Innovation adoption is not a straight line. It goes in bumps and bursts, as each individual and group that can make decisions on future direction experiences their own personal 'light-bulb' moment.
In the case of blockchain technology and decentralized digital assets, that moment occurred when we first investigated whether or not it was possible for decentralized currencies to exist at all. For others, it was the rise in value of these digital assets that caught their attention. Regardless of why or how each of us made the journey, we're here.
But what about the 'rest of us?'
Those stalwart, conservative banking executives that question whether or not a digital asset is really needed, and who may not truly understand how usage of one can smooth out cross-border transactions and settle instantly? These conservative, risk-averse business-people are important to convince: Many of them, while not fully understanding what makes distributed computing tick, control the purse strings and investment direction for large corporations and financial organizations.
It turns out that, even though it's taken some time, they're edging closer - and with increasing speed - toward usage of digital assets. The International Monetary Fund (IMF) has issued papers. The Organization for Economic Co-operation and Development (OECD) is taking an interest. The G20 has issued its current opinion on digital assets. The US Federal Reserve Faster Payments Task Force is open to financial innovations that can speed up commerce. Large research arms of information technology giants like SAP, CGI, and Microsoft have indicated their interest in the growing industry. Central banks and commercial banks have started signaling their more-than-academic interest in digital assets.
And remittance companies? They're leading the charge in production use of the new financial instruments in transferring value across borders, with many of them piloting Ripple's xRapid solution.
In short, the future is here, and even the most conservative technology holdouts have now started to wake up to the direction the future is taking when it comes to globally-scoped digital assets.
It was hard to miss the headline - or the epic corporate photo that went along with it - from Forbes magazine: 1
The article was an exceptionally well-researched piece on the history of Ripple, recounting David Schwartz's unique role in the dramatic events leading to the creation of both XRP and Ripple's product offerings. It had a few surprises that I didn't know about, including the company valuation of Ripple, and David Schwartz's estimated piece of that amount.
But more than the interesting trivia about Ripple were the quotes provided by David Schwartz and Brad Garlinghouse. The article covered the fascinating story of Ripple's CTO, starting with a story from his childhood - he used to dismantle the doorknobs in his parents' home!
“The function of a doorknob is to control the movement between two spaces. It’s a gateway, a barrier, and obstacle. It’s a control... When that barrier goes away, you understand it. It sounds silly, but to me it might as well have been magic.”
The quote seemed to hint at his eventual role in unlocking the flows of global commerce with Ripple's technology solutions:
“We want to create a payment network like SWIFT. But one where the settlement, the actual movement of money, the actual plumbing underneath the surface, would be a decentralized, open network...The endgame is just money moving invisibly, as easily as information.”
And Brad Garlinghouse touched on the XRP Creator's higher-level executive responsibilities in Ripple after his recent promotion to Chief Technology Officer:
“David’s not a guy who is going to require a lot of micromanagement: He’s, if not the soul, he’s a key part of the soul of what we’re trying to do here.”
The article was, overall, one of the best I've seen about Ripple and XRP, and covered the origin story from a unique perspective that seemed to connect the early events and company vision with how it is progressing in 2018. I highly recommend the read for those new to XRP or just curious about Ripple, the company.
TechCrunch's most recent Disrupt conference recently took place from September 5th through 7th in San Francisco. 2
During the conference, Michael Arrington and Brad Garlinghouse shared the stage along with an interviewer who at turns was both inviting and menacing:
The session provided quite a bit of opportunity for Michael Arrington to assist in pointing out some of the key characteristics or misconceptions about XRP, with the help of Brad Garlinghouse. Several times, Michael Arrington would purposefully claim something inaccurate, with an invitation - accepted - for Brad Garlinghouse to correct him. I was chuckling as I watched some of this exchange - Michael Arrington does not shy away from conflict whatsoever, and proved his points with a unique flavor of assertiveness and irony. Here's one exchange:
Michael Arrington: "You could rollback transactions, right, on the XRP Ledger?"
Brad Garlinghouse: "Absolutely not. This is one of those FUD - misinformation things - that people say, like 'Ripple can block a transaction.' Not true. 'Ripple will rollback a transaction.' Not true.
Michael Arrington: "You could... but you would never do that, right?"
Brad Garlinghouse: "We actually can't."
At this point, Brad Garlinghouse couldn't keep a straight face and started laughing, knowing full well what point Michael was trying to demonstrate.
Both Michael Arrington and Brad Garlinghouse were communicative about various confrontational points, and at one point Michael Arrington launched into a what I'd term a 'rant' about how the SEC was in the process of ruining the climate of crypto innovation in the United States by not issuing clear-cut guidance about which tokens and cryptocurrencies constitute a security. He also recounted a recent interaction he'd had with the SEC, which provided one first-hand perspective into just how confrontational the US policy-making body may be about cryptocurrency. Brad Garlinghouse was more circumspect in his assessment of the SEC's role:
"On the topic of the SEC, the one thing I will say is ... there are unequivocally-bad actors in the ICO ecosystem. There have been frauds; there have been massive scams. Hundreds of millions - if not billions - of dollars have been heisted. And if anything, I'm surprised that the SEC hasn't been more aggressive going after some of those bad actors.
That doesn't take away from my point that the clarity would be very helpful. And I agree with him (Michael Arrington) that there is risk that a lot of this development ends up non-US. And the impact on the United States' economy for having the Internet that we think of today... being very US-centric in many ways has been very, very positive for the US..."
I agree with Brad Garlinghouse's balanced assessment of the SEC's role; to serve as a protector for investors, but also to prevent disruption of the potential for the US economy to benefit in substantial ways from the innovations represented by blockchain technology and their closely-associated digital assets.
Organization for Economic Co-operation and Development
The Organization for Economic Co-operation and Development, or OECD for short, was established after World War II to encourage co-operation and reconstruction of countries affected by global conflict. 3 Its scope has become more broad since those early days, and it now engages its member countries and contributing organizations to use... 4
"...its wealth of information on a broad range of topics to help governments foster prosperity and fight poverty through economic growth and financial stability.
We help ensure the environmental implications of economic and social development are taken into account."
Its mission is to: 5
"...promote policies that will improve the economic and social well-being of people around the world."
OECD Research Document
An OECD contributory group known as the "Directorate for Financial and Enterprise Affairs Corporate Governance Committee" released a document that drew some conclusions about initial research into blockchain technology on June 6th, 2018. The document was titled "Blockchain Technology and Corporate Governance Technology, Markets, Regulation and Corporate Governance."
The purpose of the document seemed to be to educate readers about the basics of blockchain technology, along with the digital assets that are ordinarily linked to each of these individual networks. While the document discussed Bitcoin as one of the most well-known examples, it also interestingly mentioned Ripple technology later in the document: 6
"To date, after Bitcoin and other leading cryptocurrencies, one of the first full scale deployments of a blockchain is the RippleNet, a permissioned blockchain of a global payments system. It uses smart contracts and a token called XRP as a value carrier. Banks, payment providers, corporates, and exchanges (with digital asset capabilities) are the permissioned users of the system. RippleNet processes cross-border payments in real time with end-to-end tracking and payment certainty at minimal transaction costs.
RippleNet is a good case to imagine how blockchain technology can be transformational and possibly disruptive in the finance industry."
I agree with their assessment, and it looks like this document provided some measure of perspective on the entire topic of blockchain technology for readers. The document was not an isolated salute to Ripple, however:
Paris Meeting of the OECD
The OECD recently sponsored a meeting in Paris titled "Distributed Ledgers: Opportunities and Challenges" between September 4th and 5th. This is a meeting that I see as key in an ongoing global adoption of more transparent accounting for organizations that are truly international in scope. DLT has the potential to enhance accountability for these organizations and eliminate many of the problems with more traditional centralized methods of accounting. The meeting's organizers indicated that the participants focused on: 7
- Blockchain’s potential global economic impact
- Implications on privacy and cybersecurity
- Using blockchain to enhance inclusiveness
- Using blockchain to promote green growth and sustainability
- Using blockchain to strengthen governance and enforcement practices
Of course, because of their prominence as the leading business that has production-ready DLT applications, Ripple was invited to speak and provide their perspective. Dan Morgan, Ripple's Head of Regulatory Relations, participated as a panelist:
At one point, the facilitator of this session, Flore-Anne Messy, Head of the Insurance, Private Pensions and Financial Markets Division for the OECD, asked Dan Morgan how the regulatory climate nationally and internationally was affecting Ripple:
"Over the last five or six years, we've seen an evolution of regulators' approaches to a number of areas, including open banking, peer-to-peer lending, and crowd funding...
...the view of crypto-assets is moving very rapidly, globally, even compared to these recent developments."
This fearless exploration of crypto-assets' role in cross-border value transfer is something we've begun to see more and more of at an international level. Dan Morgan's response went on to expound further:
"At Ripple, we have a vision, and we want to create the Internet Of Value, to move money like information moves today. To do that, we use a DLT-based solution, and we see a real potential for crypto-assets...
...there's two fundamental parts: First is connectivity, which is messaging and settlement, and we use our xCurrent Solution for this. This dramatically reduces costs and times, and provides greater certainty; bidirectional messaging links to settlement. But you still need to prefund Nostro accounts overseas. It's estimated that 5 trillion dollars are locked up in these accounts globally.
We see real potential for digital assets to remove the need for pre-funding..."
He then went on to talk about the fact that the biggest barrier to entry for many banks was regulatory uncertainty, and handed out praise to several international organizations, which included the OECD, for taking the first step in creating useful reference documents and artifacts on the topic. He also emphasized consumer protection and a licensing model for crypto businesses, which is something that we've heard before not only from Ripple, but from even the most conservative of governments when it comes to crypto trading, such as China.
The other panelists provided testimony on a variety of topics, however it was apparent that the focus of the meetings was not only restricted to the use of distributed ledgers, but also the use of their associated digital assets. Overall, I get the sense that this meeting was one data point of many in 2018 of global organizations beginning to develop ways of classifying these new financial instruments.
In fact, the word 'taxonomy' was used more than once, indicating that various governments are now struggling with consistent international standards for how to categorize blockchain concepts. As a cryptocurrency follower, I predict that there will be an increasing number of these types of discussions to assist regulatory organizations at creating appropriate levels of safeguards, while at the same time balancing this concern with the encouragement of new innovations.
TransferGo announced via an interview on September 5th that they plan on supporting the high-traffic money transfer corridor of Europe-to-India. Their CEO, Daumantas Dvilinskas, was quoted as saying: 8
“We’re delighted to be one of the first companies in the market to offer our customers real-time money transfers.
By using Ripple’s revolutionary blockchain technology, we’re able to establish real-time communication between us and our banking partners in India, allowing TransferGo customers to send money to family and friends or make international payments immediately.”
The specifics of which Ripple solutions and components are being used within the service have not yet been released, but in any case, this is yet another significant win for Ripple in the remittance provider space.
MUFG Provides Shining Review of Ripple Technology
The fifth largest bank in the world is Mitsubishi UFG, or MUFG for short. 9 Recently on September 3rd, Steven Diep posted a video on Twitter that was originally recorded at the 2nd Blockchain for Finance Conference on June 20th of this year:
The video features a presentation by Mike Truter, Managing Director -Asian Systems Office of MUFG. In it, he describes how MUFG is leveraging new technology to lower its costs and compete with others in the Asian corridor. More specifically, he coherently compares SWIFT with Ripple in no-nonsense terms:
"Typically, an SLA (SWIFT service level agreement) for fund transfer movement is between one and three days. Using technology such as Ripple - we can get that down to something like thirty seconds, which is significantly different, and at a cheaper cost as well; so it's not just the time savings, but the cost as well."
This is yet another glowing reference from a Ripple client about how its technology is being used to provide head-and-shoulders better service for customers.
On August 3rd of this year, Ripple formally introduced a new service by its partner SBI as "SBI Remit," and released a video demonstrating how the service can be used specifically to send money to Thailand.
Just one month later, SBI announced that their cumulative (total regardless of time frame) remittance handling had exceeded ¥500 billion Yen. That's approximately $4.5 billion US dollars at today's conversion rates. In an article by Ambcrypto, it was reported that SBI gave credit for its accomplishment to Ripple technology, stating: 10
“Remittance using Ripple’s distributed ledger technology, which began with The Siam Commercial Bank Public Company Limited, a major commercial bank in Thailand in June 2017, is extremely superior in terms of cost-effective speed and economy. The use of customers has increased remarkably.”
There have now been multiple payment platforms such as SBI's that have implemented Ripple technology under the hood, and RippleNet's reach is extending globally as more and more banks sign up for the network.
Royal Bank of Canada
The Royal Bank of Canada (RBC) is the 24th largest bank in the world. 11 It has over 16 million clients and has 80,000 employees across the globe.
On September 8th, @BankXRP (Twitter avatar) tweeted that he'd noticed something on one of their recent Capital Markets documents, titled "Imagine 2025 - Themes, Opportunities & The Law of Accelerating Returns."
The document was a purposefully futuristic look at possible technological advancements, and their potential effect on banking. Unlike some other large banks, it appears that RBC is not hiding their head in the sand when it comes to potential disinter-mediation and other issues. Instead, the document unflinchingly takes a look at current trends and where they could lead in the coming years.
One of those areas is the remittance industry. RBC wrote in their document: 12
"Ripple created an open source, peer-to-peer, decentralized protocol, with a network of participating financial institutions (RippleNet) and a series of individual technology solutions including payment processing (xCurrent), liquidity support (xRapid) and payment access (xVia). While not necessary for xCurrent and payment processing, we believe that it is helpful to use the "complete" solution as an example of how blockchain could disrupt the remittance market, including the use of XRP and its corresponding ledger.
In this solution, XRP is used as a bridge asset, meaning that it is a store of value that can be transferred between parties without a central counterparty and thus support liquidity between any two currencies.
As a result, banks can consolidate their liquidity into one XRP account instead of holding local currency in accounts around the world. By making markets directly between banks' domestic currencies and XRP, banks minimize the number of intermediaries."
The document is very promising if it signals RBC's view of where the future lies: While 2017 was marked by the introduction of the very concept of digital currencies used in cross-border transfers by banks and remittance companies, 2018 is the year where these same stakeholders are strongly considering its production use in achieving real-time settlement.
The document went on to include two graphical comparisons of costs and settlement time:
For those of us that know and understand what Ripple's innovations can do for banks and remittance companies, this information comes as no surprise; but it's great to see these comparisons made in such stark format in a document from a major bank.
We were hoping to view video of Berkeley's meeting with Coil at their "Blockchain at Berkeley" student organization meeting, and Coil did not disappoint. On September 5th, they released the session called "Refactoring the Web with Interledger (ILP):"
The hour-and-a-half-long session provided a ton of valuable insight from Stefan Thomas, Coil's CEO, about what the Coil team is doing to deploy elements of web monetization. While the entire session offered insight into how Coil works, and how its components such as ILP figure in the architecture, one of the most exciting quotes happened in response to a summation of Stefan Thomas's explanation of how Coil plans on supporting flat rate subscriptions:
"So... the question is 'Is it (Coil) like the all-you-can-eat sushi of web monetization?' Yes! Exactly. It's exactly what it is.
We gave a presentation at Apple, and they called it the Amazon Prime for the whole Internet. It was their catchy way to put it."
While any reference to Apple is sure to excite crypto traders, this quote was specific to how Coil is deploying its solution, and was peripheral to its use of XRP as a settlement asset. However, XRP fans should keep in mind that Coil converts US dollars behind the scene to XRP to pay its subscribing websites and content creators; it's one more use case for the fastest, most secure, and scalable digital asset.
In recent blog posts on the XRP Community Blog, other writers have drawn attention to how much electricity is wasted currently by the old proof-of-work cryptocurrencies such as Bitcoin and Ethereum. While those invested in P.O.W. cryptos may not want to discuss the topic, the detrimental environmental impacts of energy-intensive cryptocurrency mining is starting to attract the wrong kind of attention worldwide.
By contrast, those in the XRP Community are able to emphasize that XRP is the most efficient of the new digital assets, and does not rely on wasteful mining to secure its network.
One of the ways in which an XRP Community member by the name of @WanderingWare (Twitter avatar) is supporting this emphasis on environmental conservation through support of XRP is to sell some unique merchandise:
In addition, he indicated that for the tips or donations he receives, he'll contribute the XRP towards planting additional trees:
"I am officially partnered with 'One Tree Planted' organization and so when I receive tips I cash them out and plant trees. This organization will plant one tree for each $1 dollar donated: So far the XRP Community has planted 157 trees."
So how does planting trees contribute to the environment? WanderingWare indicated the scientific background behind his effort:
"Tree offset calculation is based on a tree planted in the humid tropics absorbing on average 50 pounds (22 kg) of carbon dioxide annually over 40 years - each tree will absorb 1 ton of CO2 over its lifetime."
Kudos on his effort to help heal the environment by planting trees, and on his unique XRP designs.
Coinbates Advertises XRP Support
Not too long ago, I covered the addition of XRP to the Bitcoin Superstore. It's important to track all use cases for XRP, even retail use cases that might be very different than the use cases for banking and cross-border payments.
In addition to the Bitcoin Superstore, XRP was recently added to another boutique retail site for cryptocurrency users, known as 'Coinbates.' Coinbates is basically a rebate and advertising center that offers discounts on merchandise for those willing to part with some of their cryptocurrency. It supports a wide variety of cryptocurrencies - including XRP - and is planning on integrating with brands such as Macy's, New Balance, and Microsoft. 13
The project was funded (and will be funded) via an ICO, and is following their road-map to release a beta version of their crypto 'cashback' product this month. While they are currently in beta, it's a service worth keeping an eye on as they follow their ICO and release road-map. Of course, I'm highlighting their project here because they are planning on actively supporting XRP as part of their platform; based on some other mainstream rebate projects that only utilize fiat money, this idea may get some traction with those in the cryptocurrency space.
NOTE: I do not endorse any ICO. Please do your own due diligence.
Bit4You is a new exchange whose construction was funded by an ICO. It's based in Belgium and according to its road-map, it will eventually support a smart-contract-driven decentralized exchange. 14 For now, however, its beta exchange platform is up and running, and the team just announced that they added support for XRP trading:
When questioned about the pairings that XRP supports, Bit4You indicated that all pairings are linked to USDT (Tether). The exchange indicated that USDT will be the route that its traders can take to enter and exit fiat, presumably through a USDT-to-USD exchange or by redeeming the currency directly.
In addition, when questioned about further pairings, they indicated that they are studying the pairings for possible future development. In any case, it's great to add a Belgium-specific exchange to XRP's global listings.
XRP Ledger Continues its Decentralization
The XRP Ledger is more decentralized than Bitcoin or Ethereum:
This graphic demonstrates that while Bitcoin and Ethereum are dominated by one or two large mining consortiums, which is a result of their flawed, incentivised mining systems, the XRP Ledger's largest validator organization - Ripple - only controls a mere 7%.
This is a fact.
It's also a fact that validators can choose any other validator to 'trust' as part of their UNL list - the unique node list. Each validator must designate a list of other UNLs that it cooperates with, and they are free to choose any other validators that they wish.
However, from its early days, the default UNL that operators download from Github has historically been dominated by Ripple validators. Until 2018. At last count, Ripple validators now account for 46% of this list, which means that even if you look at 'recommended' trusted validators on the default UNL, Ripple is more decentralized than Bitcoin or Ethereum.
This is an inconvenient reality that now receives very little publicity from XRP's competitors; they would rather not have the general public know that proof-of-work systems are flawed in their design, leading to more and more centralization over time by large mining cartels! This pitfall in using incentives has been purposefully obscured by large Bitcoin and Ethereum investors that would rather not highlight this security weakness:
While the early proof-of-work networks were noble experiments and examples of what 'could be possible' with decentralization, their inherently flawed design is now leading them to the end result of complete centralization - which is a broken social contract with their early converts.
Visualizations of XRP Decentralization Level
Both of these independent, third-party sites show a pictorial representation of Ripple's role in the default UNL, providing insight into the current status of the default settings for XRP Validators.
XRP Was Created For International Commerce
Information is key when researching digital assets.
XRP was created specifically to support global levels of commerce, and can scale horizontally using Payment Channels; this allows the network to support more transactions per second than centralized payment processors such as VISA. Coil has integrated its web monetization solution with this XRP Ledger capability.
Remittance processors are leaning in quickly, attempting to ascertain just where they can leverage XRP to reduce friction in cross-border payments. Banks are following suit, and have discussed digital assets even at the first SWELL conference in 2017.
Ripple, the largest company building on the XRP Ledger, has positioned its cross-border liquidity solution - xRapid - to utilize XRP to help banks eliminate the need for Nostro accounts in foreign countries where they do business. And the regulatory climate, while still evolving, is starting to become more well-defined as international organizations create standardized and clear taxonomies of digital assets. These efforts will help nationally-scoped regulators create clear legislation and rules that protect consumers, and also foster innovation.
When researchers, academics, and other financial industry stakeholders take a look at the choices for digital assets, there is one stand-out when it comes to the metrics that really count, such as security, settlement speed, scalability, decentralization, and clear code governance: XRP.
Sources and Credits:
Cover Art: Thank you to rawpixel