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Brad Garlinghouse Responds to FUD (Litigation, XRP Sales, Etc.)

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Posted (edited)
9 hours ago, Archbob said:

If you use x-rapid you are just going to replace holding Nostro/Vostro with holding XRP for liquidity. Its great for us XRP holders, but it really doesn't solve much. To use X-rapid efficiently exchanges have to hold large amounts of XRP to provide that liquidity. Countries don't send equal amounts of remittances to each others. For instance, Mexican working in the US send a lot more back each day than Americans working in Mexico so the American exchange will have to hold a large pool of XRP to not run out each day. You could re-balance every day/week/whatever, but you would still need to hold at least that much in reserve to provide for the service. If you plan to transfer $5 trillion a day, you would need $5 trillion in reserve at the exchanges of XRP to ensure it runs smoothly. You just traded holding currency for holding XRP, it doesn't really free anything up.

With xCurrent and SWIFT GPI now going to be able to settle in minutes or seconds, banks can also reduce the amount they hold in Nostro/Vostro because of the shorter transfer time.

Market makers will hold the XRP, not the exchange (though of course exchanges also hold XRP too to ensure order books are liquid enough), so that burden is distributed amongst many individuals and businesses - who then profit from holding XRP (they make money on each trade).  Nostro/vostro burdens an indvidual institution just for the purpose of settling transactions - it's a big cost of doing business that XRP removes.  Arbitrage bots will buy up ther cheaper XRP on a Mexican exchange and sell them back to other exchanges.  In theory, a one-way flow of XRP from the US to Mexico will mean the US exchange will become attractive to market makers as they're virtually guaranteed buys.  Ripple could (are probably do!) provide liquidity-on-demand via market makers who are working with Ripple.  In other words:-

  • a transaction request is made on xRapid
  • xRapid checks if exchanges have necessary liquidity
  • if not, a Ripple-affiliated market maker can provide liquidity for the transaction
  • transaction is then quoted back to the sender

Of course, all of the above is automated and happens in seconds.   In theory, I don't see why the liquidity-on-demand part can't happen.

Edited by 2ndtimearound

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4 hours ago, yxxyun said:

 

This is why Garlinghouse's statement - on Twitter of all places - is problematic. Using shortened language to explain things that have more depth than an at-a-glance reading can convey isn't ideal. In fact I'd argue it's outright bad. It smacks of irritation on the part of the CEO, rather than a carefully considered PR move to clear up doubt and confusion.

He says "XRP sales are about helping expand XRP's utility - building RippleNet & supporting other biz building w/XRP"

First bit - expanding utility - fine. Building Ripplenet? Gotcha. The last bit is open to debate, and when it's a declarative statement like this it should not be open to debate.

'Supporting other businesses building with XRP' - does he mean they're supporting other businesses that are using XRP, or does it mean they are supporting businesses by investing XRP? Either reading is valid given how it's written.

I don't want to cry obfuscation or tar Garlinghouse with the traditional business exec doublespeak brush, but this is unclear at best, and it needed to be worded better. Or just not said at all.

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Can't market makers work with fiat instead of digital assets? I see the value of digital assets when there is no need to exchange for fiat and banks hold accounts denominated in these digital assets. 

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1 hour ago, Freaky said:

They just don't understand that XRP as a bridging asset is becoming less and less relevant.

What you say might turn out to be true - but there are a lot of people betting the other way.

ILP changes everything. It allows currency swaps to be sourced from any provider that is making an offer. The existing correspondent banking system locks those offers into a small set of providers who can charge fees that are 'competitive' compared to other providers, bu possibly not 'optimal'. One can already see that alternatives to liquidity have sprung up via the large number of payment providers that are out there operating alongside the current system, and these payment providers are not doing badly and the correspondent system is under stress.

Once all the existing providers have signed up to ripplenet, the costs of x-border transfers will be reduced by the competing offers from all providers.

7 minutes ago, AlvaroXRP said:

Can't market makers work with fiat instead of digital assets? I see the value of digital assets when there is no need to exchange for fiat and banks hold accounts denominated in these digital assets. 

yes they can, and this is the biggest issue with xRapid. Once the existing forex traders jump onto ILP and ripplenet, then they can still use the framework behind the existing correspondent system to balance flows with their existing setup. Who cares if the ledger is updated from bank A to bank B and the trade happens, or if the XRP ledger is updated with a buy/sell xRapid pair. All that matters is that customer X gets a good rate, in a good time. Real time settlement will become the norm even for non crypto transactions because the bank ledger updates will become atomic too.

The question of xRapid's success is defined 100% by  "can it become cheaper than the existing system". All the money tied up with nostro/vostro will be shifted to 'liquidity on demand' and flow balancing across corridors. That on demand liquidity can be much smaller than the existing nostro/vostro because with real-time settlement, balancing can be done in real time and the costs to everyone will be massively reduced, but it doesn't have to use XRP for that to happen, it can still use fiat.

However, XRP and the ledger do provide a very low cost way of achieving this, with zero counterparty risks, and if volatility of XRP is reduced, then parties will be willing to hold it and use it so it stands as good a chance as any other of being one of the winning solutions.

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Posted (edited)
12 hours ago, WuWei said:

Maybe this will help with your incessantly "challenged" perspective. Imagine that every FI partnership that Ripple has acquired, is akin to having secured an easement, or a right of way upon which to build out the future corridors.  Not all of them will ultimately be built upon, but the ground work is clearly being laid. Keep up the "good work" Freaky, as you seemingly have a negative comeback for every bit of progress discussed on these boards. At least you're consistent. And as for cryptoxrp: how on earth can your vision of what Ripple is in the process of doing, be so myopic? Are you really so near sighted as to not see that the amount of xrp necessary to support the liquidity necessary to efficiently carry the projected future load, needs to be greater than the current demand? You're right, this isn't rocket science and yet imho, you're both failing miserably. 

Wu Wei you seem to become personal without providing new data which makes a decent conversation with you quite difficult. I'll try once more.

As you stated yourself groundwork is being laid'. At present with all the hype just 3 corridors where XRP is used... ok.... that is not very much,  is it? And imagine that when the groundwork is laid (in the years to come) the financial institutions of this world will decide not to use XRP as a bridge asset. What would happen then? Our point is that groundwork alone is not enough. There must be a strong belief and trust with all parties that XRP is the right choice. And that trust weighs heavy. With Ripple selling to much XRP in the present fragile XRP ecosystem the XRP price will tank.

That alone will significantly reduce investor trust in XRP and is the reason why many XRP holders are now considering joining an effort to fork from the Ripple XRPL blockchain. The problem is that one party (Ripple) has to much XRP and as a result can influence the XRP price to an extent that it becomes unhealthy to the liquidity of the ledger itself.

The evidence of this you can see in the 2019 XRP price development.

My hope is that BG and his team can somehow turn around the present loss of investor trust and help to preserve unity in the XRP community.

Edited by cryptoxrp

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7 hours ago, 2ndtimearound said:

Market makers will hold the XRP, not the exchange (though of course exchanges also hold XRP too to ensure order books are liquid enough), so that burden is distributed amongst many individuals and businesses - who then profit from holding XRP (they make money on each trade).  Nostro/vostro burdens an indvidual institution just for the purpose of settling transactions - it's a big cost of doing business that XRP removes.  Arbitrage bots will buy up ther cheaper XRP on a Mexican exchange and sell them back to other exchanges.  In theory, a one-way flow of XRP from the US to Mexico will mean the US exchange will become attractive to market makers as they're virtually guaranteed buys.  Ripple could (are probably do!) provide liquidity-on-demand via market makers who are working with Ripple.  In other words:-

  • a transaction request is made on xRapid
  • xRapid checks if exchanges have necessary liquidity
  • if not, a Ripple-affiliated market maker can provide liquidity for the transaction
  • transaction is then quoted back to the sender

Of course, all of the above is automated and happens in seconds.   In theory, I don't see why the liquidity-on-demand part can't happen.

See, those institutions make money with the Nostro/Vostro accounts, all the big banks do. You are basically saying "instead of making all the money themselves, now they can share those profits around with many individuals and businesses". I bet they are thrilled with that.

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13 hours ago, Archbob said:

If you use x-rapid you are just going to replace holding Nostro/Vostro with holding XRP for liquidity. Its great for us XRP holders, but it really doesn't solve much. To use X-rapid efficiently exchanges have to hold large amounts of XRP to provide that liquidity. Countries don't send equal amounts of remittances to each others. For instance, Mexican working in the US send a lot more back each day than Americans working in Mexico so the American exchange will have to hold a large pool of XRP to not run out each day. You could re-balance every day/week/whatever, but you would still need to hold at least that much in reserve to provide for the service. If you plan to transfer $5 trillion a day, you would need $5 trillion in reserve at the exchanges of XRP to ensure it runs smoothly. You just traded holding currency for holding XRP, it doesn't really free anything up.

With xCurrent and SWIFT GPI now going to be able to settle in minutes or seconds, banks can also reduce the amount they hold in Nostro/Vostro because of the shorter transfer time.

This is an incorrect representation of how xRapid works. If anyone needs to hold XRP it's the market makers and that is only for the length of each transaction so yes, it does eliminate the need for Nostro/Vostro accounts for banks, FI's and remittance companies

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Posted (edited)
34 minutes ago, Archbob said:

See, those institutions make money with the Nostro/Vostro accounts, all the big banks do. You are basically saying "instead of making all the money themselves, now they can share those profits around with many individuals and businesses". I bet they are thrilled with that.

LOL - OK, banks make more money from dormant capital just sitting doing nothing than if they invested it elsewhere.   This forum is a parallel universe to the universe I know.

Edited by 2ndtimearound

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46 minutes ago, Mpolnet said:

This is an incorrect representation of how xRapid works. If anyone needs to hold XRP it's the market makers and that is only for the length of each transaction so yes, it does eliminate the need for Nostro/Vostro accounts for banks, FI's and remittance companies

You are just shifting holding the money to some one else, it still doesn't free up the money. The exchanges are the market makers a lot of the time, so you are just shifting Nostro/Vostro from the banks to the exchanges.

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19 minutes ago, 2ndtimearound said:

LOL - OK, banks make more money from dormant capital just sitting doing nothing than if they invested it elsewhere.   This forum is a parallel universe to the universe I know.

They make a lot of money charging people to use those accounts sitting there. Banks like Citibank make a fortune off of them.

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2 minutes ago, Archbob said:

They make a lot of money charging people to use those accounts sitting there. Banks like Citibank make a fortune off of them.

LOL again.  Banks hold other banks' money for the purpose of quick settlement.  That cash is dormant (not invested).  Non-invested money makes more money than invested money even in the safest of investment funds? Thanks for a peek into your parallel universe...

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Posted (edited)
9 minutes ago, Archbob said:

You are just shifting holding the money to some one else, it still doesn't free up the money.

Nope, it frees up a whole hell of a lot of the money.  Think of it like disk-swapping i/o RAM or something.  I dunno, what's your background - I'll give you an analogy that works.  (If you say "banking", then just give me the name of the bank for whom you work... No reason.  Promise not to short it.  Pinky swear.)

 

Edited by NightJanitor

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15 hours ago, cryptoxrp said:

Wu Wei you seem to become personal without providing new data which makes a decent conversation with you quite difficult. I'll try once more.

As you stated yourself groundwork is being laid'. At present with all the hype just 3 corridors where XRP is used... ok.... that is not very much,  is it? And imagine that when the groundwork is laid (in the years to come) the financial institutions of this world will decide not to use XRP as a bridge asset. What would happen then? Our point is that groundwork alone is not enough. There must be a strong belief and trust with all parties that XRP is the right choice. And that trust weighs heavy. With Ripple selling to much XRP in the present fragile XRP ecosystem the XRP price will tank.

That alone will significantly reduce investor trust in XRP and is the reason why many XRP holders are now considering joining an effort to fork from the Ripple XRPL blockchain. The problem is that one party (Ripple) has to much XRP and as a result can influence the XRP price to an extent that it becomes unhealthy to the liquidity of the ledger itself.

The evidence of this you can see in the 2019 XRP price development.

My hope is that BG and his team can somehow turn around the present loss of investor trust and help to preserve unity in the XRP community.

New data? As opposed to your FUD claims: i.e.: 

 "With Ripple selling to(o) much XRP in the present fragile XRP ecosystem the XRP price will tank.'  "That alone will significantly reduce investor trust in XRP"

Ok, how's this? "Ripple sold $251.51 million XRP in Q2 2019...." and of that $106.87 million were "Institutional direct sales."  Did you get that? $106.87 million in institutional direct sales. That's a lot of money from a highly conservative field of business. Does this at all sound like a "fragile XRP ecosystem"  or that this has resulted in "reduce(ed) investor trust," or is this, once again, your consistently myopic view based on the current price?  Who might I ask, would have a better insight into the progress that Ripple is making than these institutional investors? Why on earth would institutional sales total in the hundreds of millions of dollars if Ripple isn't indeed building out a strong foundation? Once again, your fixation on the current price leads you to conclude that "just 3 corridors" (thus far) is proof that it's all just hype and that these beginnings are meaningless. What you fail to mention is that each partnership is a foot in the door for a potential xrp corridor in the near future. Owners of xrp are NOT investors, and Ripple is right to focus on the task at hand and ignore the impatient speculators whose only concern appears to be "when moon?" 

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23 minutes ago, WuWei said:

Owners of xrp are NOT investors

This is a false statement that I often see people posting.  See the definition of investor: https://en.m.wikipedia.org/wiki/Investor.

If a XRP owner purchased XRP with expectations of future financial return, by definition they are investors.

People may be mixing up investor vs. shareholder terminology.  Owners of XRP are not shareholders of Ripple, unless they own Ripple stocks.

 

 

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20 hours ago, 2ndtimearound said:

Market makers will hold the XRP, not the exchange (though of course exchanges also hold XRP too to ensure order books are liquid enough), so that burden is distributed amongst many individuals and businesses - who then profit from holding XRP (they make money on each trade).  Nostro/vostro burdens an indvidual institution just for the purpose of settling transactions - it's a big cost of doing business that XRP removes.  Arbitrage bots will buy up ther cheaper XRP on a Mexican exchange and sell them back to other exchanges.  In theory, a one-way flow of XRP from the US to Mexico will mean the US exchange will become attractive to market makers as they're virtually guaranteed buys.  Ripple could (are probably do!) provide liquidity-on-demand via market makers who are working with Ripple.  In other words:-

  • a transaction request is made on xRapid
  • xRapid checks if exchanges have necessary liquidity
  • if not, a Ripple-affiliated market maker can provide liquidity for the transaction
  • transaction is then quoted back to the sender

Of course, all of the above is automated and happens in seconds.   In theory, I don't see why the liquidity-on-demand part can't happen.

Write out the transactions on balance sheets and you'll see why.

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