The True Potential of Ripple and XRP

Note: This post is my own recollection from 2013, when there were only a handful of cryptocurrencies (before even Ethereum existed).  Most the points made here, however, can be applied to blockchain in general as a high level of what the technology really capable of.

     I first heard of Ripple and its cryptocurrency token XRP back in 2013.  At the time, it was obscure but considered one of the more promising alternatives to Bitcoin.  Not only did it reduce Bitcoin's minutes-to-hours settlement time to mere seconds, it allowed anyone to create new symbols to represent practically anything - new currencies, companies, debt, even countries or people - anything - with just a few mouse clicks.  Just like that, your new symbol was then tradable 24/7 by anyone with its value determined completely by the free market.  Ripple was not just a currency; it was literally a global decentralized exchange.  Already there were symbols to represent the US dollar, the Euro, gold, even other cryptocurrencies like Bitcoin, and just like the base currency XRP, these could all be traded or sent within seconds.  On top of that, the technology did not require mining, meaning the energy costs of the millions of computers crunching computations to maintain Bitcoin would be unnecessary.  Best of all, the technology was already done and live.  Anyone could create an account on the Ripple website and use this functionality firsthand.

     The most immediate and obvious benefit of this technology is the near instantaneous transaction time.  Money can now be sent in real time anywhere in the world, and unlike Bitcoin or other cryptocurrencies, the user never has to actually deal with any currency other than the one he's using.  Everything is automatically and seamlessly converted in between without the user knowing.  In other words, he can work solely in USD and have all the benefits of sending it instantaneously to anyone anywhere in the world with the recipients also receiving it in their currency of choice.  You can essentially now send pure value, which is abstracted away from the choice of currency to the real market rate.  The obvious application here is replacing bank wires, ACH, SWIFT, remittances, and other money settlement related technologies.  That's where Ripple Labs, the creator of the technology, has decided to pivot towards currently at the time of this post.

     But Ripple can do so much more than just send money quickly.  These symbols that you create so effortlessly can represent anything, not just money.  It is not just a payments protocol.  You can very much create a symbol that instead represents your company or shares you are trying to issue.  In other words, the technology is there for anyone to IPO their own company, fund, or other financial vehicle without any bank or middleman right there with a few mouse clicks.  And just like with the stock market, anyone would then be able to trade the symbol you created, and the market would determine its value.  The exchange would even always be open any day any time, eliminating the concept of pre-market or afterhours.  All of the benefits of a traditional IPO or stock offering can be had at virtually no cost, no time, and with no middlemen by literally anyone in the world - including those who may not be in a country with the financial infrastructure of the States.

     But why stop there? No one said you had to only exchange money, and no one said you had to only exchange equity ownership either.  There's nothing stopping you from creating symbols to represent loans, fundraising for ideas/projects, fundraising for causes/charities, even people.  What does it mean to represent a person on an open exchange? Their credit.  Except instead of relying on credit agencies, a person's credit can now be determined entirely by the free market with no authorities in between.  The same goes for any other form of borrowing or funding.  It's an implicit credit rating, or in other words, a market-determined value, for every person, company, and financial instrument that gets listed.  If you wanted to get a loan, you could simply issue shares of a symbol backed by your own reputation, and whoever agrees to exchange dollars for your symbol is basically agreeing that your reputation has value and that they trust you to one day buy the shares back.  If you wanted to raise money for a project or idea, you would essentially do the same from the account of a company or organization with the symbol issued now representing the fundraising for the project instead.  Backers who own this debt or issuance can choose to hold or further trade it with other people willing to exchange, essentially automatically creating a secondary market again with no intermediaries.  This essentially tackles peer-to-peer lending, decentralized credit, and crowdfunding all with one fell swoop.

      And all of this can be done on the same global decentralized exchange.  Deep down, anything to do with value or money can be represented the same way.  We've broken down the walls and categories to the point any sort of value in society can be represented and exchanged in a market equally accessible to all.  You don't need to exchange money for shares or vice versa; you can directly exchange shares for other shares, commodities for loans, private equity for bonds, etc with again all the intermediary trades necessary to make it happen automatically occurring behind the scenes.  Anything can be traded, issued, and sent in real time anywhere in the world.  Even code can be stored to run indefinitely, and there is no downtime because there is no actual exchange to overload, no central point of failure.  This exchange is owned by no one and is equally open to everyone on the planet.  This is why technology like this is compared to the internet; it is everywhere and controlled by no one.  Anyone can access and use the exchange directly with no one in between (besides your internet provider), and like the internet, the exchange itself is forever online, fully automated with no manual human labor or involvement.  Longer term, it effectively opens the door to other fully automated constructs such as automated cities with no human admins, service providers, laborers - essentially the premise of internet of things (IoT).  It goes hand in hand with fully automated technologies being driven by advances in artificial intelligence (AI) (what better place to live permanently and never be shut down than on a decentralized network?).

     The technology is now already more than three years old, but somehow it has only become more obscure than it was before.  Part of that is from the pressure on Ripple Labs to narrow their use case to just the settlement infrastructure for banks; it is unfortunate to see such powerful technology pigeonholed to a small fraction of its potential.  The other reason is perhaps the lack of expertise, focus, or resources to drive the business execution in full rather than in a piece-wise fashion.  They're almost like the Microsoft of cryptocurrencies when it comes to marketing, where despite having a superior technology (such as the Surface), they let everyone else box them into a category that already exists until someone else rebrands it; for Ripple here, their box is blockchain and bank transaction settlement.  You can literally go on YouTube or even their own developer's guide to find everything here already discussed years ago.  Yet public perception continues to be that they just facilitate payments like any other cryptocurrency, probably because that practically is the only thing they're doing with it at the moment.  Hopefully this changes as the concept becomes more widely understood and accepted.