XRP and the business case for Ripple
SEC Sues Ripple. Courtesy of Ripple
I wrote a version of this headline – titled “Is Ripple for real?” – six years ago Fortunee. At that time, and on many occasions since, I have thought about that very question. A big reason for this is that XRP, the token often associated with Ripple, is different from other cryptocurrencies. Unlike other blockchain projects, there has never been any mining or proof-of-stake mechanism. Instead, the XRP founders simply conjured 100 billion tokens out of thin air in 2012, and ever since people have been trying to figure out what the stuff is for.
Ripple, meanwhile, has gone through more identities than Madonna. When I first heard about it in 2013, people claimed that the XRP ledger was a more versatile version of Bitcoin and that it would make the original cryptocurrency obsolete. Two years later, during the “blockchain not Bitcoin” era, Ripple tried to be besties with the big banks – only to be rudely brushed off when the banks realized they wanted nothing to do with XRP. For its next act, Ripple sought to disrupt the money transfer industry – giving large buckets of XRP to Western Union and MoneyGram, only to see the companies sell everything for a quick buck and then leave Ripple high and dry.
Ripple’s ongoing efforts to grease the banking and corporate worlds have made the company, and by extension XRP, an object of hostility and derision among the rest of the crypto world. For a long time, it felt like Ripple’s only friend was the XRP Army – a motley collection of pickpockets, hucksters, bots and fanatics who cheer maniacally every time the currency is mentioned on Twitter. But in the last two years something has changed. Ripple became popular, even win over its longtime antagonist, crypto overlord Ryan Selkis aka TwoBitIdiot.
Much of this change of heart has occurred due to Ripple’s decision to go toe-to-toe with the Securities and Exchange Commission in a high-profile lawsuit challenging what many see as the agency’s arbitrary and overreaching behavior. My enemy’s enemy is my friend and all that. But in the meantime, it seems the company has finally figured out a sustainable business strategy.
I spoke with Ripple President Monica Long this week, and she told me that the past two years have been the best in the company’s history thanks to the growing popularity of its cross-border payments platform, Ripple Net. The platform provides on-demand liquidity (ODL) through a network of market makers that use XRP to facilitate fast payments and settlements. In 2020, Long says ODL was available in three countries, but today the numbers have grown to 40 markets representing 90% of world forex trading. She explained that Ripple has not found its sweet spot with large banks, but with small and medium-sized banks in remote regions that appreciate the lower transaction costs it offers and also have newer and more adaptable technology stacks. The company now makes money in the form of transaction fees, but also by selling its holdings of XRP to customers. Long adds that Ripple has also started selling a crypto brokerage tool called Liquidity Hub and that it has invested heavily in making the XRP Ledger more versatile, including by integrating an Ethereum virtual machine option.
All of this is to say that Ripple, more than ever before, has figured out a long-term value proposition for both the company and XRP – and that it may be poised to succeed regardless of how the big lawsuit turns out.
Jeff John Roberts
[email protected]
@jeffjohnroberts
DECENTRALIZED NEWS
Do Kwonthe refugee swindler who created the infamous Terra stablecoin, was arrested in Montenegro on the same day the Justice Department unveiled charges against him. (Fortune)
Chat in Binance-run Chinese-language chat rooms suggest employees were helping customers in mainland China get around KYC checks, alarming experts at regulatory and national security levels. (CNBC)
A judge in New York threatened to detain Kyle Davies, the cryptobro co-founder of failed Three Arrows Capital, in contempt unless he agrees to appear and assist liquidators assessing the mess. (WSJ)
The share price at Block plunged after the short seller Hindenburg Research accused it of misleading investors on key figures and tolerating criminals using the Cash App product. (Fortune)
Sheet Investment, the hedge fund run by contrarian investor Cathie Wood, took a double hit after negative news related to Coinbase and Block—two of the fund’s largest holdings. (Bloomberg)
MEME O’ MOMENT
Pharma Bro to Do Kwon in November: “Jail isn’t so bad”:
