnings to St Jude!

XRP News

The default, recommended UNL list that is used when validator operators download the software for XRP has historically contained nodes dominated by Ripple.   However, starting in 2018, this default listing grew to include non-Ripple validators, and the trend is quickly driving towards greater and greater levels of decentralization for this default UNL.  

Ripple is now a minority operator for transaction validation, and runs thirty-nine percent of the validators on the recommended UNL, and only eight percent overall:

cinapple validator statistics

So who runs the two newest validators on the default UNL?

They are both validators run by educational institutions, including Korea University and the University of Kansas.   At least one of these institutions (Korea University) is connected with Ripple's University Blockchain Research Initiative (UBRI) that was started in early June of this year. 12  Adding educational organizations into the mix for the default validator list is a wise move in my opinion;  businesses have a financial stake in the health of the XRP Ledger, and educational institutions that are teaching their students about blockchain technology can also benefit from running a local stock-and-validator combination on campus.   Hopefully we'll see more universities choose to sponsor and run XRP validators.  

This further reduction of Ripple's role in transaction validation is proof of progress on their plan to make XRP the most decentralized among the world's top crypto-assets.  13

NEXO

NEXO is an innovative new platform that enhances the ability for individuals to keep their cryptocurrency, but still have access to liquid cash when necessary.   It's a simple concept:  If you own cryptocurrency, you can deposit it with NEXO, and then access a credit line up to $2,000,000:

NEXO Screenshot

The credit line can be accessed via a direct transfer to your bank account, or by usage of a credit card.   The platform is partnered with BitGo for custodian of the deposited crypto-assets.  

On October 17th, a crypto researcher noticed that XRP was now available as a choice on the site for loan collateral, along with a wide variety of other cryptocurrencies.   This means that XRP owners can access instant loans by using their XRP as collateral;  it's an additional alternative to capital for those that have purchased XRP.  

As NEXO's business model is proven successful, I expect to see many more of these types of instant credit companies - and even banks - providing credit in exchange for crypto.  

Earn XRP through Omni

Omni is a new 'sharing economy' company that aims to allow individuals to rent out their personal property for financial rewards.   To easily enable global scope of their service, they've enabled the ability for users to 'cash out' in XRP. 14

Omni Example

Giving property owners the option to cash out their rental income via XRP means that, regardless of their country of origin, they can receive a liquid asset that they can use to exchange.  

How does the entire service work?   Here is a video that the company released on their blog site that describes it in detail:  15

Essentially, property owners send their items to an Omni storage facility, where the items are then cataloged, photographed, and placed on the company's website for rental.   While some may question this business model, I predict Omni is the 'tip of the iceberg' in the next wave of sharing economy apps.   There may eventually be companies that specialized in specific property to reach lower price points, but Omni's value seems to lie in the fact that it can handle a wide variety of merchandise - like an early version of an "Amazon for sharing."   I detect exciting potential in the next few years for this company.  

Currently, Omni is only available in San Francisco and Portland;  hopefully with the adoption of XRP, the company will expand quickly to other cities throughout the United States, and even other countries.  

Bitvo Exchange

Bitvo is a new Canadian-based exchange that launched on August 1st of this year.  16   And now, roughly two months after its initial launch, the exchange recently added support for XRP trading as well, with the additional benefit of supporting a direct fiat-to-XRP pairing with Canadian Dollars (CAD):  17

Bitvo Tweet from Leonidas

Thanks to Leonidas for noting this fiat pairing for Canadian users.   Canadian crypto traders now have several good options for direct fiat-to-crypto on-ramps for XRP.  

Bitrue Promotions

Bitrue is an exchange based in Singapore.   They are new, having went live on July 27th of this year.  18

The exchange garnered quick attention from the XRP fan base because of their decision to use XRP as one of their 'base' currencies for trading.   Traders have the option of trading XRP in combination with ten other cryptocurrencies.  19  

The exchange has been on a roll recently, with Coinmarketcap adding Bitrue's daily volume to its consolidation site, and the production deployment of the Bitrue Android and IOS applications, which facilitate mobile trading from customers' phones.   And on October 19th, the exchange announced an exclusive deal for those that trade XRP:

Bitrue Tweet

Bitrue strikes me as a 'diamond in the rough,' and I've noticed that the exchange has the ability to add customers through well-publicized promotions.   The fact that they're based in Singapore, a country with well-defined crypto regulations, also helps.   They are adept marketers and business-people, and I predict that their exchange may one day challenge some of the major players in the space.

For more information about Bitrue's XRP promotion, either click on the preceding tweet, or navigate here to open a new window:   Bitrue XRP Promotion

Cobinhood

The Cobinhood exchange launched on December 18th, 2017, and listed a small number of crypto pairings along with fiat support.   It then promised to add more cryptocurrencies to its supported list.  20  On October 18th, the platform announced that they would be adding support for two additional pairings - both for XRP: XRP-BTC and XRP-USDT.

In the same announcement, Cobinhood noted that they would begin to support margin trading on their platform on the same day:  October 19th.

Liquid

In addition to Cobinhood, another platform that supports margin trading has announced support for XRP. Liquid is owned by Quoine, which is headquartered in Japan.  21  The Liquid platform was funded from the proceeds of a record-breaking ICO, which rasied over $100 million in 2017.  22

The exchange supports a wide variety of cryptocurrencies, including an XRP - JPY (Japanese Yen) pairing.

On October 19th, Liquid announced that they would be adding XRP to the choices available for margin trading:

Liquid Tweet

Both Liquid and Cobinhood might prove popular with those XRP traders looking to try their hand at a new platform that supports trading with leverage.

Never Sell?

When people ask me 'when is your exit point' for your XRP investment, I sometimes respond with an answer that they didn't expect:  "I may not cash out."

It sounds counter-intuitive, right?  What is the normal measure of success for the price appreciation of a crytpo-asset?  It's normally considered a rising price denominated in a fiat currency such as the US Dollar.   And while this is one way to measure an investment's success, I predict that by the time I reach a point where I'm comfortable parting with my XRP, there will be a myriad of options for me to continue storing my value in the crypto-asset of my choice, as well as to spend it on day-to-day needs.  

This is the dream for crypto-assets:  To provide an alternative to citizens of the world to store their earned value in a financial instrument of their choice.   Technology has enabled the innovation of trust-less, decentralized, no-counter-party assets which do not rely on any central authority for management.   This is a relief to many of us that have watched as the real value of our national currencies steadily decline over time.   In some rare instances, national currency value has plummeted suddenly, forcing citizens to make hard choices about how to salvage their savings.  

In other cases, their bank accounts have been 'shaved' to pay off central bank debts, or negative interest rates introduced.  

For people looking for something better, crypto-assets provide an alternative, albeit a very volatile one.   But do not underestimate the potential of this new and rising concept to take hold of the public's imagination.  

Now layer on top of that the fact that mainstream investors will naturally gravitate towards one crypto-asset in particular.   While some crypto-assets are content to rest their value on the notion of cryptocurrency itself, XRP was created to facilitate international commerce and liquidity, serving as a cross-border bridge for banks, large corporates, remittance processors, and peer-to-peer payments.  

XRP can truly support global commerce, scaling to facilitate the massive and growing use case of cross-border payments.  
xrp symbol
Sources and Credits:
Cover Art: Thank you to Rawpixel

  1. https://breakermag.com/about-breaker/
  2. https://breakermag.com/ripple-has-a-ton-of-doubters-this-exec-is-trying-to-change-their-minds/
  3. https://ripple.com/insights/news/ripple-the-gates-foundation-team-up-to-level-the-economic-playing-field-for-the-poor/
  4. http://mojaloop.io/
  5. https://githubuniverse.com/watch/
  6. https://www.sibos.com/
  7. https://www.moneynetint.com/
  8. https://www.ccn.com/uk-foreign-exchange-firm-joins-ripple-blockchain-ripplenet/
  9. https://www.finextra.com/newsarticle/32782/moneynetint-signs-on-with-ripple/blockchain
  10. https://www.moneymatch.co/
  11. http://www.focusmalaysia.my/Snippets/moneymatch-cross-border-transaction-on-blockchain
  12. https://ripple.com/insights/ripple-introduces-the-university-blockchain-research-initiative/
  13. https://youtu.be/bFLttk3x8Ag
  14. https://blog.beomni.com/introducing-xrp-cash-outs-on-omni-2ec168d79821
  15. https://blog.beomni.com/omni-is-the-concierge-for-your-stuff-67e097195bfa
  16. https://www.marketwatch.com/press-release/bitvo-launches-cryptocurrency-exchange-platform-in-canada-2018-08-01
  17. https://globenewswire.com/news-release/2018/10/18/1623835/0/en/XRP-and-Ethereum-Classic-Now-Available-on-Bitvo.html
  18. https://twitter.com/BitrueOfficial/status/1022682126242721792
  19. https://www.bitrue.com/trade
  20. https://medium.com/cobinhood/announcing-cobinhood-exchange-e8082a5666ec
  21. https://www.liquid.com/company/
  22. https://icorating.com/ico/liquid-qash/

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Hodor

Hodor

I blog about Ripple & XRP. FULL DISCLOSURE: All views are my own. I do not work for Ripple; I am not a professional financial analyst, and the majority of my crypto holdings are XRP.

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