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XRP - The Standard (Big read)


JCCollins
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On 9/12/2018 at 9:50 PM, ADingoAteMyXRP said:

if nations have their own digital fiat that matches the speed and efficiency of XRP (which they eventually will) then XRP would become unnecessary as a bridge because those national currencies (since they exist on a distributed ledger) will be global in scope.

If I have digital USD and I’m trying to remit as digital Yen, I simply find a market maker willing to trade that digital USD for digital Yen, then transfer the Yen to the new account. Similar to XRapid but simpler. 

The reason XRP is necessary right now, is that those currencies are not digital and global. XRP might still be useful for rare pairs, but other than that it would just add friction to that transaction.

I think what you may be missing here is the fact that when nations create their own digital fiat, each of them will function as a walled garden and not have the liquidity need to accomplish what you are claiming. That is the whole point of a neutral bridging asset that allows for the instant trade of digital USD for digital Yen. Just because a fiat becomes digital does not automatically make it globally instant and liquid.

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14 hours ago, JCCollins said:

Hard to say for sure.  In theory, they could.  But it's important that everyone understands the point of XRP and Interledger.  Your original comment indicated that central banks could just use their own digital assets instead of XRP.  That was your position.  I would propose to you that the more central banks develop their own digital assets the more XRP and Interledger will be used to transfer value across all the assets.  There is a misunderstanding out there that central bank digital assets are a threat to XRP.  It is, in fact, the opposite.  Interledger creates the ability to transfer value across all ledgers and assets, seamlessly, fast, and at fractions of the cost, it takes today.  Whether central banks decide to hold some XRP in reserve is not consequential to the function of XRP and Interledger.  Does this make sense to you?

About my first original comment. For me it's hard to believe that central bank (any country) must use XRP in order to work with Interledger. That's why I clarify my question if any country must have an XRP reserve to work in Interledger. I read several time your answer here. I found that central banks can operate with interledger with or without XRP reserve. Am I correct? If yes, that's make sense. Thanks

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22 minutes ago, Edm22 said:

I think what you may be missing here is the fact that when nations create their own digital fiat, each of them will function as a walled garden and not have the liquidity need to accomplish what you are claiming. That is the whole point of a neutral bridging asset that allows for the instant trade of digital USD for digital Yen. Just because a fiat becomes digital does not automatically make it globally instant and liquid.

I see your point, but would argue that we have a very liquid forex market right now. Illiquid corridors will always benefit from XRP as a bridging asset, but the major innovation for primary pair exchange (at the moment) is that XRP can be transferred instantly between wallets. Once fiat is digital, that solve won't be as gamechanging.

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3 hours ago, FreedomGundam said:

About my first original comment. For me it's hard to believe that central bank (any country) must use XRP in order to work with Interledger. That's why I clarify my question if any country must have an XRP reserve to work in Interledger. I read several time your answer here. I found that central banks can operate with interledger with or without XRP reserve. Am I correct? If yes, that's make sense. Thanks

I don't think you're understanding right.  They don't need XRP reserves to use Interledger, but XRP (xRapid) can still be used to complete exchanges. So can xCurrent. But using XRP creates even more efficiency and cost savings. Central banks can still use xRapid without holding XRP on reserve.  That is the beauty of Interledger.

Quick edit to clarify: Central banks can still use XRP without holding XRP on reserve.  Is that how you are understanding it?

Edited by JCCollins
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1 hour ago, JCCollins said:

I don't think you're understanding right.  They don't need XRP reserves to use Interledger, but XRP (xRapid) can still be used to complete exchanges. So can xCurrent. But using XRP creates even more efficiency and cost savings. Central banks can still use xRapid without holding XRP on reserve.  That is the beauty of Interledger.

Quick edit to clarify: Central banks can still use XRP without holding XRP on reserve.  Is that how you are understanding it?

Thanks for the great writeup.

Yes, this is my understanding:

ILP can be used with any ledgers, with any currencies

The benefit of using XRP is that central banks no longer need to hold large amounts USD or a combination of many currencies, and instead can use a 'neutral' currency like XRP to provide liquidity in exchanges

I can see central banks wanting to hold XRP reserves, and they would need very large amounts if they want to support the daily volume of transactions. About $5T of USD is held in reserves, right?

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30 minutes ago, stdyrm said:

Thanks for the great writeup.

Yes, this is my understanding:

ILP can be used with any ledgers, with any currencies

The benefit of using XRP is that central banks no longer need to hold large amounts USD or a combination of many currencies, and instead can use a 'neutral' currency like XRP to provide liquidity in exchanges

I can see central banks wanting to hold XRP reserves, and they would need very large amounts if they want to support the daily volume of transactions. About $5T of USD is held in reserves, right?

My understanding is that they do not have to hold the reserves since the XRapid software sources the XRP from Market Makers when the transactions are ordered.  So it is the Market Makers that have to hold the reserves, but yes Central banks might want to hold their own reserves too.

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5 minutes ago, Julian_Williams said:

My understanding is that they do not have to hold the reserves since the XRapid software sources the XRP from Market Makers when the transactions are ordered.  So it is the Market Makers that have to hold the reserves, but yes Central banks might want to hold their own reserves too.

Ah, thanks for the clarification. Okay, that makes sense. Yeah, I do think the central banks might want to hold their own reserves also. But the great benefit of using XRP is central banks hold much less in reserves (which is in line with what Ripple and the community have been saying). This is a huge benefit, beyond the benefits of just using ILP.

But anyway, I guess the collection of market makers would need to hold large amounts of XRP to support liquidity for the exchange ... which the current market cap of XRP is not nearly high enough to support even if Ripple held 0 XRP (if/when of course, XRP becomes a bridge currency). It almost sounds too good to be true 

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2 minutes ago, stdyrm said:

Ah, thanks for the clarification. Okay, that makes sense. Yeah, I do think the central banks might want to hold their own reserves also. But the great benefit of using XRP is central banks hold much less in reserves (which is in line with what Ripple and the community have been saying). This is a huge benefit, beyond the benefits of just using ILP.

But anyway, I guess the collection of market makers would need to hold large amounts of XRP to support liquidity for the exchange ... which the current market cap of XRP is not nearly high enough to support even if Ripple held 0 XRP (if/when of course, XRP becomes a bridge currency). It almost sounds too good to be true 

Yes I agree with everything you write there.

I sometimes wonder if it is correct to say XRP eliminates Vostro Nostro accounts, it might be more truthful to say it unifies them into one bridge currency which make more efficient use of the reserves held waiting for usage in cross border transactions.  Maybe instead of locking up 27 trillion they would have 5 trillion locked up in XRP, that in itself would make XRP worth at least $50 if my maths is right, and much more in practice. So lets keep our fingers crossed that it happens.

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6 minutes ago, Julian_Williams said:

Yes I agree with everything you write there.

I sometimes wonder if it is correct to say XRP eliminates Vostro Nostro accounts, it might be more truthful to say it unifies them into one bridge currency which make more efficient use of the reserves held waiting for usage in cross border transactions.  Maybe instead of locking up 27 trillion they would have 5 trillion locked up in XRP, that in itself would make XRP worth at least $50 if my maths is right, and much more in practice. So lets keep our fingers crossed that it happens.

Thanks! Yes, even without the 'need' for nostro/vostro you would think banks still want to somehow hedge against fluctuations in their native currencies. 3-5 Trillion seems like a reasonable estimate, which is why I'm using that as a basis. And yeah, I think $50 is very reasonable, especially considering there's going to be tons more uses of XRP. Anything beyond that is gravy.

If XRP is accepted as a bridge currency throughout the world, it becomes a trustworthy currency, and I would think countries are more likely to accept XRP for other types of transactions, not just exchanging currency. Ripple knows, the asset most trusted by FIs will be the one that gets used.

Anyone with corrections, disagreements, etc - please chime in! If we openly share our knowledge, our XRP community will become very strong.

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1 hour ago, stdyrm said:

Thanks! Yes, even without the 'need' for nostro/vostro you would think banks still want to somehow hedge against fluctuations in their native currencies. 3-5 Trillion seems like a reasonable estimate, which is why I'm using that as a basis. And yeah, I think $50 is very reasonable, especially considering there's going to be tons more uses of XRP. Anything beyond that is gravy.

If XRP is accepted as a bridge currency throughout the world, it becomes a trustworthy currency, and I would think countries are more likely to accept XRP for other types of transactions, not just exchanging currency. Ripple knows, the asset most trusted by FIs will be the one that gets used.

Anyone with corrections, disagreements, etc - please chime in! If we openly share our knowledge, our XRP community will become very strong.

I think that  as the system grows it naturally becomes a reserve currency of some sort, especially if the value of xrp increases as its markets grow it would become a store of value  currency in itself.

Edited by Julian_Williams
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On 9/15/2018 at 4:12 PM, stdyrm said:

Thanks for the great writeup.

Yes, this is my understanding:

ILP can be used with any ledgers, with any currencies

The benefit of using XRP is that central banks no longer need to hold large amounts USD or a combination of many currencies, and instead can use a 'neutral' currency like XRP to provide liquidity in exchanges

I can see central banks wanting to hold XRP reserves, and they would need very large amounts if they want to support the daily volume of transactions. About $5T of USD is held in reserves, right?

Central banks can still use XRP in xRapid without actually holding XRP. That’s what makes it a thing of beauty. 

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3 hours ago, JCCollins said:

Central banks can still use XRP in xRapid without actually holding XRP. That’s what makes it a thing of beauty. 

Thanks for clearing that up. Julian_Williams was very helpful too. 

Honestly, xRapid just makes way too much sense, especially if a bank is already using xCurrent. 

Ripple is smart to focus on FIs … they have a huge headstart changing an industry that doesn't like to change. The usage for P2P transactions, non-banked users, etc. … once Coil and Tipbot start rolling, the content creators will make this happen.

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  • 1 month later...

With regard to @JCCollins mentioned topics of the New Silk Road Initiative, the (trade) war between USA vs. China and the coming economic collapse of China I want to share a presentation of German stockbroker and author Dirk Müller (alias "Mr. Dax").

EDIT: Unfortunately, the video has been shortened by 30 minutes on YouTube meanwhile and is only fully available (w/o subtitle generator) here.

Edited by tar
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