Thanks a lot JoelKatz. very transparent and informative as always!
some more questions. =)
Mentioning crypto currency to bankers only put question marks over their head (
) and it's a pretty bad strategy.
Our initial approach was to pitch to FI's to do all their transactions on a public ledger. Most of them saw the advantages, but they didn't like the loss of privacy, scalability, ability to customize rules, and so on. So we changed our approach.
But the opposition to crypto currencies is slowly changing. We're finding that FI's are becoming more and more receptive to crypto-currencies. Being able to use them off-ledger helps a lot. Most of what they're opposed to comes from the blockchain/ledger part, not the crypto-currency party. And, who knows, they may even come around on that part over time.
could you mention what they are opposed from the blockchain/ledger part? is it just what you mentioned above (privacy, ...) or are there other things?
I also don't think that bankers are against using a crypto currency, but I think there are at least two things in order for them to use it:
1. they must know how the money supply works, who has control over it, how it will be distributed. I think they can eventually use a cryto currency, but one THEY have control over it. I think it will be very hard for them to use one crypto currency that a company has control, because they would be to vulnerable.
2. the currency should be regulated. Who can create it. And this is a big problem when we consider many countries. Maybe there would need to be a member of each central bank that is using the network.
But without XRP, how does Ripple solve correspondent banking problem?
There are a lot of different problems all tangled up. You don't have to solve all of them to have a viable product. For example, just the lack of pre-transfer setup is a big enough problem that you could have a viable banking payment product just by solving that. Just the lack of transparency into the status of a payment is a big enough problem.
yes. cost, transparency and time. SWIFT gpi tries to solve transparency and time, but for what I saw they solve transparency and improves time for same timezone for the same day, but it still takes longer than Ripple that settles in seconds.
I'm wondering how Ripple reduces cost comparing to correspondent banking, as I highlighted your comment below.
Don't you have market makers in the permissioned network? If not, why not? Why would banks not allow market makers? It would be risk free for them, right? and it would also reduce the transactions' cost.
I think Ripple probably has potential to reduce infrastructure cost, right?
An IOU would be like nostro/vostro accounts, and if there is not a direct trust relationship you would still have intermediaries.
Right, and the point of ILP is that the intermediary doesn't have to be trusted, so you can use *any* intermediary. Likely, day one the intermediary for almost all payments will be whatever intermediary it is today. Maybe that's the sending bank's FX desk. Maybe it's a correspondent. So you'll get the setup/transparency benefits,
but not FX/intermediary cost savings.But the point is that you've changed the ground rules. You could argue that the Internet won't really change anything -- the same customers will access the same data, they'll just do it more quickly and in a standardized way. First, that's a big win. But second, once you have a common way to plug customers into data, you can add all kinds of new customers and new data that you didn't have before. Same here. Day one, the funds will take the same rails. But very quickly, new intermediaries and new services will pop up because they have a framework to plug into.
Just as the Internet made it possible for anyone to provide data to any user, Ripple could make it possible for any intermediary to bridge payments between any endpoints.I hope it happens. I really hope the project works.
