Thanks for the response
@JoelKatz ! A couple followups:
1. "I think there are a number of reasons why institutions have historically preferred to use digital assets off chain rather than on chain. I think we're close to changing that because institutions are starting to see the benefits of moving on chain. But I agree it has been very slow. Even Ripple can't use the XRPL DEX for payments yet because we can't be sure a terrorist won't provide the liquditity for payment. Features like permissioned domains will address this."
I understand why that is especially here in the US after the previous SEC administration. But, shouldn't that have been less of a concern for foreign entities? It still feels like there should be a lot more activity regardless. Now that regulatory clarity is here, I imagine this should ramp up exponentially - like now. If it isn't - I'm out of ideas.
2. "There are use cases where volatility isn't a minus, or is even a plus. Generally, for most digital assets the general view is that the upside is worth more than the downside, so as long as you aren't very risk averse, holding it is not really a disadvantage."
I get how it might be appealing to a retail speculator. But as a bank/institution, there's no need to expose oneself to fluctuations for payment networks since there are alternatives that don't require it. If I'm a bank, I don't want to speculate on my payment network. I've got my balance sheet / treasury for that. Expecting price appreciation is more of a function of a monetary asset, not payment networks.
3. "A bridge currency only works if someone is holding it so that you can get it precisely when you need it. But I think that in practice if you don't know what asset you will need to hold next, you may hold the dominant bridge currency because it should be cheaper to exchange into whatever you happen to need next."
Thanks for the insight. Curious though, given XRP’s volatility, do institutions really want to hold large XRP balances long-term, or would they lean toward stable, less risky assets instead? I still see a stablecoin or a CBDC as a dominant winner here: stable value, and no fluctuation exposure. Similar to what I said above.
4. "If one stablecoin wins, then no. You would just use that stablecoin as the bridge currency. But I don't think one stablecoin can win for several reasons, including that a stablecoin can only be stable relative to one particular fiat currency and will always have jurisdictional ties. If we're in a multi-stablecoin world, it still makes sense to have a bridge asset that serves the long tail of tokenized securities, loan portfolios, and so on."
Thanks for the perspective! I agree a single stablecoin dominating globally is unlikely due to jurisdictional issues. That said, in a multi-stablecoin ecosystem where each one is presumably backed 1 to 1 by real world assets - what makes XRP (or any other crypto) a better alternative? I'd rather use a stablecoin (even if it's not a USD, could be GBP, could be JPY).
5. "I'm not sure how much that will really matter so long as we have interoperability and asset portability. Multiple chains are a good form of scalability as well. But I think the best way to see why they might is to ask the same question about Circle -- why don't they launch USDC only on their own blockchain? You can see why that's obviously silly. I think the same kind of logic will apply to tokenized real world assets over the next year or two."
Fair enough. Time will tell but the issue is people's expectations of that happening (that BlackRock will choose XRPL to tokenize). Price is so closely tied to these rumors that I think it's also fair to be critical of expectations.
6. "If you're asking about XRPL, it's not really US based. It has never discriminated against any particular participant and if it ever started to, I would hope people would stop using it. If you mean Ripple's enterprise payment products, we have separately licensed entities in many jurisdictions. But obviously, you're not going to see it in North Korea or Cuba any time soon and their might be, in some cases, pushback to a US company having some control over, say, payments between Pakistan and Saudi Arabia. We build trust and we make hay where the sun shines."
I hear that, but if it's not really US based, why did the SEC lawsuit have such a huge consequence on development and adoption? It feels like we can’t have it both ways. Either it's not US based and shouldn't have been affected or it is and that requires a lot of trust.
Thanks for taking the time to answer my questions. I'm skeptical about this space.
Time will tell but for me, that time has passed and it's not telling me much. After years of being in this industry, I've learned that people live on the fumes of a promise for a better future - coming soon.