LE: the link to the hearing https://parliamentlive.tv/event/index/df1a1232-f145-4748-a561-d2cddea27746
I was ****** when I saw Mr. Walker’s attitude regarding blockchain technology, but especially his attitude towards Ripple. To sum it up, he basically stated that Ripple raises red flags because it is a successful business, by selling software and XRP. Although I appreciate Mr. Zagone’s attitude by being cool and not minding Mr. Walker too much, I wasn’t really pleased with some moments of the talk. Ripple is a strong company and Mr. Zagone should have presented clear responses to some very doubtful and hypocritical statements and conclusions presented by Mr. Walker. The only reason Ripple was there is that they are fighting the good fight for all the crypto market. I didn’t see the CEO of Bitcoin there, or Vitalik or any other “proud leader” advocating for why his project should be regulated. That’s because they hide in Ripple’s shadow waiting to benefit from their work.
A more decisive attitude is required and a more simple language is a must when talking to authorities and regulators. For me it was clear during the discussions that, even though Mr. Zagone stated multiple times that XRP is open source, people didn’t understand what that meant. A simpler communication style is needed, explaining complex concepts in simple terms while using familiar notions from everyday life. Simple and efficient communication is crucial in this phase and that can drive an “aha” moment for regulators, which is extremely important for everyone in the market.
Here are my answers and conclusions after that debate. I call for your help to correct me where I was wrong or to complete the information where it is not enough:
1. Mr. Walker @10:22:30 Swift tech has been hacked over and over with millions of dollars in losses. Swift's message failure rate is 6%. Imagine how you would feel like if 6 times out of 100 you wouldn't get paid because of an error. Ripple's Xcurrent system is proven better than legacy technology which is used right now by Swift. It's faster, more secure, easier to track and cheaper. More like 2018ish... not 1970ish. He also distinctly failed to mention that a payment is not just a message sent to a bank to tell it what to do. The most important part of the payment is the settlement and Mr. Walker specifically avoided that and phrased the payment just as messaging because he is aware that SWIFT doesn’t do settlement neither efficiently nor safely. He avoids the problem of settlement throughout the debate, especially when talking about XRP. That is why he calls XRP a currency and not an asset. This is either deliberate or he doesn’t understand the technology: both cases are extremely severe for a man consulting for authorities.
2. Mr. Walker @10:23:25 SWIFT’s tracking is not efficient. And blockchain does make tracking efficient. Manually exchanging messages and upgrading status on SWIFT requires time, money and, most importantly, people. That's where human error has been proven to create a lot of problems, from hacking to 6% failure rate. And that is why Ripple's tech is better because it doesn't require manual status updates, improves tracking, exchanging messages and, most importantly, settlement because... blockchain.
3. Mr. Walker @10:10:50 About adding layers of complexity and branching blockchain in other types: I can post this on Twitter now because, over time, people have added layers of complexity to the internet which created the world wide web and so on. Some technologies and improvements proved useful and valuable and became better and improved more. Some were useful then and, after a while, became obsolete. The same thing with different kinds of blockchains is happening right now. It's called progress and that's how we advanced from praying to imaginary people in the sky to understanding the fabric of reality better. We add layers of complexity to us as human beings, improving ourselves and society every single day. That's why we don't live in caves anymore. The market will decide which blockchain version and real world applications will exist in the future. Not Mr. Walker, hopefully.
4. Also on adding layers of complexity: this argument is very subtle, most people missed it, and it's just wrong and damaging. It is a very fallacious argument because Mr. Walker is talking about Ripple. They didn't copy SWIFT tech and added another layer of complexity, they built it from scratch completely better in every aspects. So no, Ripple didn't add any layer over old technology, they just built a better product using better technology.
5. Mr. Walker @10:24:15 The USD is liquid when the markets are stable and everyone's jolly. And it does NOT have liquidity everywhere, hence the need for nostro/vostro accounts. Ripple is not a cryptocurrency, it is a company. This is a terrible claim from a man with such background and it once again proves he doesn’t know what he is talking about or deliberately misleading. In 2008, USD's and all other currencies liquidity have proven to be completely non-existing. And the problem was that normal people couldn't get access to their hard worked money because, in reality, that money was on paper. Liquidity providers had nothing to work with because there was literally nothing. XRP has a clear supply. If 2008 happens again, its price might go up because of high demand, but it won't disappear suddenly. And people will be able to get their funds. Again, let's think in 2018 terms, not 1970.
6. Mr. Walker @10:24:50 XRP's liquidity has multiplied astonishingly in the last 2 years. So yes, liquidity is building and it's getting more and more liquid, that can be traced and measured, that is a simple and clear fact. Regarding the price, again, that's a really tendentious approach. The whole market went down, not just XRP. And that's because the market is in its infancy. Also, that drop has no impact on XRP's movement while used as a means of exchange between currencies, because... 3 seconds. If you want to see who is manipulating the market, investigate the exchanges better and ask them what coins they are heavily invested in and track the high volume bots on those exchanges. It’s really simple.
7. Mr. Walker @10:25:10 What do you mean when XRP's liquidity dries up? XRP cannot be created through debt, therefore cannot be inflated and the total amount cannot be changed. It is there and will be there, it was there before Ripple and will be there after Ripple. Over time and through use, it will become scarce. So XRP cannot become illiquid because of a financial crisis or any other cause for that matter. It has a very clear use case and it is being used more and more; that's a verifiable fact. And that is why Ripple is building liquidity through partnerships, empowering market makers and other institutions to participate in XRP liquidity.
8. Mr. Walker @10:25:50 The HSBC example is a lot of talk and not much sense. Mr. Walker uses the expression "added layer of complexity" to justify his inability to create a user friendly, secure and streamlined input and messaging system (because that's what he had to build and didn’t). We are all humans and had our failures, but that has nothing to do with Ripple's tech. Also, his statistical analysis at HSBC regarding consensus at the beginning of the transaction intimately describe Ripple tech.
9. Mr. Walker @10:28:15 You end up with all kinds of credit and market risk with cash on a ledger... Coming from Mr. Walker and pertaining Ripple tech versus legacy tech, this is really really funny. And terrible understanding of how Ripple tech works. Another subtle thing he infers is that Ripple tech is in proof of work. No, Ripple has passed proof of work and is in production with all products except Xrapid, which is in trial at the moment (but trial production, if I may say so, because Cuallix is using it live). Ryan Zagone specifically states that, Mr. Walker chooses to ignore it. He also ignores a direct question regarding reducing costs and doesn’t answer it, but prefers to tell a story which has no sense.
10. Mr. Walker @10:29:10 The story about the large consultancy company is again extremely perverse and I never expected such jelly backbone from such a person. Skepticism is good, but not when it turns to this type of ill-considered example. Ripple's tech proves very simply and clearly the reduction of costs: from the huge sums in nostro/vostro accounts, to the infinitely lower transaction costs and to the considerably reduced time to complete AND settle the transaction. Mr. Walker is avoiding the settlement problem because that cancels all his previous arguments against Ripple tech.
11. Mr. Walker @10:29:40 Most people don't need to understand blockchain. Most people don't understand how Swift works. I don’t understand how my microwave works. They just need a much better, faster and more efficient and especially SAFE technology to transfer their money. I don't understand how computers work, but I use them. Do you, Mr. Walker, know exactly how the world works, because you are living in it? Asking for a friend.
12. Mr. Walker @10:29:48 The costs components are well known and quite clear. That is how Ripple has managed to build technology which reduces the risks and minifies the cost by orders of magnitude. It's called knowing your market and product, and that’s what businesses do. All the questions from the management scenario Mr. Walker proposed have been answered very clearly by Ripple. And they have provided the solution as well.
13. Mr. Walker @10:30:30 Improvements and value for the financial sector: little to nothing. There’s a man literally sitting next to you representing a company which literally proved that financial institutions can save up to 60% in costs. Saying that blockchain is pixel dust and that's it, resembles a trait of authority beyond debate. Mr. Walker's opinion is final because he worked in all these great places and knows everything about everything. And he proposes that we should wait 4 days for our money to arrive at immense fees and with a huge failure rate. While we can send an email or text message in seconds. And, somehow, blockchain and fads have blocked what Mr. Walker calls genuine financial innovation over time. Maybe that is the reason for which we have to wait 3 days for a transfer and pay a lot of money in fees, while we can send an email in seconds? Maybe that is why I can’t send 20 EUR through my bank, and nothing will arrive at the other end because of fees? Because people in banks have been „blocked” by fads? Thank you for trying to keep us in the financial Stone Age, my dear sir!
14. Mr. Walker @10:34:00 “Genuine innovation is hard: you need to be analytical, you need to be imaginative, you need to understand problems”. If he’s not talking about Ripple people here, I have no idea what he’s talking about. So (extremely simplified):
· Understanding problems: we are waiting for three days to receive a payment and we’re paying a lot of money in fees.
· Analytical: can this process be improved? What are the underlying problems and processes which cause the big problem?
· Imaginative: what if we think outside the box and add a digital asset to streamline the process and improve it considerably, by solving the underlying problems which cause the big problem?
15. Mr. Walker @10:34:22 „We have created an innovation theatre”. Yes, you have, and you’ve been part of the theatre for a long time now and I haven’t seen an innovative contribution from you or anything you have done. Now you are talking against the people who are actually contributing and breaking up that theatre with real solutions to real problems.
16. Mr. Walker's reaction @ 11:27:08 is an eye opener about how he treats information from people who have done the tests, have the results and talk with facts. He makes the following argument as basis of his appearance: the initial bitcoin blockchain has been modified so much that it has taken another form. The exact same thing happened with www and gave us these amazing tools which we use right now. History doesn't repeat itself, it rhymes.
17. Mr. Walker @10:30:40 That company which sells that digital asset (not cryptocurrencies) started by selling software which took years to build, refine and improve. And that's how it survived until it created enough value for that digital asset to be recognized by the market as valuable. Just like Apple, which started way before the Iphone was introduced to the market. The Iphone was bought because it was innovative and developed by a reputable company which sold solid products in the past. This is called evolution through hard work and dedication. No hype, no false promises, just hard, constant work. No, they haven't done "interesting things around payment messaging". They have a unique solution ready to be deployed at enterprise level to user level, top to bottom, to reduce costs and time. Exactly, they have also raised a lot of money from VC's, which proves their quality in the real business world.
18. Mr. Walker @11:31:45 Real people are buying crypto currencies and that gives them no rights as investors. Correct. They are buying the digital asset (XRP) used by a serious and reputable company (Ripple), with a clear track record. The difference is that these people know what they are buying, when it comes to Ripple and XRP. Those who buy other assets have a duty toward themselves to do research. Value is given by the market. ALL forms of money are made up. It is people's TRUST which gives that money value. That is why there the USD's value is higher than the Argentinian peso value. People trust USD more, at a very deep, foundational level. All the institutional structure and financial infrastructure supporting the USD strengthens that value. That's what Ripple is building for XRP: structure and infrastructure, to provide legitimate trust.
19. Mr. Walker @11:39:00 Buying stock in a company as a normal person does not place me on the same level as other investors in that company. If the company is badly managed, the stock price will go down and I will have nothing to say about it, unless I have voting rights or stock majority. I will just sell like all the others who have lost faith in the company. Again, an unreasonable comparison and argument provided by Mr. Walker.
20. Mr. Walker @10:12:36 Saying that blockchain technology has existed for 20-30 years is false. The concept has existed for a long time, but the infrastructure was not good enough. Just like the concept of AI has existed for a long time now, but there is no infrastructure in place for it to develop according to the vision we have now. So using the argument that the idea of blockchain has existed to render the innovation around the space as false is definitely troublesome. On the same note, the concept of wormholes and interplanetary travel has existed for a long time now, but we don't have the tech to do it. Does this mean that when we will improve the tech we won't regard it as innovation because we had that concept for 50 years?
21. Mr. Walker @10:13:45 Exactly, blockchain is developing to get people to agree. The cross border sector works so badly because of the lack of infrastructure/protocols in place. Ripple has built protocols, just like the Internet has protocols, to allow people to agree without friction. It eliminates user input for a big part because the protocol takes care of the process. Just like the email protocol: it is easy to send an email because all the companies which provide this service use the IMAP and POP3 protocols. Therefore, everyone agrees on the foundations of sending email and build applications on top of that layer. That’s what Ripple has already built for payments data. It’s there, it is working every day. The same answer stands for Mr. Walker @10:27:27 and @10:21:40: protocols and standards. Lack of unified protocols/consensus/standards is also a BIG reason for which regulation costs are so high across the world in the financial sector.
22. Mr. Walker @11:30:25 Cryptocurrencies raise a lot of red flags for Mr. Walker because he doesn’t really understand what XRP is actually doing in the Ripple tech ecosystem. This becomes obvious once you listen and realize that he has two mantras he keeps repeating: one is that the initial bitcoin blockchain has suffered modifications and second that there are red flags concerning cryptocurrencies. He repeats those mantras because he doesn’t understand the technology; naturally, he is afraid of that which he doesn’t understand. And that, my dear sir, is the REAL reason the financial sector hasn’t improved, because of people who are afraid of change and innovation like yourself.