Fiat Money & Cryptocurrency: XRP in the Mix

For those of us in the United States, the declining purchasing power of the US Dollar is something that has taken place over generations, so we don't notice it unless a researcher takes "consumer price indices" published by the Bureau of Labor and Statistics and charts increasing prices over time. A chart only stretching back to 1983 shows the amazing trend, which is even more stark over a longer period of time:

But what would happen if we were faced with the possibility of the dollar suddenly and without warning losing over a quarter of its purchasing power in a matter of days? What if the price of gasoline spiked to five dollars per gallon?

It may sound like an implausible situation for those of us in the West, but that's precisely what's happening to one national fiat currency as we speak: The Turkish Lira. ¹ ²

Turkey's economy has been battered of late for a number of reasons, including Turkey's Central Bank's unwillingness to raise interest rates, a doubling of tariffs from the United States, and mounting debt. The grouping of causes has prompted a loss in confidence in the Lira, and its value has been plunging as many trade their Lira for other currencies... and cryptocurrency. ³ ⁴

That's right; we've seen this before. When there was a bank run in Greece, it coincided with a sudden surge in demand for Bitcoin in 2015. ⁵ ⁶

To what extent has the concern over the Turkish Lira prompted citizens to forsake their national currency? To answer that question, you have to look at the routes for acquiring cryptocurrency in Turkey. Unlike some other regional countries, Turkey doesn't prohibit its citizens from investing through exchanges, so Turkish-based exchanges like BTCTurk, Paribu, and Koinim can be examined for any evidence of increased interest. Each of those exchanges reported similar findings: In just 24 hours, they experienced a volume growth of over 100%. ⁷

Some in the cryptocurrency markets may greet this news with glee, but it's also a cautionary warning: Other world governments are learning from this incident as well. If they truly want their citizens to trust the value-retention capability of a National currency, they have to manage it correctly; either that or tie it back to a gold or precious metal standard whereby its value truly becomes a redeemable counter-party asset.

My opinion? While recent history has just provided painful lessons that the value of crypto fluctuates wildly, it's still a viable option in some circumstances. National currencies can still compete easily if they consider guaranteeing the value of their issued digital (or paper) assets.

The other alternative is more troubling: What if, instead of competing with cryptocurrency, countries instead act to outlaw its trading? I don't believe this will happen, but history has shown me one thing: Politicians and governments would much rather avoid a problem now and instead let future generations and governments deal with it. And that behavior spells trouble for openly allowing citizens to choose their own currency or digital asset.

Thus far, however, the United States, Russia, Japan, and many other countries have shown a willingness to allow their citizens to invest in any digital asset or cryptocurrency. But exceptions to this openness have been cited as well, alongside these progressive policies. In 2017, China banned direct exchange-based trading against its Renminbi (Chinese Yuan). And India's Reserve Bank moved to ban cryptocurrency firms and businesses from receiving banking services.

To ensure continued level playing fields in the face of future international financial crises, it would be wise for digital asset firms, investment houses, businesses, and investors to pursue their own agenda like any other industry - through legal lobbying efforts in various countries. Thus far, this effort has had fits and starts, but some organizations have arisen to pursue the goal of influencing legislation in meaningful, smart ways that will foster both innovation and responsible regulation of digital assets and their associated, centralized exchanges.

This interaction between the world's legislative and regulatory bodies and the new crypto market needs to continue, augmenting the momentum behind the efforts we've already seen thus far in 2017 and 2018.

Ripple News

On August 10^th, TechCircle interviewed Navin Gupta, Ripple's Managing Director for India, Southeast Asia, the Middle East, and North Africa, about Ripple's product offerings and how it aims to compete with SWIFT in the Indian subcontinent. ⁸

The questions and topics offered insight into Ripple's view and strategy about their plans for serving India's banking and remittance market. Here are a few of my favorite questions and answers:

Question: What blockchain solution is Ripple offering?
Answer (Navin Gupta): The company’s primary focus is to target the remittance market globally. What we are trying to do is provide a better and faster alternative to SWIFT, which is used worldwide by financial institutions.

We are building a message-based superhighway through which money can travel and, mind you, they don’t have to be cryptocurrencies; fiat currencies can also travel via our blockchain protocol.

We are already working with several banks globally especially in the Middle Eastern region. We also have customers in Africa and Europe who are conducting millions of transactions via our network protocol instead of using SWIFT.

Question: Most of these are international transactions. How are exchange rates applied?
Answer (Navin Gupta): Ripple’s blockchain protocol has an exchange programme inbuilt. As soon as a request to send money is received, it checks the rates and applies it on the money. For example, if you are sending pounds, which has to be converted into dollars, then the exchange rates are applied on the sender and then the money gets deposited in dollars only.

We have also used XRPs in some countries where cryptos are allowed. We are using XRP for transfers between Mexico and the US. In this case, the money sent is first converted into XRPs and then the XRPs are converted back to fiat currencies.

Question: The Reserve Bank of India has mandated banks to move to SWIFT. Is there any regulatory hurdle here?
Answer (Navin Gupta): There are some misconceptions here. The RBI doesn’t mandate the use of any technology. It shares the list of compliance requirements that every bank has to follow. And at Ripple we don’t circumvent rules or regulations. We follow the law of the land and, hence, we don’t face any regulatory hurdle in India.

Question: How do you see the cryptocurrency scenario in India?
Answer (Navin Gupta): Regulators have to ensure that cryptos are not being misused and we entirely support that cause. It takes time for a regulator to make decisions and ensure that all tracks are covered and all stakeholders can continue to work in the best of conditions.

I like the focus indicated by Navin Gupta's thoughtful responses: The Indian remittance and banking market is a key focus for Ripple and any other fintech company that wishes to expand globally. According to the World Bank, 2017 statistics indicate that India is the largest country when it comes to international inflow of remittances, followed closely by China. ⁹ ¹⁰

Ripple has consistently sought to aim its products globally rather than focus on a specific region, like some of the large Western banks. It's a necessary strategy that fits lock-step with their technology solutions like ILP. Their tools do not limit banks' choices; they expand them and allow banks to move towards modernization at their own pace while maintaining low risk and regulatory compliance.

SWELL Agenda Updates

For those tracking the latest updates to the SWELL Conference agenda, it looks like Ripple is gradually adding more fine-grained details. The day-by-day plan has been updated with specific conference topics.

My favorite session title was the last meeting on Tuesday, October 2^nd:

For those looking to view or track additional material about the conference, you can refer to the link here: Official SWELL Conference Site

Sentbe Considering xCurrent

Sentbe is a new fintech-oriented remittance company founded in 2015 serving the Asia-Pacific (APAC) region of the world. ¹¹ It's based in Seoul, South Korea, and as of early 2017 serves customers in the Philippines, Indonesia, Vietnam, and Japan. ¹²

An article published in mid-April indicated that, due to a law change in South Korea, the market for the company expanded considerably thanks to regulatory clarification. In that same article, Park Ga-young, the author that broke the story, indicated that: ¹³

"The fintech firm is mulling to adopt xCurrent, the world’s third-largest cryptocurrency Ripple’s enterprise software for cross-border payments by financial institutions, to seek a faster and cheaper money transfer solution.

Sentbe has raised up to 4 billion won so far, including 2 billion won from Korea’s major cryptocurrency exchange Coinone which is a strategic investor. It aims to raise an additional 6 billion won in series B funding later this year."

The article indicates the importance of clear regulatory guidance for new fintechs looking to compete with the dominant positions of traditional correspondence banks. These new market entrants can help supercharge global economies, but it's imperative that governments around the world take an active role in shaping meaningful and thoughtful regulation for new technology like xCurrent and xRapid.

ChainXChange Las Vegas 2018

ChainXChange is a conference that focuses on blockchain technology and its impacts on various categories of technology, finance, social change, and content, including: ¹⁴

Artificial Intelligence
Sports, Media, and Entertainment
Transactions, Currency and Fintech
Healthcare
Internet of Things & Foods
Non Profit and NGOs

The conference is scheduled for August 13 - 15 in Las Vegas at the Mandalay Bay Convention Center. ¹⁵ The 'main stage' speakers are an impressive list of technology luminaries including Steve Wozniak (co-founder of Apple), Nicholas Thompson (Editor in Chief, Wired Magazine), Lilia Infante (Special Agent, Department of Justice / DEA Cyber Task Force), and Cory Johnson (Chief Market Strategist, Ripple), among others.

Obviously, I'm excited for all of the content at an event with this level of high-caliber speakers and contributors; but especially since Cory Johnson will be one of the speakers.

These are still the early years of blockchain technology, and they are unfolding in slow motion compared to the whirlwind takeover of Internet technology. In the case of blockchain technology, the innovations are even more obscured due the way in which big money has a tendency to muddy the waters; when intuitive communicators like Cory Johnson expound on topics, the issues can be clarified in a way that defines concepts in greater relief and clarity for all audiences - not just computer science aficionados and hobbyists.

After the conference, hopefully we can view some of the video content published by the event organizers or attendees.

XRP News

Ever hear of localBitcoins? They are the consistent go-to work-around for people in countries that prohibit crypto trading but yet want to own Bitcoins. The system works to connect bids and offers in a peer-to-peer fashion; there have been many peer-to-peer crypto trading platforms developed on this model afterwards, but localBitcoins was one of the first to support this model to effect peer-to-peer 'over the counter' trades from one person to another.

The risks, of course, have to do mainly with the payment method by the buyer; while cryptocurrency is typically an irreversible transaction, many traditional payment channels are not - and hence lies the risk for the seller of crypto. In any case, various peer-to-peer exchanges like localBitcoins think they've figured out how to minimize that risk and yet still operate effectively by providing warnings or ratings. ¹⁶

It's a fascinating case study in true peer-to-peer payments, and it's notable because in its early years, it didn't ask for identifying information from customers - it was only voluntary and added to the comfort level of traders looking for reputable dealers. That all changed in 2018 as it started an across-the-board requirement for identifying information from any trader that dealt in large amounts of Bitcoin.

This change prompted many traders to look for decentralized exchanges (DEX's) that didn't have this requirement. Registrations at competing sites like Bisq, HodlHodl, LocalEthereum and LocalCoinSwap started increasing after the change. Whatever you think of these over-the-counter, peer-to-peer platforms, they represent an entirely different paradigm than a centralized exchange.

One of the new entrants to the decentralized exchange game is a DEX whose development was funded by a recent ICO: Local CoinSwap ¹⁷

Local Coin Swap

According to a blog on its site,¹⁸ the platform is now in "Alpha" release or later, and the road-map on its official site shows a release date in August:

The site, along with a tweet from its official twitter account, indicated that the platform will support XRP trading in its initial roll-out. ¹⁹ ²⁰

No official communication has been provided on the site or on Twitter regarding the hard release date other than a general month-based time frame. This makes me hesitant to even discuss the project prior to its launch, but I know that some XRP fans are also users of other decentralized exchanges and may want to bookmark this one for future reference.

NOTE: While I discuss some ICO-funded exchanges in today's blog, I do not endorse any ICOs. I'm only covering them simply based on the fact that these exchanges have indicated they will support XRP trading.

Bitto Exchange

Bitto is a new exchange that is being funded from an ICO. It hasn't gone live yet, but a tweet from their official Twitter account indicated that they would be going live "in August, as planned." ²¹ They tweeted that they would be supporting XRP as one of the first cryptocurrencies listed on the platform. ²²

Bitto aims to have a worldwide presence, and indicated in their white-paper that it would support "local deposits in local currencies..." with "...Priority set-up given to countries with major users." ²³

Nauticus Exchange

The Nauticus Exchange is another cryptocurrency exchange funded by an Initial Coin Offering (ICO). The exchange is currently in 'beta,' and the official road-map indicated an opening in August of 2018 : ²⁴

However this target has since been pushed back indefinitely according to the latest blog published on August 11^th: ²⁵

"Founders Bryan Ng and Jonathan Chang are examining the options for a staged ‘Beta’ launch, opening with a limited selection of the most popular cryptocurrencies (Bitcoin, Bitcoin Cash, Ethereum, XRP, Litecoin etc)....

...The delay with KYC makes it unlikely the exchange will launch in the next few weeks as we need to allow enough time for a critical mass of users to be verified for launch."

Nauticus's COO Jonathan Chang also indicated:

"We are very close — but we won’t launch until we are 100% confident that every single aspect is working flawlessly. The feedback from our community and Pilot testing group is that they’d prefer a delay to launching with a product that isn’t perfect."

PLAAK Exchange

No, it's not time to clean your teeth: PLAAK is another on today's list of ICO-funded exchanges. This one is specific to Australia, and it includes a mobile-based crypto trading platform, among a number of other project-specific tools described in its ICO. For those only interested in the XRP trading portion of the offering, their timeline indicates:

In addition, a recent tweet from August 3^rd indicates that the exchange is now "up and running for Aussie traders:"

The project's whitepaper²⁶ indicated that the exchange will support fiat and also full Know Your Customer (KYC) functions, although it's not clear what fiat-crypto pairings will be available, including that of AUD (Australian Dollar). Australia has its share of crypto exchanges, however, each time a country-specific exchange is added to the XRP ecosystem, it provides a certain level of liquidity redundancy for new corridors.

It was interesting to note so many recent ICO-funded exchange launches: It seems that each of these new exchanges has the capability to further expand the cryptocurrency market at its beginning stages, and even further, I wonder if this exchange diversification will continue, or whether there will be a consolidation of the growing number of liquidity end-points.

Netcoins Lists XRP

Netcoins is a unique company in the crypto trading space, based in British Columbia. ²⁷ Broadly speaking, it's two things: An over-the-counter market for cryptocurrency, and also a vast network of 'virtual automatic teller machines" (Virtual ATMs) that allow customers to purchase cryptocurrency at an estimated 21,000 locations throughout Australia, Europe, and Canada. ²⁸

Its reach is extensive thanks to its innovative use of 'virtual' ATMs whereby any retail establishment can sign up to re-sell cryptocurrency. ²⁹ ³⁰ For those using the virtual ATM, the function is restricted currently as only an entry point to owning cryptocurrency, and solely supports the purchase end of the transaction.

On August 12^th, Netcoins announced that XRP would now be integrated with both parts of its platform: ³¹ ³²

Even though the Netcoins business model is relatively new - the company only recently started its 'virtual ATM' project in 2016 ³³ - they also indicated that they recently broke $2 million dollars' worth of daily transaction volume on July 19^th of this year. ³⁴

If the idea catches on in a major way, it's great to have XRP listed alongside other popular choices in these same retail establishments.

CryptoPay

CryptoPay is a multi-service money transmitter business in the UK and Europe that started in 2013 by integrating Bitcoin with traditional methods of payment like prepaid bank cards. They integrate users' bank accounts with their account at CryptoPay, and then users can purchase Bitcoin, Litecoin, and now XRP:

The service is headquartered in the UK, and provides another means for XRP holders to use their zerps for everyday purposes; like the Wirex group of services, it bridges the gap between crypto and traditional finance. We can add one more company to the list of wallet & exchange providers that augments XRP's utility for retail use cases.

Dungeons of FUD

I'm struck by the unique artistic contributions, memes, videos, and even music that I've seen contributed by members of the XRP Community; one such occasion happened recently when I saw a tweet in my Twitter stream from @adam_kaczmarek_ (Twitter handle):

I had to give it a try: The game reminded me of an old role-playing-game from the 1990s, and included actual references to WietseWind's FUD Bingo site. I found myself completely caught up in the game until I finished it. I'm displaying the ending screenshot here proudly:

It's a fun diversion from crypto investment research; thanks Adam for contributing some of your time to spread a bit of joy!

WietseWind's Updates

Wietse Wind has updated the XRP Tip Bot to include a user-submitted message if they wish during the withdrawal process. I did this myself just to try it out, and of course, it worked perfectly! Now my message is a permanent part of the XRP Ledger history:

The other update WietseWind recently made was to integrate the full history of the XRP Ledger into the network as a part of the validator(s) that he maintains:

You may wonder how much room this full history requires? Currently it uses approximately 8.5 terabytes of data on one of WietseWind's servers: The ledger will keep growing to a massive size over time. This is one of multiple community-sponsored XRP Ledger histories that exist, and it's great to know that there is a full history in addition to the validators that Ripple maintains; the redundancy of the XRP Ledger is enhanced with this addition to the network!

XRP Decentralization Update

The XRP Community has been consistently tracking the decentralization of the 'recommended' unique node list (UNL) that is the default, recommended list of trusted XRP validators downloaded when developers wish to configure and run an XRP Validator.

It is the diversification of this recommended list that was one of the last steps in Ripple's published decentralization plan from 2017, and has proceeded apace in 2018 with new attested validators being added seemingly on a weekly basis. The overall approach includes removing one Ripple-managed validator node on the recommended list for every two new attested validators:

The latest validator operators to pass this attestation process include @Coil and Bithomp:

This particular update is more noteworthy than prior ones, however, because the number of Ripple-run validator nodes on the XRP Ledger's recommended UNL has now dropped to below 50%, signifying a key milestone in the decentralization path.

I'll continue providing the current status of decentralization as updates continue to the default recommended list with more attested validator operators.

Just-in-Case for World Citizens

During the current crypto trading climate, it may seen counter-intuitive to some to suggest that cryptocurrency is going to compete with national fiat currency for some of its traditional use cases, such as storage of value. Critics have no trouble pointing to the recent decline of market-determined values of these no-counter-party digital assets as proof that they are subject to the whims of speculative interest.

But times are changing.

Some nations encountering trouble with their own official currency, such as the ongoing situation with the Turkish Lira, and the well-known examples of Greece and Venezuela, indicate that the availability of cryptocurrency can provide a needed safe haven against miss-managed public trust. Will these situations increase in number? Time will tell, but I'm willing to bet that international demand resulting from political and economic turmoil will only increase in the short term.

Couple this with trends in the crypto market: While Bitcoin and Ethereum continue coasting on their current volume, XRP focuses on its utility. Retail businesses are now dropping their support for Bitcoin in record numbers, while xRapid's role in achieving superior cost savings for remittance processors and banks has now been documented independently by those companies that have completed trials.

Consider XRP's massive use case, with its inherent performance metrics and you can see why it continues to make adoption progress. More and more exchanges are using it as a means of quickly transferring value to and from external exchanges and wallets.

As the world educates itself that 'cryptocurrency' doesn't necessarily mean 'Bitcoin', the XRP Community is also doing its part, making certain that accurate information is easily accessible. When those looking for a cryptocurrency as a hedge against failing national currencies do their homework, my guess is that Bitcoin will cease to be an automatic choice.

The journey has been years in the making; the use cases for XRP are now starting to materialize in stark relief as the future unfolds.

Sources and Credits:
Cover Art: Thank you to Johannes Plenio

Fiat Money & Cryptocurrency: XRP in the Mix

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