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David Schwartz questions and answers on Quora about Ripple


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The anwer to 

Question 11 really doesn't make sense, k they build the tech just like ripple and then use their native token just like ripple then. What am I missing here??????

Edited by 1qtboye
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18 minutes ago, 1qtboye said:

The anwer to 

Question 11 really doesn't make sense, k they build the tech just like ripple and then use their native token just like ripple then. What am I missing here??????

My answer is, swift will make ripple a tough competitor 

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19 minutes ago, 1qtboye said:

The anwer to 

Question 11 really doesn't make sense, k they build the tech just like ripple and then use their native token just like ripple then. What am I missing here??????

My major concern with Ripple is that they might take too long to execute and then the big players with infrastructure and cash flow come in to dominate. Similar to what has happened to Oculus for example. Awesome concept, but they failed to take the market. I suppose we just need to work out why Oculus didn't dominate even though they had the best product... as an example.

Don't get me wrong, I'm really happy with Ripple's progress and I can't think of how I would make things move faster, but Ripple must understand that it's at that critical stage where they're dumping blood in the water and there is going to be a feeding frenzy. 

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10 minutes ago, johnny said:

My major concern with Ripple is that they might take too long to execute and then the big players with infrastructure and cash flow come in to dominate. Similar to what has happened to Oculus for example. Awesome concept, but they failed to take the market. I suppose we just need to work out why Oculus didn't dominate even though they had the best product... as an example.

Don't get me wrong, I'm really happy with Ripple's progress and I can't think of how I would make things move faster, but Ripple must understand that it's at that critical stage where they're dumping blood in the water and there is going to be a feeding frenzy. 

You got the point....too long to execute and there will be more advance tech in the coming years if they are too slow

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59 minutes ago, JoelKatz said:

That's great. Ripple is doing all of those things because they are necessary pre-conditions for Ripple's XRP strategy to work. The more fast and efficient payments are, the more demand there is for rapid settlement.

The innovation behind XRP is XRP. Another token would just be another private banking token -- exactly what banks use today, and settlement takes days.

Exactly. My understanding is the key is not to use the just any digital.            " Token" but the common " token used by all", which has to be independent, otherwise its no different to current system of text msging between one bank stating to another, we owe u this much money but it gets settled later due to time taken in exchanging fiats in background, and meanwhile financial institutions are exposed to one of them defaulting. 

Edited by Rchopra
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1 hour ago, JoelKatz said:

That's great. Ripple is doing all of those things because they are necessary pre-conditions for Ripple's XRP strategy to work. The more fast and efficient payments are, the more demand there is for rapid settlement.

The innovation behind XRP is XRP. Another token would just be another private banking token -- exactly what banks use today, and settlement takes days.

Can you elaborate how XRP determines its value against a range of currencies and how bank hedges their positions when holding XRP for the transaction duration (which could be seconds or a week if it's against something that needs to be validated?).

I am not very sure how XRP works targeting inefficient corridors like SGD/THB.

 

Scenario A :

Bank A wants to transfer $10mil USD to bank B, it will get hold of the required amount of XRP (assume price is USD$1,000).

In this scenario, Bank A buys the usd$1,000 XRP and immediately within the second, Bank B acknowledges the receipt and credit it to their account.

This should have no impact of any sort.

 

Scenario B :

Buyer uses Bank A to transfer $10mil SGD worth of Letter of Credit to Seller represented by Bank B, Bank B Verifies and acknowledge the LOC validity.

In this case, $10mil USD worth of XRP tokens will need to be held in escrow by Bank B until Seller submits proof of delivery to Buyer.

For this case, if there is a currency fluctuation, it is the Seller who needs to hedge his position (not the bank).

 

Scenario C:

Bank A does a currency pair of SGD/THB to Bank B (thai bank), Bank A buys the requisite amount of XRP  (assumed SGD$1360 per XRP if XRP is at USD$1000) and sends the XRP to Bank B.

Bank B acknowledge receipt of the XRP and instantly converts the position to a THB (assumed 1 XRP is THB$25000).

Does this means XRP will just be based on the spot rate (without the bid/ask spread) of the forex currency pair in question?

 

Thanks.

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23 minutes ago, missdaboat said:

Scenario C:

Bank A does a currency pair of SGD/THB to Bank B (thai bank), Bank A buys the requisite amount of XRP  (assumed SGD$1360 per XRP if XRP is at USD$1000) and sends the XRP to Bank B.

Bank B acknowledge receipt of the XRP and instantly converts the position to a THB (assumed 1 XRP is THB$25000).

Does this means XRP will just be based on the spot rate (without the bid/ask spread) of the forex currency pair in question?

In one atomic transaction that both pays and settles, bank A would transfer ownership of the SGD from the sender, bank B would transfer ownership of the THB to the recipient, and the recipient of the SGD would make an XRP payment to the provider of the THB. The party that winds up with the SGD may or may not be the sending bank. The party that previously owned the THB that the recipient now owns may or may not be the receiving bank.

The party that provided the XRP was wiling to do so in exchange for ownership of SGD at the sending bank. The party that provided the THB already had THB at the receiving bank that they were willing to sell for XRP. (Or, at least, very "near" the sending/receiving banks.)

If the bank is the party providing or accepting the XRP, they are netting out a number of payments and can be periodically rebalancing by buying/selling XRP.

It can also be market makers who do the SGD/XRP and XRP->THB conversions. You can imagine a consortium of banks that handle SGD that use domestic settlement between them and have a common path to/from XRP that they use to settle with similar consortia elsewhere.

Banks can also just hold XRP and hedge the fluctuation risk. But that's probably not going to be the cheapest solution in the short term.

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Regarding question 12: The answer was near exclusively directed at Stellar, the company/organization. What are your thoughts on Stellar, the technology (stellard after all was deprecated and they wrote https://github.com/stellar/stellar-core) and their changes to Ripple style Consensus (called SCP by them) which seems very similar (UNLs <--> quorum sets) in some regards but also differs in some places?

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@JoelKatz Thanks for taking the time for the quora session Q&A - awesome reference material!   Sometimes it's the common-sense business answers that are the most powerful:

Quote

I think that’s kind of the wrong question to ask. If banks are using the Ripple payment network, they’ll have no technical obstacles to using XRP. It will then become a business decision. If it’s cheaper, faster, and better, they’ll probably use it. If it isn’t, they probably won’t.

:sun_bespectacled:

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