Potential XRP risks as outlined by Joel Katz

[rossonero]

It is? Not on Bitstamp at least. Too bad, wanted to get more. 

[Konan45]

If risk factor analysis has you shook this is not the market for you.

[hammertoe]

18 minutes ago, mulder said:

looks like XRP crashing 

Turn your monitor the right way up

At least on USD:rhub / XRP there was a slight peak in XRPs value just now to 0.237, but it has returned back to around 0.233.

-Matt

[Jorgos]

Replace Ripple with 'X' in JK comments, and you'll see a list of potential risks / threats that can be applied to (tech) companies in general.

-----------------------------

• Someone else does almost exactly the same thing X does, but does it better.
• Unfavorable regulatory changes make X's business model impractical.
• Some serious technical problem is found in the X system and neither X or anyone else is able to fix it.
• Some horrible personal or business scandal affects X
• Someone comes up with a better way to do X

------------------------------

[cryptoxrp]

2 hours ago, zone said:

Always appreciate Joel's honesty but reading all that "you never know" makes me a bit doubtful about Ripple. I don't know for sure, but it sounds like he clearly knows Ripple isn't anywhere close to getting banks interested in XRP. Maybe the cost savings isn't much, maybe it's actually more expensive to hold XRP, maybe banks are perfectly fine with just using Ripple software...maybe I should put more in NEO instead since Chinese stocks have served me well in the past. Maybe...

 

@JoelKatzJust a thought about the "maybe banks are perfectly fine with just using Ripple (ILP) software" part of the sentence. Obviously there is a risk that banks will only use the Ripple ILP network with  their own "IOU crypto coins" and nostro/vostro accounts. Depending on the quality of the XRapid solution we will have the answer to that question in the very near future.

However maybe Ripple has another more "end-consumer" way of promoting XRP to the average Bitcoin investor. XRP in my honest opinion should be more and more promoted as a stable  international value currency with a Ripple supported userfriendly XRP wallet and user supportdesk. Also Ripple should develop a simple retail payment widget (in the Netherlands we have the Ideal payment widget which interfaces with different banks) which can be used in retail websites so our customers can pay us with XRP.

Ripple has been 'harvesting' millions of dollars worth of XRP the past year and it is (and I would like to emphasize this) capital which should ALSO be invested in "end-user solutions" and should definitely not dissappear in the pockets of +x Ripple managers or having +x offices around the globe. Ripple should make it a very high priority to focus on the people (end-user usecases) who are going to use XRP and those users/people will only then start trusting XRP as a stable "store of value".

By creating a XRP peer to peer payment system (where the Ripple liquidity pool can be used as a bank vault) a transition system can be created where "for the sake of value transfer" banks are no longer needed. A proprietary Ripple supported XRP wallet would set the international standard.

Don't forget that banks are only a group of people working together with a bank license. Nothing more. In the Ripple business case I am at present missing the direct end-user/customer focus. All is indirect via banks and api's. In the end the end-users will determine the XRP cryptocoin/token value and landscape and not the banks. That the banks will be the early "XRP usage engine" I beleive is a misconception. Banks will initially focus on "easy money makers, easy low-risk cost cutting, defending their cash-cows". It is "the people" who want change, banks imho do not have that sense of urgency. They will only start feeling that sense of urgency if some other financial entity has the capability to take over their business!

In other words: I beleive that we need the average Joe's (banks have their own business agenda) to help build XRP strength and trust.

Additionally I beleive the escrow solution Ripple is planning to implement is far to luxurious. A maximum release of 250 million XRP tokens per months is more than adequate to fullfill the needs. Any monthly XRP sales above the 250 million should go to the public exhanges which will support the price and the much needed trust in the XRP value.

[RecentChange]

2 hours ago, Siniath said:

I still think the greatest risk to XRP is bitcoin. You never know when it's going to burst but one thing is certain: it will take us down with it. 

A sharp drop in price will make FIs very wary of the whole crypto space. It could throw us back years. 

So imo it's going to be a race: will XRP be adopted first or will bitcoin crash first. 

This is what I worry about. Xrp will eventually go up after the fall of bitcoin. There should be tons of news in the next few years of banks/companies joining. 

[JoelKatz]

I do believe that people have a right to know and understand what Ripple's prospects are and what the risks are. I see a lot of people focusing on what I think are the wrong risks. For example, I don't think Bitcoin and Swift are really potential competitors because neither of them is trying to do what Ripple's doing. (Ripple is much more harmed by bad things happening to bitcoin than good things.) I could be wrong about that, of course, but that's my view.

When I say "who knows", what I mean is that I don't know of any specific reason or way that this particular risk would materialize. But these are the ones that I worry the most about and these are the ones I'm actively trying to make sure we avoid.

I try as hard as I can to be honest about both our strengths and our weaknesses because the long term health of both the company and the XRP market is important to me.

Oh, and as for:

Quote

... maybe banks are perfectly fine with just using Ripple software ...

I don't think that's something to worry about. Once they're using our software, there are no technical obstacles to using XRP. If we can make it save more money, I can't imagine banks turning it down. Of course, if we can't make it save banks money or improve their payment flows, they won't use it -- but that's on us, not the banks.

[quietboy]

@JoelKatz Do banks on Ripplenet still require nostro/vostro accounts? Speed is one thing XRP improves upon. However, if using XRP as a source of liquidity means bank don't need to manage liquidity in multiple currencies...that's a massive reason to use XRP. 

[JoelKatz]

Just now, quietboy said:

@JoelKatz Do banks on Ripplenet still require nostro/vostro accounts? Speed is one thing XRP improves upon. However, if using XRP as a source of liquidity means bank don't need to manage liquidity in multiple currencies...that's a massive reason to use XRP. 

RippleNet is sort of agnostic to how the money moves. You can use traditional correspondent banking. You can use a RippleNet member that has the reach you need (like EarthPort). Or you can use XRP. Right now, most destinations are not reachable through XRP, so you still need nostro/vostro accounts or you need to use a partner that has them.

This is kind of our two-phase plan. The lack of XRP liquidity does not prevent people from getting value from RippleNet. So we can continue to build the network and find the corridors where XRP liquidity can really make a difference and then incentivize liquidity in those corridors. We can also focus on corridors where there's already XRP liquidity by targeting partners who have payments there.

See here if you haven't seen it already:
https://ripple.com/solutions/source-liquidity/

[Zerponaut]

@zone maybe you should sell any XRP you might have and buy into NEO or BTC. Either of them could go to the moon or tank unexpectedly too. You never know.

[LaBelleSaison]

15 minutes ago, JoelKatz said:

Oh, and as for:

... maybe banks are perfectly fine with just using Ripple software ...  

I don't think that's something to worry about. Once they're using our software, there are no technical obstacles to using XRP. If we can make it save more money, I can't imagine banks turning it down. Of course, if we can't make it save banks money or improve their payment flows, they won't use it -- but that's on us, not the banks.

Quote

This is kind of our two-phase plan. The lack of XRP liquidity does not prevent people from getting value from RippleNet. So we can continue to build the network and find the corridors where XRP liquidity can really make a difference and then incentivize liquidity in those corridors. We can also focus on corridors where there's already XRP liquidity by targeting partners who have payments there.

Thank you, JK. Your comments remove all the clouds for me. 

[Zerponaut]

1 hour ago, Jorgos said:

Replace Ripple with 'X' in JK comments, and you'll see a list of potential risks / threats that can be applied to (tech) companies in general.

-----------------------------

• Someone else does almost exactly the same thing X does, but does it better.
• Unfavorable regulatory changes make X's business model impractical.
• Some serious technical problem is found in the X system and neither X or anyone else is able to fix it.
• Some horrible personal or business scandal affects X
• Someone comes up with a better way to do X

------------------------------

Heck, lets replace it with 'Bitcoin' and see what happens

• Someone else does almost exactly the same thing Bitcoin does, but does it better. Where to start and end the list here?
• Unfavorable regulatory changes make Bitcoin's business model impractical. What business model?
• Some serious technical problem is found in the Bitcoin system and neither Bitcoin or anyone else is able to fix it. Transaction times, Transaction cost, centralization, 51% consensus
• Some horrible personal or business scandal affects Bitcoin Mt. Gox, BTC/USDT pairing
• Someone comes up with a better way to do Bitcoin Just about everyone in the last 8 years

Nope, no effect whatsoever.

Edited November 22, 2017 by FunkyGiraffe

[Konan45]

1 hour ago, strikerjax said:

This is what I worry about. Xrp will eventually go up after the fall of bitcoin. There should be tons of news in the next few years of banks/companies joining. 

Yes this is the real problem. The enormous growth this year seems what I would say is 2 or 3 steps too early.

Smart money has to be one step early so by the time values reflect use cases you made money by speculation and prediction.

Unfortunately we are far off use cases justifying this market by a wide gap and that gap leaves risk of a major crash back to pre-March '17 prices very possible.

Sure things will come back with implementation in 3-5 years, but BTC and by extension all others could easily lose everything gained in the process.

In fact if I could influence the market and had a 5 year time frame, I would want that to happen.

Edit: what I mean is we are some years out from legitimate, standalone price independence from the wider market. Regardless of how different the uses are and how prices rationally should not interact we are still at the mercy of how long the market will view BTC with the "store of value" justification rather than a pyramid scheme.

Edited November 22, 2017 by Konan45

[Guest]

5 minutes ago, FunkyGiraffe said:

Heck, lets replace it with 'Bitcoin' and see what happens

• Someone else does almost exactly the same thing Bitcoin does, but does it better. Where to start and end the list here?
• Unfavorable regulatory changes make Bitcoin's business model impractical. What business model?
• Some serious technical problem is found in the Bitcoin system and neither Bitcoin or anyone else is able to fix it. Transaction times, Transaction cots, centralization, 51% consensus
• Some horrible personal or business scandal affects Bitcoin Mt. Gox, BTC/USDT pairing
• Someone comes up with a better way to do Bitcoin Just about everyone in the last 8 years

Nope, no effect whatsoever.

Done in one! Good job. 

[quietboy]

35 minutes ago, JoelKatz said:

RippleNet is sort of agnostic to how the money moves. You can use traditional correspondent banking. You can use a RippleNet member that has the reach you need (like EarthPort). Or you can use XRP. Right now, most destinations are not reachable through XRP, so you still need nostro/vostro accounts or you need to use a partner that has them.

This is kind of our two-phase plan. The lack of XRP liquidity does not prevent people from getting value from RippleNet. So we can continue to build the network and find the corridors where XRP liquidity can really make a difference and then incentivize liquidity in those corridors. We can also focus on corridors where there's already XRP liquidity by targeting partners who have payments there.

See here if you haven't seen it already:
https://ripple.com/solutions/source-liquidity/

Get it, thanks! So for now it makes sense to grow the number of banks on ripple net. Once there are enough partner banks on it in every corner of the world, the use case for XRP becomes evident.