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VanHasen

USC (utility settlement coin) vs XRP

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Hey all,

as it seems that some folks are very concerned about USC being a threat to XRP as settlement tool used by banks/FI's, I decided to cross post archbob's topic about HSBC here in general discussions

oddly he/she posted this topic in "XRP Trading And Price Speculation" where it seems some members (me included) can't actively participate on

 

as far as I know USC is/will be backed by a basket of FIAT-currencies what makes it NOT universal and independent like open traded digital assets (i.e XRP)

the beauty of XRP as a universal settlement tool for Banks/fi's is that XRP is a global traded open source liquidity solution where no participants have to trust each other

Banks wanting to settle their payments with USC do have to participate on the consortium which is utilizing USC and they do have to trust each other for executing crossborder payments

as far as I understand this, USC is just another kind of stable-coin (backed by a basket of FIAT) inside of another kind of "walled garden" --> "A bank-issued digital asset can only really efficiently settle between the banks who issued it." - (BG, source below)

 

please feel free to correct me if I'm wrong but I definitely do not see USC being a threat to XRP and its global nature of a universal open source liquidity solution at all!

 

 

 

this is what brad garlinghouse had to say about USC

https://www.linkedin.com/pulse/case-against-bankcoin-brad-garlinghouse

"UBS, Deutsche Bank, Santander and BNY Mellon announced their “utility settlement coin,” a new digital asset they hope will become the industry standard for blockchain settlements. They expect banks will initially use the coin for post-trade settlement and clearing by early 2018, after they secure blessing from regulators and central banks.

While this development signals significant market traction for an institutional use of digital assets, I have to say it’s deeply misguided. A bank-issued digital asset can only really efficiently settle between the banks who issued it. Then, two scenarios can play out.

Scenario one: all banks around the world put aside competitive and geopolitical differences, adopt the same digital asset, agree on its rules, and harmoniously govern its usage. Fat chance.

Scenario two (the more likely scenario): banks not in the issuing group issue their own digital assets with their own sets of rules and governance.

We’re kinda seeing this already, as the FT points out, with Citi’s Citicoin and Goldman Sachs’ SETLcoin. The result would be an even more fragmented currency landscape than what we have today. If banks of different digital asset groups want to settle trades with one another, they’ll have to make markets between their unique digital assets or trade between their digital assets and a common fiat currency. What a mess!

The second big problem with the “utility settlement coin” is it seems it’ll be backed by a basket of currencies. Once backed by cash, it’s no longer an asset; it’s a liability. Trading liabilities then ultimately requires moving cash across borders, re-creating today’s system but adding more friction!

We strongly believe banks need an independent digital asset to enable truly efficient settlement and we believe XRP is best positioned for that role. It goes back to the fundamentals of what makes digital assets unique and special - they’re universal currencies, meaning anyone can use them as units of value anywhere in the world. That universality gives digital assets global reach and the ability to settle much faster than traditional assets.

Compared head to head with other independent digital assets (like bitcoin or ether), XRP settles the most efficiently cross-border, in just seconds. In fact, we’ve run tests with global banks to prove XRP can lower liquidity costs for cross-border trades. More to come on that front."

 

 

and here's another blog post about USC in regards to XRP

https://steemit.com/cryptocurrency/@invicid/ubs-digital-currency-and-how-it-affects-xrp-s-future

"What is UBS’ Utility Settlement Coin? And how is it similar or different to XRP? 

Utility Settlement Coin is not an asset, it’s a liability! Why does this matter?  

In the case of Utility Settlement Coin, UBS has already announced their plan to back the digital currency with a conglomeration of fiat currencies. To keep it simple, Utility Settlement Coin and others like it will be backed in value by US Dollar, Euro, Yen or some mix currencies depending on the issuing bank. Once a digital asset is backed by physical fiat, then like any asset it is no longer considered an asset but a liability.  

Why does making a digital asset a liability decrease it’s effectiveness in innovating how transactions are processed? Well, it’s quite simple. Trading liabilities, regardless of the utilization of blockchain technology to transact, still requires the cumbersome movement of physical cash across borders to ultimately settle the payment. While blockchain technology will create more efficiency in internal bank transfers, it will not completely optimize how payments are settled."

Edited by VanHasen

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Exactly what Brad says: 
Every bank wants their own logo on a coin, but no bank wants to use that other banks coin. They are competitors. So when there is an indepent asset available, with it's own value instead of backed by fiat, and an allready pretty build up growing network of banks, it eventually becomes a no brainer to connect and participate in that network to move your customers money freely around the world. Those customers will demand that kind of service sooner or later, or they'll go to another bank.

The momentum to being that no-brainer is being build, and once the size of the Ripple network is big enough, it will flip that momentum and not participating in it would be signing a banks demise.

This is why I believe in the end Ripple will have to hand over the majority of XRP to a central, but independent authority like IMF or some sort of world bank.

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https://www.google.com.au/amp/s/www.coindesk.com/hsbc-says-its-settled-250-billion-in-trades-with-distributed-ledger-tech%3famp

HSBC is huge with branches in every country I've been to so they could cross boarders with their own coin and once there it wont matter to other banks what digital asset they used to get value                cross-boarder because they'll be dealing in local Fiat by then .

 

Edited by Helmsdeep

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They are signing more banks to their consortium all the time and it already includes many of the world's largest banks. Like it or not, these things are more of a threat to Ripple than other solutions like Worldwire. SWIFT is made by banks as well and they managed to dominate for decades.

If its backed by the 5 major world currencies, it won't have the volatility that XRP has or the slippage. This is basically what the IMF wants to replace the SDR in the future.

Edited by Archbob

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Anyone knows about the speed of transactions and other technical characteristics (like TPS) of this USC coin running

on their Clearmatic distributed ledger platform?

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2 hours ago, Archbob said:

They are signing more banks to their consortium all the time and it already includes many of the world's largest banks. Like it or not, these things are more of a threat to Ripple than other solutions like Worldwire. SWIFT is made by banks as well and they managed to dominate for decades.

1: no consortium member will be restricted to just use one solution but USC is restricted to just be used inside the consortium

2: more or less, USC is another CBDC with counterparty risks -- they still need FIAT-liquidity pools (held by CB) to "back" the settlement via USC

3: EVERYONE (but especially SME's) outside this wall will have to bridge its payments with another liquidity solution that is cheap and fast and globally available OR they keep on paying high fees to those big banks providing FIAT-liquidity pools!

I don't think that at any given time in the future global payment flows will be executed inside of one or a few big walled gardens (monopoly?) to settle crossborder payments - not all banks do trust each other (its more the opposite) - there will be other CB's or consortiums of banks with their own (CB)DC's - and guess what, they will all need a bridge to be settled somehow with each other that has no counterparty risk and is globally available (i.e. something like XRP)

 

2 hours ago, Archbob said:

If its backed by the 5 major world currencies

so, what happens to payments flowing in countries none of those major currencies are used/available? that's what XRP is aimed for in the first place - the exotic corridors with high friction

XRP is surely not aimed to i.e. USD/EUR conversations in the first place!

Edited by VanHasen

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7 hours ago, VanHasen said:

so, what happens to payments flowing in countries none of those major currencies are used/available? that's what XRP is aimed for in the first place - the exotic corridors with high friction

XRP is surely not aimed to i.e. USD/EUR conversations in the first place!

This is what SDR actually is and they use it to bail out third world countries. 

USC isn't the same as XRP, sure, but it will eat up a lot of the same markets if successful.

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6 hours ago, Archbob said:

Yeah, it almost looks like XRP was R3 backup plan because they couldn't purchase USC.

XRP was the original plan and R3 tried to pull a fast one on Ripple, got caught, got rejected, and now back to XRP. 

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On 1/18/2019 at 5:48 PM, mandelbaum said:

R3 tried to buy this project in 2018 but the offer was denied. Then 3 months later we learn that Corda settler uses XRP exclusively at first.

https://www.coindesk.com/r3-rejected-utility-settlement-coin-blockchain

Not just one marathon going on here.

This Coindesk article is absolutely baseless and no facts to support any of this being true, pure opinionated speculation by author.  Coindesk was the only ones who reported this. IMO i don't think it is even remotely true.  If anything, the opposite is true. Given the circumstances, it is more likely that R3 denied allowing USC for settlement on Corda because they already had XRP embedded into Corda Settler.  R3 was just waiting on settling the court case with Ripple. R3 might have been keeping their options open in case Ripple case was settled in a way that XRP would not be an option anymore.  R3 also probably realized that USC hadn't even finished a successful PoC and was still in development with no proven use. On the other hand XRP and XRPL has 6 year history of proven results with zero issues. Choosing XRP was a no brainer, with Ripple and SBI both creating products that will boost XRP usage and liquidity would be beneficial if they also jumped in and aided in XRP adoption. 

There is very little info available about USC development since 2017, there was a lot of hype in 2015-2017 and then absolutely nothing except this random, baseless article from coindesk. The biggest issue that was probably realized about USC was an unproven technology with minimal support besides a couple major banks and no platform that wants to use it. Also, USC is NOT and asset but instead a liability with not just one couter-party but multiple counter-parties.

This project is most likely dead in the water. Why would an unproven liability settlement coin deny a monstrous consortium like R3, which has a live platform. The live platform has the leverage over an unproven fiat backed coin that hasn't even completed a successful PoC and zero adoption. Coindesk should have been held accountable for writing a completely baseless article just to spread FUD. This was written at a time prior to R3/Ripple settlement of court case.  FUDdesk writing on pure speculation assuming that USC was actually a threat to XRP.

Anyone else find another article or any facts to back up this coindesk article???

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