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29 minutes ago, JoelKatz said:

The argument goes like this:

1) A significant fraction of volume will require a vehicle currency.

2) It will be a crypto-currency.

3) It will be XRP.

 

I'm not concerned about the technology but about the markets, regulation and banks.

- Why a bank should make business with big market makers that connect their ledger with a cryptocurrency? Do you think they will allow this? Why should't they prefer a USD private ledger as bridge, where the regulation is clear already? What's the advantage of XRP w.r.t. any other bridge in ILP?

- Is XRP stable enough to be a bridge currency?

-What will be the role of IOUs on RCL in a ILP powered network?

My answers AS NOW are: NO, NO, useless. But time will tell :)

Edited by tulo

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7 minutes ago, tulo said:

I'm not concerned about the technology but about the markets, regulation and banks.

- Why a bank should make business with big market makers that connect their ledger with a cryptocurrency? Do you think they will allow this? Why should't they prefer a USD private ledger as bridge, where the regulation is clear already?

      because over RCL/XRP will be cheaper

- Is XRP stable enough to be a bridge currency?

      no need for a stable bridge currency as long as the spread is low enough - as per payment/transaction XRP will fill in its role in a time frame of a few seconds

-What will be the role of IOUs on RCL in a ILP powered network?

      real world usage: one side wants to pay in USD and receiver accepts JPY. Over RCL the most favorable path will be offered over USD>XRP > XRP>JPY

My answers AS NOW are: NO, NO, useless. But time will tell :)

 

Edited by kanaas

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8 minutes ago, tulo said:

I'm not concerned about the technology but about the markets, regulation and banks.

- Why a bank should make business with big market makers that connect their ledger with a cryptocurrency? Do you think they will allow this? Why should't they prefer a USD private ledger as bridge, where the regulation is clear already? 

Every ILP transaction will be one that has no technical obstacles to being bridged by XRP. There's no playing field.

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37 minutes ago, JoelKatz said:

The argument goes like this:

1) A significant fraction of volume will require a vehicle currency.

2) It will be a crypto-currency.

3) It will be XRP.

I've fleshed out each of these three points a couple of times but would be happy to answer questions about them. Every ILP transaction will be one that has no technical obstacles to being bridged by XRP. Today, almost all payments would encounter technical obstacles if you tried to bridge them with XRP. XRP is not only not competing on a level playing field, there's no playing field.

RCL/XRP is just one of the way we plan to profit from ILP. It is possible for ILP to succeed and Ripple to still fail if others do everything better than we do. But pretty much all of our current strategies, for both RCL and other products, need ILP to succeed in order to have a market. If you had the idea for Twitter, Google, Amazon, and Facebook but the Internet didn't exist, you'd do what you had to do to get it built and then hope that you don't become Altavista, GeoCities, and Flooz.

I'm completely with you and have a lot of faith in the brilliant idea of ILP/RCL as a unique blockchain AND legacy-agnostic forex market that is open at use by all MM's and end-users (from individuals to large Financial Institutions) 
But the key is volume and getting MM's on board.
So we all here are eagerly waiting for some news on the MM front as that's the real barometer of heath, viewing the Ripple solutions.
So @JoelKatz: Can you unveil something on that front? I remember you once said not to expect much on this before year end. Is that still the case?
It would be great to here more about the MM initiatives.

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17 minutes ago, Morty said:

Every ILP transaction will be one that has no technical obstacles to being bridged by XRP. There's no playing field.

Exactly! Besides MM's, no payer/receiver will even know that they used XRP. They just will notice a very nice FX-rate.
Banks can use ILP/RCL on both sides without having even one tenth of an XRP on an account - they even do not need a Ripple account - ILP will use the best of Ripple for them. It's like you send a parcel by DHL: you do not care if that parcel went over the pont by aviation or by ship - do you? You just like that it's crossing the Atlantic fast (and cheap)...

Edited by kanaas

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1 hour ago, Morty said:

Every ILP transaction will be one that has no technical obstacles to being bridged by XRP. There's no playing field.

No technical obstacles but market/banks obstacles. If a bank doesn't allow a market maker to operate in their ledger then XRP cannot be a bridge...

@kanaas why over RCL will be cheaper? With ILP every currency will be cheap. The FX rate will be only decided by spread and in big USD market the spread is less than Ripple...

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1 hour ago, tulo said:

@kanaas why over RCL will be cheaper? With ILP every currency will be cheap. The FX rate will be only decided by spread and in big USD market the spread is less than Ripple...

In ForeX markets the rate is partly made up by the services that supports it. If one transacts from USD to JPY it goes by a certain service delivered by a bank or a ForeX market. And they are not working for free. In all those cases the cost has 2 components: one in the rate (the spread) and one in a % cost for the service. With RCL, it's integrated in the network, therefor lacking additional servicecosts, and where (once its full operating) MM's will compete for the best rates on one or more IOU pairs. What Ripple expect (and IMO they have that right) is that the path over RCL will always become the cheapest, if there is enough liquidity on a pair, because this by MM's created spread, de facto will be the ONLY cost of the ForeX component on a transaction. External, or a by bank running ForeX, will always be more expensive due to the extra service costs.

Edited by kanaas

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1 hour ago, tulo said:

No technical obstacles but market/banks obstacles. If a bank doesn't allow a market maker to operate in their ledger then XRP cannot be a bridge...

 

Banks cannot prevent MM's to operate on the Ripple network. They can of course use ILP and avoid using RCL by dictating their own path of choice. But if the free path is way cheaper, why would they avoid it? 

BTW by operating on RCL an MM doesn't touch the ledger of a bank, doesn't even come close to it.

Edited by kanaas

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46 minutes ago, kanaas said:

Banks cannot prevent MM's to operate on the Ripple network. They can of course use ILP and avoid using RCL by dictating their own path of choice. But if the free path is way cheaper, why would they avoid it? 

BTW by operating on RCL an MM doesn't touch the ledger of a bank, doesn't even come close to it.

This is again not clear to most of people. The MMs in ILP have to operate in 2 ledgers (for example XRP.RCL and USD.PrivateBank). If one of the ledgers doesn't allow the MM to operate (banks for example only "accepting" MMs not operating with crypto) you don't have the bridge and you don't have the connection between ledgers. 

About the costs: if banks are smart enough they let MMs operate with their currencies without fees (to get best FX rates), otherwise they would loose the whole advantages of ILP. So USD in a private ledger is at the same level of XRP as costs, but more stable and more regulated.

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1 hour ago, tulo said:

This is again not clear to most of people. The MMs in ILP have to operate in 2 ledgers (for example XRP.RCL and USD.PrivateBank). If one of the ledgers doesn't allow the MM to operate (banks for example only "accepting" MMs not operating with crypto) you don't have the bridge and you don't have the connection between ledgers. 

About the costs: if banks are smart enough they let MMs operate with their currencies without fees (to get best FX rates), otherwise they would loose the whole advantages of ILP. So USD in a private ledger is at the same level of XRP as costs, but more stable and more regulated.

I might not understand exactly how it works, but thought to understand that with RippleConnect the bank defines to be an issuer of an IOU.bank and every MM on the RCL has access to that IOU and can trade it. How this translates in a pure ILP environment (where there is no RippleConnect) isn't clear for me as well.

Maybe someone, ie @Ripple Support , can explain this in layman's words?

Edited by kanaas

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24 minutes ago, kanaas said:

I might not understand exactly how it works, but thought to understand that with RippleConnect the bank defines to be an issuer of an IOU.bank and every MM on the RCL has access to that IOU and can trade it. How this translates in a pure ILP environment (where there is no RippleConnect) isn't clear for me as well.

Maybe someone, ie @Ripple Support

You are talking about RCL. If you see my message above my concerns are in a fully ILP network (that seems the most likely to succeed).

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7 hours ago, tulo said:

- Why a bank should make business with big market makers that connect their ledger with a cryptocurrency? Do you think they will allow this? Why should't they prefer a USD private ledger as bridge, where the regulation is clear already? What's the advantage of XRP w.r.t. any other bridge in ILP?

- Is XRP stable enough to be a bridge currency?

-What will be the role of IOUs on RCL in a ILP powered network?

My answers AS NOW are: NO, NO, useless. But time will tell :)

In the order you asked:

This is kind of like asking why music download services will succeed if musicians prefer to sell CDs. Ultimately, it won't matter what they prefer. Those who insist on options that cost more will lose market share to those who don't. The primary advantage of XRP over some kind of fiat is that it's jurisdiction neutral -- it doesn't require you to enter into an arrangement with one particular counterparty.

XRP stability doesn't affect the endpoints, but it does affect those in the middle of the trade. Instability means it moves up and down, and those who hold XRP benefit when it moves up. So on average, it's a wash in terms of gain/loss. But still you have the costs associated with managing that risk. The more stable the price of XRP is, the better it works as a bridge currency, but it can be pretty unstable and that not add significantly to the spreads. To some extent it's a problem that solves itself -- if the volume is enough that the volatility is a problem, the volume will reduce the volatility.

I expect the role of IOUs on RCL to reduce over time. This assumes that there exist robust ILP exchanges that are at least as good as RCL's internal order book and pathfinding.

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