In Search of a Regulatory Regime Using an Historical Analogue for XRP

[ICookinBrine]

The comparison Cory Johnson recently drew between Chevron's relationship with Oil and Ripple's relationship with XRP made me wonder if there is a better suited low-tech analogue for XRP.  If so, we could look at the regulatory framework applied to that analogue and evaluate whether the level of regulation, or lack thereof, of that that analogue would suit XRP.  Here is the original tweet referenced:

To be clear, the reply is helping someone understand that XRP and Ripple refer to distinct things in 2018.  I'm engaging in an unrelated line of thought that was merely prompted by the Chevron/Oil analogy.  What is the best historical, low-tech analogue for XRP?

There are a number of qualities of XRP that make oil as a less than ideal analogue.  Some qualities I would ascribe to XRP are as follows: (1) capable of being used as a tool to accomplish a task; (2) strictly limited supply; (3) originally disbursed from a single, private source; (4) capable of acquired and stored; (5) a marginal portion is consumed to perform its utility; (6) capable of being permanently destroyed/lost (e.g., black hole accounts); (7) the volume of remaining supply affects its value but not its utility (generally for all practical purposes); (8) value affects the volume needed to perform its utility.

Oil and other rare hard commodities are decent points of comparison. To go through the list above for oil: (1) yes, it is useful; (2) oil is theoretically limited, but more can be randomly found so it's not limited from a practical standpoint at the moment; (3) oil is not really sourced to a single origin, although I get the point, Chevron and a few others collect a lot of oil; (4) yes, oil can be acquired from those few who collect a lot of it and stored; (5) the analogy kind of falls away on consumption, because oil is generally consumed entirely to perform its utility;  (6) yes, it is capable of being lost or destroyed, but again complete consumption (as opposed to fractional consumption) is kind of the point for oil; (7) no, again oil is consumed to generate utility; (8) no, the volume needed to perform utility is generally independent of volume.

I'm somewhat partial to the notion that XRP's historical analogue would be a "private currency" a la privately issued California gold coins from the mid-19th century. There are some shortcomings there as well, but I like the idea that both existed/exist to fulfill  unmet needs for the transfer of value in the regions in which were or are used.  

[GiddyUp]

This seems reasonable...

https://ambcrypto.com/ripple-top-official-traditional-regulatory-framework-can-fit-on-top-of-distributed-ledger/

"Ripple top official: Traditional regulatory framework can fit on top of Distributed Ledger"

Published 22 hours ago on October 10, 2018 By Priyamvada Singh

“The protections that have been put in place today fit nicely on top of this infrastructure and this infrastructure is really just about facilitating settlement and clearing out obligations and removing exposures and credit that are incurred over the course of payments,”

[enrique11]

Oil is a limited resource that decreases with time:  It has many use cases (e.g., petroleum products) and plays an important role in our global economy.

XRP is a limited resource that decreases with time: hopefully, it will have many use-cases and will be a vital component of the global IoV economy.

XRP is like a commodity then, like oil; however, oil is a fungible commodity, and so is xrp...which guarantees the same level of 'quality' across all XRP,  so it's a great property for XRP to have, to be equal in value (like a currency) since XRP has a bridging-currency use case for cross-border payments - that's it's primary, most valuable use case, IMO.

Edited October 12, 2018 by enrique11
correction

[ICookinBrine]

 

15 hours ago, GiddyUp said:

This seems reasonable...

https://ambcrypto.com/ripple-top-official-traditional-regulatory-framework-can-fit-on-top-of-distributed-ledger/

"Ripple top official: Traditional regulatory framework can fit on top of Distributed Ledger"

Published 22 hours ago on October 10, 2018 By Priyamvada Singh

“The protections that have been put in place today fit nicely on top of this infrastructure and this infrastructure is really just about facilitating settlement and clearing out obligations and removing exposures and credit that are incurred over the course of payments,”

This article prompts a good point in that a lot of what is being done with XRP by Ripple can be laid on top of the existing systems of oversight. It reminded me of the following post by JK, which I thought also artfully made a similar point:

I the posts above to  mean that compliance with KYC/anti-money laundering regulations, the apportionment of liability for electronic fund transfers (e.g., Regulation E), etc. will be handled by the entities that already do this in the same way they have done it.  This gives all participants an existing body of experience to draw on and apply going forward.

That's not to say, however, that there aren't distinct concerns raised by XRP more generally than the set of concerns that previously existed with cross-border remittance as we have known it until 1 Oct. 2018. I suppose the novel aspects of XRP (and persons/entities relationships with XRP) is what is leading me to ask what products can we look to from the past to assess whether natural market forces are sufficient to safeguard its users and utility.

[ICookinBrine]

This diamond comparison from another thread is decent as well: