/ Ecosystem

XRP: The Power of Focus

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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XRP can Do Everything a Crypto-currency Should Be Able to Do

Chalk it up to my over-enthusiasm.

When I first brainstormed about all the possible use cases for XRP, I wrote down all possible  use cases for an immutable distributed ledger, which is what the XRP Ledger can provide along with the crypto-currency XRP.

This approach was kind of like saying "what are all the things that money can be used for if it's also a place where you can permanently write information?" And the resulting list was very long indeed.

Consensus 2017

But then i watched the round table discussion with Miguel Vias from the final day of Consensus 2017, where he was describing the main use case(s) for XRP, and I was struck by his approach.  He boiled it all down to two use cases, one in his introduction of XRP, and broader one in his description of the primary use case. 1

Miguel's Introduction:

“ XRP.... is primarily designed for cross-border payments.  The value derived from usage of value transfer across borders.  “

Miguel_Consensus

Miguel's Description of XRP's primary use case:

“One of the things at Ripple that we're incredibly focused on with respect to XRP is a VERY CLEAR USE CASE.  Payments.  ... And our goal is for XRP to be the .... institutional standard for digital value transfer globally.”

So let's just focus in on one, and see how big "cross-border payments" and "value transfer across borders" is.

All We Need is One Use Case for XRP

How big is value transfer across borders?  Let's narrow our focus further to just where the SWIFT organization of banks does the lion's share of value transfer across borders.  SWIFT sometimes takes days to transfer value across borders.  Now we have a new method (XRP Ledger, XRP, and the Interledger Protocol) that can do it in seconds. 2

Current volume with SWIFT: According to a document from the US Treasury,  SWIFT handles about $5 trillion per day, or given about 250 business days per year, about $1.25 quadrillion dollars a year. 3

swift_symbol

Investopedia acknowledges Ripple as one of the alternatives to SWIFT. 4  XRP – the crypto-currency – in this scenario would be used for account activation, and most likely as a no-counter-party risk bridge currency.  The amounts of XRP utilized for these purposes would be massive.

The Chief Cryptographer of Ripple responded to my original brainstorm for all possible use cases for XRP by reminding me of Ripple’s laser focus on international transfers of value more than any other use case:

“I often get asked a question like "Does Ripple support X" where X is something people often pitch Bitcoin for. And the answer is that unless the X is international payments, Ripple probably doesn't have a go to market strategy, a marketing team, partnership agreements, revenue targets, a supported software product, and so on. But, of course, people are welcome to use XRP for any application they would like. And they may find that the lower transaction fees, faster confirmation, and additional features (such as multisign, key rotation, arbitrary assets, community credit, and so on) are valuable to them. We're absolutely thrilled to see that happen. I would love to see organic growth around XRP.”  5

The key takeaway from his comment is that while XRP can support all of those “other” use cases that crypto-currency is used for, Ripple is leaving it to others within the crypto-currency space to decide for themselves the benefits of using a crypto-currency that can do the incredible things that XRP can do.  They are instead focused squarely on SWIFT’s core function.

We’ve seen this focus on international transfers of value in all of their corporate decisions and communications.  While other crypto-currencies are busy trying to capture investor’s money through ICOs, Ripple is busy building banking partnerships.  The consortium of banks that is adopting Ripple technology now numbers over sixty. 6

Ripple also recently hired two former SWIFT senior leaders to assist in efficiently targeting this market. 7 8

Even if only a sliver of SWIFT’s market share goes to Ripple – and it looks like that is about to happen – XRP could be utilized by the billions.

Sources:

  1. https://youtu.be/aiNDDWZs0b4
  2. https://ripple.com/xrp/
  3. https://www.fincen.gov/sites/default/files/shared/Appendix_D.pdf
  4. http://www.investopedia.com/articles/personal-finance/050515/how-swift-system-works.asp
  5. https://www.xrpchat.com/topic/5397-xrp-master-of-the-use-case/?do=findComment&comment=51057
  6. https://ripple.com/insights/sumitomo-mitsui-banking-corporation-and-japan-post-bank-join-sbi-ripple-asias-bank-consortium/
  7. https://www.finextra.com/pressarticle/63924/ripple-hires-hsbc-payments-exec-marcus-treacher
  8. https://www.americanbanker.com/news/swift-exec-marjan-delatinne-defects-to-ripple

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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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