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Is this bank-led trade-settlement platform a serious Ripple competitor?


panmores
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4 hours ago, mrenne said:

The way I see it is that several different groups of banks will have their own stablecoin, which settles their internal transactions. Then XRP will settle transactions between the different stablecoins.  In this scenario the total potential for settlement in XRP is much smaller than the total FX settlement, which is why I do not follow the most optimistic models for XRP price estimations based on total FX volume. Whether or not this will be compensated by an exponential growth of FX transactions, we'll need to wait and see.

Could you clarify this? XRP's primary use case is cross border remittance, and currency exchange is integral to that. How is Ripple not at the forefront of that market?

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Every body said it: counter party risk. And historically nations are about the riskiest counterparty one could have. 

How will they determine a rational exchange rate of any given currency against the token without active forex markets between the token and the various currencies? You need markets to determine price. Two thousand years of economic history has taught us that. Say I'm Mexico and I have five billion "settlement tokens", but I want 5 billion more. How do I go about that? If I buy them from another country, how does the seller of these tokens determine how many pesos should be paid? Do I pay in gold? In oil? In goods? In current markets that price is determined by forex. Furthermore, if it is backed by fiat, what is to stop a central bank from simply printing more of their backing currency to give the illusion of GDP growth? But I'm sure countries neeeeeevvvvvveeerrrrr do that. So long as the printed money is only going into the account reserved for backing or purchasing the tokens, then the inflationary shell game will be hidden from the seller or other holders of the "settlement token" until it is too late. 

The only way such a system would work is if it is backed by the actual goods and assets of the nation, ie. things that are not debt instruments. But, absent having to actually ship tons of gold, oil, or etc. to another country to get more tokens, how can other users of the tokens be sure that the fiat another country is using to either buy of back their token purchases actually represent the value of their economy and isn't simply printed out of thin air? There is no way that I can see with a "settlement coin". However, as it just so happens, there is practical way to do it by creating an unbacked crypto and letting individuals hold and trade it, and having forex markets to protect against inflationary tactics by countries. By creating a massive value network in which the token can be traded nearly anywhere for nearly anything, the market will provide the de facto backing on its own. For example, you don't need the assurances of the US government that the dollar is valuable...you can simply look around you at people using it and see that it has value. And forex markets are a watchdog of sorts on the issuers, they signal to the network if the US government is devaluing the currency, thus keeping them (somewhat) honest. This is why i see XRP as superior. It has the forex markets to keep the people holding it honest. Think about it, would you trust selling me a million XRP if I pay by personal check? From what I can see, that's essentially what these settlement token schemes are.

This is not to say that they wont introduce such a settlement coin, I actually find it likely. But it will not be anything new. It will still be a trust based system with massive counterparty risk. 

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If you do a forum search you will find quite a bit of info regarding USC as it’s been in the works for a while.

https://www.xrpchat.com/search/?q="Utility settlement coin"&updated_after=any&sortby=newest&search_and_or=or

Basically, it’s a walled garden or group of gardens.

Is it competition? No. XRP is the apple cart that goes from garden to garden. But all the fruit contained within a garden is a slice of pie that XRP cannot have, until it needs to leave those walls.

Currently, gardens are growing, walls are being built and roads being laid. Trade will come and the carts will be filled. Give it time.

Meanwhile, make sure your investments are safely stored and enjoy the great outdoors.

Edited by Flintstone
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Here's an update what Fnality and Clearmatics are actually doing - looks like a fragmented approach to me, doesn't match Ripple's holistic solution:

https://www.coindesk.com/fnality-utility-settlement-coin-central-bank-token-blockchain

The Takeaway:

  • With $63.2 million in fresh funding from 14 banks, Fnality is building tokenized versions of five major fiat currencies.
  • The digitized fiat would be fully collateralized by cash held at central banks and is meant to solve the “cash on ledger” problem faced by other financial blockchain projects.
  • The consortium says it is open to working with JPMorgan, whose JPM Coin project has similar aims.
  • Fnality’s tech partner, Clearmatics, is building these systems on a private version of ethereum.
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  • 4 months later...

Seems these Fnality folks are coming back into the news:

https://www.forbes.com/sites/andreatinianow/2019/10/17/blockchain-start-up-backed-by-big-banks-ushers-in-new-era-of-banking/amp

 

Hadn’t seen this thread back in June, definitely quelled my fears. As you all say, the big key point here is counterparty risk. Though it seems they are a bit closer to actually launching now. Exciting times!

Edited by Ryyy20
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Looking back over this thread what stands out to me is that many of the posts were impressive in their prescience about the developments we have actually seen over the last few hectic months. A salute to the collective nous of the XRP community who are able to pick where this story is taking us. Exciting times indeed and more gifs. 

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