Early Warning: Adoption Signals Detected

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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This is what we were waiting for...and it is what we expected.

And this is how we knew it would happen;  rumors of strange volume on the XRP Ledger that few can explain.   Strange wallet movements as liquidity swirls like an invisible vortex forming underneath a seemingly-calm lagoon of exchange transactions.   And speculative demand turning its collective attention to the challenger, finally acknowledging at the end of 2018 that 'it's time.'

XRP's rise to the top of the rankings at this point is unavoidable, due to its adoption by the very banks, businesses, remittance processors and corporates that Ripple has been aiming to convince for over a year now with their new product offerings.   At SWELL, we heard from some of the early adopter banks and remittance processors about the use of Ripple's three main solutions: xCurrent, xRapid, and xVia.  

And then both before and after the conference, we learned how Ripple is actively shielding early adopters from volatility risk of using XRP as a bridge asset, with tools such as path-finding and Multi-hop.   These innovations are part and parcel of what Ripple does, and does best;  figure out how to get an electronic packet of value from 'point A' to 'point B.'  In the days since the conference, more details about how this technology works have been revealed by both Ripple and members from a new company called Coil, who are embarking on their own journey with XRP.  

Coil has done two things:  revised Codius, the smart contract hosting software that is configured to use XRP for remuneration out-of-the-box, and further refined the Interledger Protocol, or ILP, used for communication of payment packets between different ledgers.  

Coil is not doing these things out of the goodness of their hearts, however;  they need these components to build out their vision of Web Monetization - a framework for how Internet content creators can get paid for their original work.   Currently, the Internet remains 'broken,' dependent on privacy-destroying advertising to fund so-called 'free' services such as Facebook.   Coil aims to change all this, by creating a voluntary way for users to browse participating sites ads-free.   They're still in the early stages, but have decided to invite users along for the journey, opening their application for beta testing to a limited number of people.  

The XRP Community development projects - dozens of sites, applications, and open-source contributions by the public - are so numerous and frequent that I've struggled to keep up with them.   The XRP Tip Bot may be the most well-known of these initiatives, but others are starting to elevate themselves to a higher-profile status.   More on some of these later in this blog...  

Because of this growing momentum behind XRP, and the shortening of the time frame before Ripple's xRapid solution is used at scale, the market's speculators have been 'flipping' over large portions of their holdings and purchasing XRP.   Some in the community have called this the 'flippening' as a convenient way of labeling the ongoing trend;  whatever the label, it's starting to accelerate, and it can be seen by the impartial charting of price behavior over the past two weeks as we enter the last half of November.  

Will XRP take the top spot by the end of 2018?   Will we see material levels of demand from xRapid that challenge even the speculative levels of demand in the small crypto market?

Ultimately, nobody knows the answers to these questions, and the people with the most knowledge are keeping silent;  but we are watching from the sidelines, attempting to discern any hint of the speed and momentum behind this dramatic market change that is happening in front of us.  

Ripple News

When it comes to early adoption signals, those in the XRP Community have been on the forefront of research, delving into the numbers that are now publicly-available through multiple sources, including Google BigQuery.   These tools allow for the public to research wallet movements, and the volume statistics on the XRP Ledger.  

In addition to hobbyists researching XRP data, business and corporate stakeholders can also use tools provided and maintained by Ripple, including the XRP Charts website.   This site is where some XRP researchers went to determine the latest potential trends, and they were not disappointed.   As reported by AMB Crypto on November 17th, several anomalies have been observed as of late:

  • On-ledger volume exceeding off-ledger volume
  • Significant wallet movements between exchanges and whale traders
  • Creation of mini-escrow contracts by Ripple apart from the XRP reserve escrows

The specific wallets involved in the analysis, as well as some of the potential causes and interpretations, can be found in the article on AMB Crypto;  in addition, several threads on XRP social media forums have been created to debate and analyze these transactions in great detail.   If you are looking for more details or information, I'd advise you to search on Reddit or XRP Chat for more in-depth information.  

Singapore Fintech Festival: Brad Garlinghouse and Ross Leckow

During the Singapore Fintech Festival, Brad Garlinghouse shared the stage with Ross Leckow, the IMF’s Deputy General Counsel.   Note that Ross Leckow also participated in a panel discussion at the SWELL conference in early October.  1

During the discussion between the two during the conference, they touched on a few topics that seem to dovetail with recent banking partner announcements for RippleNet.   This included an analysis of how the regulatory climate for the Association of Southeast Asian Nations (ASEAN) is a bit more straight-forward than in the West:  2

Brad Garlinghouse:   "Regulatory clarity has a huge ability to drive digital asset and blockchain adoption.  It is surprising how many markets still have uncertainty.  But, in ASEAN, the regulatory environment for blockchain and digital asset technology is clear ...  

...  This clear regulatory environment makes it easier to apply blockchain and digital asset technology to solve real-world business use cases, such as improving cross-border payments across the ASEAN region.  The East Asian markets received $130 billion in inbound remittance payments last year alone.  They are expensive, and the market is ripe for adoption of new technology, like blockchain, to drive costs dramatically lower."

He went on to describe how the problems created by the correspondent banking framework was looked upon by Ripple as an opportunity:

"In terms of challenges, it is true that historically the region has been left behind by correspondent banking.  Global banks are contracting some of their traditional correspondent relationships, and this is creating more friction in payments in ASEAN.

But some financial institutions are seeing this challenge as an opportunity.  Nearly 50% of all of our global customers are based in the region, and our Singapore headquarters continues to be a growth engine for Ripple — expanding by 200% in the past year."

This was a revealing insight into Ripple's recent banking expansion for RippleNet, and also a hint as to where much of the volume might originate for payments on the network.  

For his part, Ross Leckow noted that the International Monetary Fund (IMF) is allowing each nation to determine their own path forward with regards to crypto regulation, but issued a concern that countries not be over-zealous in their introduction of new regulation:

Ross Leckow:  "The IMF takes a balanced view.  Each country has to decide for themselves what type of regulatory framework is best.  But generally speaking, they should be cognizant of risk but also the potential to make the global system more efficient, more inclusive with this new technology."

Even though these comments are probably far from extemporaneous, they confirm assumptions that some have already made about the IMF's position, as well as has how Ripple views the international regulatory landscape.  

XRP News

WietseWind decided to beta test his XRParrot application in late October, and was able to test out the new site with a limited set of users.  The response was positive, and on November 16th, he decided to go live with the site:

XRParrot Tweet

The roll-out has been successful, with a few users posting their own comments on Reddit, XRP Chat, and Twitter in the past few days.   The service is a convenient way for those in Europe to directly transition the Euros in their bank account to XRP, with no stops in between.   After its initial deployment, here are some interesting statistics provided directly from WietseWind:

XRParrot Statistics:

Orders placed over the 1st weekend:  140
Average transfer (before weekend):  200 Euros

Monday morning expected transfer:  28,000 Euros (approximately 70,000 XRP)

That's 70,000 XRP for one weekend: And most likely, this number will only grow as more and more European XRP investors sign up for regular, periodic withdrawals from their bank account.   It's an easy way to build a large wallet of XRP over time, and I predict that many European crypto purchases will opt for XRParrot's user-friendly interface.  

This convenient service will most likely form one of many cornerstones for WietseWind, as he grows his business with help from the XRP Community.  

Hopefully, XRP fans in Europe will choose to use Wietse's service to enter crypto, as this is a win-win for XRP;  WietseWind has a history of building many applications on the XRP Ledger, and has contributed lots of high-profile projects to the open source code base of the community.   It makes perfect sense for European XRP supporters to give XRParrot a try;  I'm waiting for him to open the service to those in the United States!

TOK Exchange

TOK is a Thailand-based crypto exchange.   The exchange seems relatively new, given its Twitter account, following, and blog.   On November 11th, the exchange issued a notice that they planned on listing XRP on their platform.

The exchange went live with XRP support on November 13th.  

It's not clear how large TOK's user base is;  in addition, there is an ongoing ICO with the same name "TOK" that may confuse some people.   Hopefully, the ICO changes its name at some point after realizing that it's been taken already.   In the meantime, be aware that there are two different "TOKs" in the crypto space - one is an exchange, and one is an ICO.  

In any case, the addition of a new, Thailand-based exchange is good news;  welcome, TOK.  

Swiss Investment Fund

A cryptocurrency company named "Amun AG" has been given permission to list an index fund that contains percentages devoted to the leading cryptocurrencies, measured by market capitalization.  3   The fund is currently weighted heavily towards Bitcoin, but the second-largest asset is listed as XRP:

Amun Crypto Investment Distribution

I don't normally cover funds with too much enthusiasm, or even some ForEx products, because sometimes it's not clear if these instruments or businesses actually have any impact on demand;  however, an article on Amun AG recently stated that their platform works to actually obtain and store the underlying cryptocurrencies:  4

"When you buy the stock, market makers buy the equivalent amount of cryptos – according to the distribution – and send it to a custodian for safe keeping."

This allows investors to shield themselves from the risks around asset custody, but yet still participate in the market growth.   I think this combination will be very appealing to some investors, so I expect this fund to grow in size substantially over time, along with other similar funds.  

Crypto Visa Card

In a recent blog, I covered the new crypto.com exchange site, that was funded by an ICO.   The exchange also offers a mobile wallet, which includes XRP.  

On November 16th, the site announced that they were starting a new service as part of their platform - that of issuing Visa credit cards.  5   6

The card is a prepaid MCO Visa Card;  the bank that the site partnered with to offer the service is Metropolitan Commercial Bank.   Their CEO, Mark DeFazio, was quoted in the press release:

"We are pleased to work closely with Crypto.com and Foris in bringing this innovative product to the US market.  This program speaks directly to The Entrepreneurial Bank spirit that we have and seek to promote.  The MCO Visa Card is quite unique and provides a bridge between traditional banking and cryptocurrencies in a safe and compliant way."

The card itself, because of its usage of the Visa network, necessitates a step where the cryptocurrency in the user's wallet is transformed into the fiat currency that they are spending.   Regardless, however, this service has shown itself to be a popular one with other sites such as Wirex.  

My prediction is that this service will drive up customer numbers for crypto.com as crypto enthusiasts opt for a card where they can 'hold' and yet spend where they need to dynamically.  

XRP Scan

XRP Scan is a site that was created by an enterprising XRP Community developer to provide a consistent look-and-feel of similar block explorers that crypto fans are familiar with.  

The XRP fan base has a number of tools that are tried-and-true over the years;  the most popular two alternatives are probably Bithomp and the XRPCharts website, but others are springing up in the last year, including the LedgerExposed, the XRP Toolkit, and the Wipple website.  The XRP Scan website was initially debuted in late October, and I covered it's initial unveiling in a blog.  

On November 16th, the creator of the site announced that a new version of the site was available:

XRP Scan Project

The site contains four different 'focal areas' of providing detail information for ledger objects, such as the ledger summary, individual transactions, accounts, and network validators.   A user can also bookmark a specific focal area directly using a URL, which the developer provided for users to bookmark.   To make the URL work, the user must add the specified number at the end of the URL, depending on what is being searched for:

Ledger - https://xrpscan.com/ledger/ [ledger-number]
Account - https://xrpscan.com/account/ [account]
Transaction - https://xrpscan.com/tx/ [tx-hash]
Validator - https://xrpscan.com/validator/ [node-public-key]

He also provided a link to report any bugs if users find them, and invited viewers to provide feedback on any other features or observations.   He issued this statement on XRPChat:

"We hope you find this project useful and use it in your daily interaction with XRP.  There are several items that we're working on to make XRPSCAN more useful and accessible for you.  We'll continuously roll out these changes as and when they are complete.  

We run a verified Ripple validator, are committed to the success of XRP and absolutely ❤ the #xrpcommunity.  We hope you give us a try and spread the word."

I really appreciated the effort involved in creating this site, and I also appreciate his focus on reminding the crypto community that XRP is 'consumed' in each transaction;  the steadily, but slowly, decreasing supply of XRP is something that even XRP fans forget about occasionally.   The site is a great addition to the XRP ecosystem of applications and useful sites that allow stakeholders to easily and freely query the XRP Ledger.  

XRP The Base & Binance

The push to lobby @cz_binance (the Twitter account for Changpeng Zhao, the CEO of Binance) to add XRP as one of its base currencies was started months ago in late August by a group of XRP fans, including @C3_Nik (Twitter avatar).   Since then, the effort has gained adherents, and I've been using the hashtag #xrpthebase generally as well, not specifically in reference to Binance, but in reference to XRP being an ideal base pairing on exchanges.  

XRP settles in a few seconds, unlike proof-of-work cryptocurrencies such as Bitcoin, which is most commonly used as a base pairing because of its historical first-mover status.   Now, however, several new exchanges have decided to use XRP as a base pairing in an effort to leverage its ability to quickly transfer value into and out of exchanges.   Traders tend to like that characteristic, as they can respond with alacrity to changing market conditions.  

The most recent development happened on November 17th, when @cz_binance sent out the following tweet:

Binance Tweet

Attached to it were his 'tips for listing your coin on Binance' which included a warning not to spam him with pleas for listing.  

The tweet caused some confusion;  I took it to be some sort of a warning or admonition to those that would seek to use social media to try and motivate him to make a change to his crypto trading platform.   This would be consistent, in my view, with a personality that likes to carefully consider all the implications of a major technological or architectural change to one of the world's highest-volume exchanges.   I chose not to respond.  

But others had a different, and legitimate opinion on the tweet;  they pointed out that CZ was inviting comments on that thread.   And this was the most-popular interpretation of the tweet, resulting in no less than 3,200 replies (at the time of this writing).  

This Tweet obviously went viral at some point;  it remains to be seen what effect this massive response and level of interest will have on Binance, and XRP's status as a potential base pairing.  

Ignore Early Adoption Signals at Your Peril

The crypto market, from its early roots in 2013 when Bitcoin trading started to reach notable levels, has been an interesting, if somewhat microcosm of the larger retail financial markets.  

As crypto traders hustle for profitable positions, there is a struggle to obtain accurate information about what's happening in specific sponsoring organizations.   For those that trade in XRP, we've been studying the largest sponsoring organization - Ripple - for hints of adoption of their solutions that can utilize XRP.   For Coil, we're looking for when it will roll out the first version of a publicly-accessible payment application.   And for the myriad of other, smaller companies that are building on XRP, such as Omni, XRParrot, and many others, we look for the adoption numbers and social media buzz around their creations.  

And in the case of XRP, some hints of its rise through the crypto rankings, along with the general adoption and usage levels of XRP, can be found through studying volume levels reported by various exchanges, and in looking at the XRP flows between wallets on the XRP Ledger.   Both of these types of analysis are currently being done by traders, and the results can be found if you look hard enough on the social media platforms where XRP is discussed and debated.  

The traditional behavior and nature of ledger activity has been disrupted as of late by never-before-seen occurrences of wallet movement, strange escrows and amounts, and dramatically different on-ledger payment volumes.   These observations are coinciding with a consistent preference by crypto traders for XRP over any other cryptocurrency.  

For crypto traders looking for early warning signs - much like residents living on a fault line - these developments are very serious indications of a quickly-developing-situation that may accelerate dramatically in the coming days.   As crypto traders begin to swivel their focus to the cryptocurrency being used for international transfers, I predict that more analysis of these early warning signs will reveal what we've been predicting all along - that XRP is on the move, and is being adopted at scale by those organizations using it to lower their payment costs.   XRP is going to help these early adopters compete and win against much larger opponents;  and when these larger players take note and begin to join the party, I wonder just how much more momentum will build behind the fastest and most scalable digital asset in existence?
xrp symbol
Sources and Credits:
Cover Art: Thank you to Evgeni Tcherkasski

  1. https://swell.ripple.com/agenda/
  2. https://ripple.com/insights/blockchain-and-digital-asset-use-in-asean-ceo-brad-garlinghouse-in-convo-with-imfs-ross-leckow-at-singapore-fintech-festival/
  3. https://www.trustnodes.com/2018/11/17/switzerland-green-lights-worlds-first-crypto-etf-to-be-listed-next-week
  4. https://www.trustnodes.com/2018/11/17/switzerland-green-lights-worlds-first-crypto-etf-to-be-listed-next-week
  5. https://cointelegraph.com/news/new-free-metal-card-with-crypto-perks-to-be-launched-in-the-us
  6. https://finance.yahoo.com/news/metropolitan-commercial-bank-issue-mco-080500856.html

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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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