Ripple is, as Ripple themselves happily state, a solution for banks to exchange things with each other.
To be clear, that is the use case that Ripple, the company, is currently pursuing.
Problem is, in the 21st century, seven billion humans are now starting to realise that we can exchange value (in other words, socially-agreed-to consensus, much like a US Dollar exemplifies) and trade with each other directly, peer to peer, without needing a bank or government in the middle.
Exactly! And to get to that great future, we need a phenomenal bridge between where the money is now and where the money will be in the future.
Ripple hoping to fuel the continued health of the historic banking model into the 21st century is like a grower of hay hoping to fuel the horse industry after Henry Ford starts selling the Model T Ford.
Right. The horse industry could have pivoted to survive in an automobile-based world. You can sort of argue that they did. Similarly, music companies could have reigned in a digital music world, they just didn't. It's certainly possibly that banks will die as the economy changes with new technology. But the smart ones will try to hold on as long as they can by improving services and cutting costs. It's certainly way too early to say that there's no business model around modernizing banks. They're handling trillions of dollars worth of payments today and right now that's still increasing. We can certainly pivot again in the future.
Email killed stamps and envelopes and the postal authority. Blockchain crypto currencies will kill banks.
Ripple's destiny is pinned to banks.
Today, yes, because we think that's the best use case to target today. After all, banks have lots of money and handle trillions of dollars worth of payments.
Does Ripple have an assured future?
Twenty, forty, fifty years from now, humans will send cryptocoins to each other over a blockchain as our way of keeping track of whom deserves what.
Why do I need a bank for that?
And Ripple will have nothing to do with banks in that future. You don't turn the wheel of your car because there's a curve 30 miles ahead. We're quite agile, we've pivoted before, we're aimed at where the money is now, and in twenty years, we can pivot again. Of course we don't have an assured future. But we'll do our best to keep aiming at the best targets.
There are really a few pieces here:
1) There's ILP. We hope that will provide the bridge between different ledgers that record value. Those ledgers can be traditional banking ledgers, they can be decentralized public ledgers, ILP doesn't care. This is what avoids us all having to transact on the same system.
2) There's XRP and its ledger. This is a system that permits pseudonymous transaction in a native asset. It doesn't have bitcoin's liquidity or value yet, but it does have support for higher transaction volume, faster confirmation, and better security. We've worked to make XRP integrate with ILP extremely well through native support for escrow and payment channels.
3) There's Ripple's business improving bank's payment systems. We're getting our software into the transaction flow of banks. This software supports moving the underlying value using ILP.
Given those three pieces, our strategy is to work to get some of those bank payments bridged through XRP. If we succeed, but banks become less relevant, then the endpoints will just change from bank ledgers to non-bank ledgers.
We're in the very early days. During the early days of the Internet, much of the work was done by the government. And much of what attracted people to the Internet in the beginning was its connectivity to existing media companies. The important thing is what you're building and what properties it has. Yes, in the early days, the key users will be the same as the key users of the previous technology. But if the new system is inherently accessible to all and fundamentally based on open standards, the world can change for the better.
