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About Montoya

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  1. The USD is not pegged though. It has a free floating exchange rate. My point being that XRP needs to have a floating exchange rate to be useful for market making. Otehrwise it cannot expand and contract with demand.
  2. Pegging the price of XRP would make it worthless as a bridge currency. It would create the same distortions as price setting any commodity.
  3. I can see the world definitely wanting to shift away from USD hegemony for various reasons. And I am familiar with the role of SDR. I think it would be greatly beneficial. But, once again, it is not governments who will be providing liquidity in the Ripple model, it is commercial market makers. If we have XRP and USD cryptos competing, I don't see people preferring a less liquid asset as a bridge. Obviously this could all change very quickly, and if that is the argument that most of you are making, then I can understand your point. But, if we assume the dollar maintains its preferential place as world reserve currency for the next 2-5 years, in which time a USD crypto is released, would my concerns not be valid? I think the misunderstanding is occurring because you guys are talking about what is ideal and I am asking what is probable. I agree with you that the USD crypto would have a host of problems. A non-state asset would be far better for a number of reasons, both for the US and other countries. But my question is, what would actually happen if a USD crypto were introduced in say a years time. Everyone complains about the current dollar hegemony, but there seem to be very few concrete steps to change it. Barring other unforeseen developments, what impact would a crypto USD have?
  4. Our money is NOT currently digitized though. I think that is one the biggest misconceptions here. What IS digitized in our current system are bank IOUs. You trade your physical dollars (which act as assets) in exchange for an IOU from whatever bank you utilize.
  5. It would need no rails. That is the whole point. What rail does bitcoin ride? It rides on the blockchain. A USD crypto would do the same. The Federal Reserve would control the blockchain as you mentioned. A fed ledger would not need to support philippine pesos either, or any other currency to be of use as a bridge currency. All that would be needed is someone in the philippines who has a local bank account and wants to buy USD crypto in exchange for pesos (ie market maker). It would be no different than buying bitcoin.
  6. A good point. But if a crypto USD existed, would they rather hold that than XRP?
  7. Wouldn't this exact thing be possible though with a US crypto? The only counterparty risk with such a coin would be the US gov. the same as a physical greenback. No pile would be needed at the other end because the US dollar is accepted almost universally. The liquidity available in such a case would likely far outstretch and local XRP markets.
  8. I agree with you that other nations dislike the U.S. dollar being the world reserve currency. I also agree that the U.S. stranglehold is being eroded by the Triffin paradox. But the problem is this...it isn't nations who will be making markets, it is traders. They will ultimately decide which currency is the most beneficial for bridging. Yes, govs can affect influence on this, but only to a point. At the end of the day, people keep investing in the dollar, they keep buying US debt, not because they love it, but because every other currency and bond somehow manages to be even worse. Down the road, I fully expect the US dollar to lose its status as reserve currency. However, I am solely discussing the near future, and whether Ripple's use case for XRP would be undercut by a crypto dollar. I cannot see how it would not be.
  9. Ok. But how? Everyone keeps assuring me that it will all work out, but no one is explaining it. I suppose I could comb through the video link provided to the SWELL conference, but it is an hour long. Can't one of you just explain why it wont affect the XRP use case in the way I mentioned? Since ostensibly you have watched it?
  10. What do you think a bridge currency is if not a currency (most) everyone will accept? I think you are confusing a debt instrument and an asset here. Money in a bank account (our current system) is a debt based system, and likely a completely different animal from what a crypto $ would be. A crypto $ would be analogous to a physical greenback, meaning it would be a bearer instrument. While technically greenbacks do have counterparty risk, ie: the US gov, in practice they are treated by users as if they have no counterparty risk, so functionally they perform as if they were an asset. This is completely different from US $ represented in bank accounts. This is a debt based system, meaning you sell your physical cash (an asset) to the bank in exchange for their IOU. Thus a bank balance US $ bears not only the counterparty risk of the US gov, as mentioned above, but also of the institution whom the depositor has trusted. A bank balance then is simply an IOU of an IOU. This is not what I'm talking about. I'm talking about a crypto that is an analog of the physical US greenback. Perhaps, you say, I am wrong and it wouldn't be this way. But then why create one at all? As you say, we already have a digital debt based accounting system. What would be the point of putting it on a blockchain? The only conclusion I can come to is that the crypto $ will only bear the counterparty risk of the US gov, which, as we can see from current global economic behavior, people treat as essentially no counterparty risk at all. If that is indeed the case, settlement in value would be instant (the same as XRP) and only bear the counterparty risk of the US gov. There would be no holding portion. The on demand liquidity would be provided in exactly the same fashion as it is with XRP, by a market determined group of forex traders. Only now they could trade in US$ instantly instead of a niche crypto asset such as XRP. The only caveats I can think of that would lead people to possibly want to use XRP over the dollar would be to avoid US gov interference or political control. I just cannot see that being a very deep market. And besides, Ripple, controlling 50 billion XRP and being based in the US would likely be subject to the exact same political control anyway. Perhaps you are right and I simply "don't understand the use case of XRP", but so far you have failed to enlighten me. I would like nothing more than to be proven incorrect here.
  11. The physical U.S. $ (not the current digital representations in bank accounts) is, for all intents and purposes a "nation neutral digital asset". A crypto dollar would be analogous to that. You seem to be positing that there would be more people, in more countries, willing to accept XRP than would accept crypto $. Do you think that is realistic? In your example, how would trading your E-Yuan for XRP be any better than trading it for US$ crypto? Wouldn't the US$ crypto be likely to be accepted in more places and by more people than XRP? Wouldn't it therefore be a more useful and sensible go-between? From an ideological standpoint, I agree with you, and would like to see a non-state backed currency. But most people would rather just use the dollar out of convenience.
  12. But why would any liquidity provider want to use XRP? Rather than US$ crypto? If the dollar is a cryptocurrency, then it is as good as a green back. It is a bearer instrument, which means the only counter-party risk is the U.S. government. Most people seem to treat that risk as non-existent. For practical purposes, a U.S.$ crypto would essentially be counter-party risk free.
  13. But why would anyone conduct forex with XRP as a go-between instead of say, a crypto dollar? Especially when a crypto dollar would instantly have magnitudes more liquidity and be accepted pretty much in every country on earth. It would simply swamp any XRP corridors.
  14. From the sounds of it, China will be releasing a crypto-yuan in less than a year. The US Fed has announced that they, too, are working on a crypto-dollar. My question is this: with the impending availability of state backed cryptocurrencies, is there any role for XRP? From an ideological perspective I can see the value of wanting to hold a non-state-controlled asset, but most people don't care about ideology and have no problem with state monetary control. From a purely business perspective, how can Ripple be expected to compete with the liquidity that governments can bring to bear in their respective cryptocurrencies? Governments can literally force liquidity on the market. If china or/and the U.S. introduce a crypto, it will have immediate market depth that dwarfs anything else. Why would remittance operators not utilize them instead of XRP? And if XRP is not getting used to facilitate cross border liquidity, why would anyone speculate in it? If no one is speculating in it, the liquidity would drop further. It would be a vicious feedback loop. The only possible reason that I could see that people may still prefer to speculate in a non-state crypto over a state crypto is the prospect of deflationary value gain, but that is a stretch IMO. I guess we will have to wait and see how profligate government spending continues to get.
  15. It would possibly be a criminal act for Ripple to do this as it would violate their fiduciary responsibility to shareholders. It is mathematically not in their interest to do so. They would be losing more in market cap than they would stand to gain in any increased value. It would essentially be a wealth transfer from Ripple to other XRP holders.
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