The Swiss National Bank recently held a conference. Brad Garlinghouse, Ripple’s CEO, had the chance to give a few remarks about Ripple, its technology and products to some of the most influential central and commercial bankers of the world. In this article, we give you the gist of his intervention.
Mr. Garlinghouse started by briefly explaining what Ripple is. A Californian private company that’s focused for years in solving a particular problem (the problem of the international transfer) using blockchain technology and, in some cases, the company’s native cryptocurrency, XRP.
The first item in the Ripple leader’s agenda was to answer the simple question that was evidently hovering in everybody’s minds; why the blockchain? He explained that, in his view, the blockchain’s technology most potent feature is to enable two parties to transact among them without the need to trust but with ensured certainty. A blockchain does this very quickly and cheaply, harnessing the power of the digital technology that has disrupted the world over the last four decades (digital computers and the internet).
He went on to describe Ripple’s specialty since its inception in 2012. It’s been to solve the international payments settlement problem. The standard system for that among the world’s banks is the SWIFT system which has not kept up with the age of the internet. It remains slow, expensive, and unreliable.
The expense incurred by banks when using SWIFT is not just about fees. Transacting in SWIFT needs for banks to hold reserves that can prefund the foreign currency involved in every transfer. That is capital that can’t be used at all but is just sitting around, waiting for the moment in which a customer will ask for an operation denominated in the correct currency.
It also means that SWIFT undermines competition in the market because only the more affluent institutions can afford to have enough capital frozen while it waits to become useful. So in that sense, blockchain technology solutions will also level the field for smaller banks.
Brad Garlinghouse At Swiss National Bank Conference, videos in thread.
"xCurrent is essentially Swift 2.0"
"xRapid is really when we use XRP to fund real time liquidity, Immediately we found demand for xRapid by banks & institutions"#XRP #XRPcommunity #XRPTheStandard #xrparmy pic.twitter.com/XBzEuZczru
— Dillon (@Dillon) May 17, 2019
In Mr. Garlinghouse’s view, blockchain technology and Ripple can do for the transfers market what the internet did for information in general, which is to make it available to everybody in the world. It would be a faster, more efficient, more useful service than the current options. It could create a financial system in which global liquidity on-demand could be as prevalent as emails and Whatsapp messages are right now.
Next, he explained his company’s products. He started with xCurrent which he described as “SWIFT 2.0”. It’s just a messaging system that has nothing to do with crypto but that updates the same process SWIFT uses. Then there’s xRapid.
That one does use the XRP cryptocurrency to speed things up and settle transfers in seconds instead of days (which is the current standard). Last but not least, there’s Ripple’s API. This one aims to facilitate integration into the company’s clients systems, which tends to be the trickiest part of the process.
Mr. Garlinghouse’s remarks were very well-received by the attendants.
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