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XRP, XRPL will be ‘bridge’ between CBDCs, says Ripple exec


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David Schwartz, CTO at Ripple, recently delivered a lecture at Berkeley, a lecture during which he shared his views on how he sees XRP and XRPL fitting into the broader picture of a world with CBDCs.

I think the benefit of us all being here is to learn from each other. Discussion and challenging each other is part of that and we can't be all right or wrong. That said, atomic swaps work a little as

I think we shouldn't forget CBDCs aren't assets, they're liabilities, because they're backed by fiat. So you're transferring liabilities, not value. Ripple is trying to create an internet of value, no

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On 10/25/2020 at 12:38 PM, Flintstone said:

A decentralised exchange for CBDC’s is highly unlikely. At least, I have yet to see a model for such. Current models are predicting something like this:

0BA0F839-02DB-4EC9-A118-BA8F1B10E434.thumb.jpeg.2ab28643fbe9b91583abe9fe239afb98.jpeg

where banks hold an account at the payment destination. Obviously, this isn’t much different to what we have now but with the speed benefits of DLT, liquidity can be moved around swiftly to facilitate settlement in different jurisdictions if needs be and would reduce the amount overall N/V required.

This system would rely on interoperability between CBDC ledgers and if Central Banks want to make use of DvP, that would need to be considered within that system too. I’m guessing a global system like that is 20 years away, with the likes of the U.S, E.U, U.K, China, Japan etc having a working model a lot sooner.

XRP being used outside of that model is not absurd, especially if it cheaper to do so.

Your model is above my head, but it expect it makes sense.!  

About this comment I have some thoughts: I’m guessing a global system like that is 20 years away.  Where will Fiat curencies, even digital CBDCs be in 20 years time?  I would guess they will be a shadow of where they are now.  I watched extract of an interview with an investor by Crypto Eri, clever chap. (I forget his name)  He started to talk of "Real money" and "Unreal money".  For him real money was crypto and ureal was fiat.  He then went on to say in a few years no one will want unreal money, because it will not be a store of value.  I think this idea will catch on very fast, (i just hope it will not be low tech gass guzzling BTC that becomes the store of value) .

Think of it.  All Mr and Mrs X's savings from downsizing their house as in a bank in digital Dollars, or Euros or Pounds.  Look at their future of these curencies.  Governments are giving away hundreds billions to save businesses crashing from Covid, and they are going to try and get that money back from companies and workers left in the diminished post-covid economies.  It is not going happen.   The only way out is let their fiat boorrowings be devalued by high inflation rates.  In effect the money will be recovered from people like Mr and Mrs X who were innocent enough to hold their savings in fiat currencies.

Look at what is happening today 29 Oct 2020; the prices of oil, stocks and I beleive even gold are slumping, yet the crypto markets are bouncing and gaining in this environment.

Investors tradtionally iquidate their investments in recessions and slumps, and hold their money in gold and liquid fiat accounts waiting to reinvest in stocks when teh prices are low enough.  But this time round keeping your money in fiat looks worse that keeping your shares in an airline.    

Crypto can tokenise itself in the value of propeties and assets of real value.  It can place itself at the centre of spinning flywheels of teh DLT where it gains value from just being  in the right placce in relation to tranacctions in the moving parts of the economy.    

It can be locked away and preserved in smart contracts and derivatives, or pegged to the value of rare metals or shares in ownership of an oil field.  

The way I see it Fiat has little chance of being more than local currency in a world of real money.  Thats what I am imagining in 20 years time when I will be lucky to be still alive on a drip in some expensive hospital paid for by my investments in XRP in the 2020s. 

 

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On 10/25/2020 at 7:11 PM, XRPage said:

Not all CBDCs are liabilities. I am talking about native blockchain-based digital currencies. When they are issued by central banks (not banks) they don't need to be backed by any money in a bank account as tether, they are money (native assets), not tokenized money. This is the type of digital currencies for which transactions in a ledger will mean instant and final settlement, and won't need a bridge asset as xrp. 

Even if you had a 'non tokenized money' version of a CBDC, one that doesn't need to be backed by fiat, it would still equal fiat money and fiat money can and will be inflated by banks and governments. History has shown that.

Edited by Danny
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On 10/25/2020 at 7:11 PM, XRPage said:

Not all CBDCs are liabilities. I am talking about native blockchain-based digital currencies. When they are issued by central banks (not banks) they don't need to be backed by any money in a bank account as tether, they are money (native assets), not tokenized money. This is the type of digital currencies for which transactions in a ledger will mean instant and final settlement, and won't need a bridge asset as xrp. 

CBDCs can be native blockchain-based digital currencies, but they are native only on their own chain. 

So then you should have a mechanism for chain interoperability (like cosmos or polkadot?) to be able to supply the CBDC tokens on a trustless decentralized exchange. Would that not create something like a 'decentralized liability'? Imo maybe it is possible, but not yet mature and it is not instant settlement

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7 hours ago, Danny said:

Even if you had a 'non tokenized money' version of a CBDC, one that doesn't need to be backed by fiat, it would still equal fiat money and fiat money can and will be inflated by banks and governments. History has shown that.

Great, but that has nothing to do with xrp being a good 'bridge' asset or not. You admitted that with native CDBCs the bridge asset use case makes no sense. 

Btw, if I have to choose a crypto as a scarce and censorship resistant asset, it wouldn’t be xrp. 

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7 hours ago, jn_r said:

CBDCs can be native blockchain-based digital currencies, but they are native only on their own chain. 

So then you should have a mechanism for chain interoperability (like cosmos or polkadot?) to be able to supply the CBDC tokens on a trustless decentralized exchange. Would that not create something like a 'decentralized liability'? Imo maybe it is possible, but not yet mature and it is not instant settlement

You may be right but basically you just described what Ripple claims xrp is good at, a bridge asset between CDBCs on its own chain. Ding ding ding! 

Note: you don’t need always something like polkadot or cosmos. Atomic swaps have existed for a long time even though they are not working on all chains at the moment. 

Edited by XRPage
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28 minutes ago, XRPage said:

You may be right but basically you just described what Ripple claims xrp is good at, a bridge asset between CDBCs on its own chain. Ding ding ding! 

That is what they previously did with the DEX where they integrated IOU's. I was kinda sad when they pivotted away from that. Their current focus is on interledger transactions, which started with the ILP paper up to where it currently stands with RippleNet and ODL.

Yes, a bridge asset and network, the question is, where should the DEX in your opinion run? On the CBDC1 chain, the CBDC2 chain or on another chain

36 minutes ago, XRPage said:

Note: you don’t need always something like polkadot or cosmos. Atomic swaps have existed for a long time even though they are not working on all chains at the moment. 

Atomic Swaps should have led to a trustworthy 'foreign' coin on the Ethereum network, but can you point me to a trustless wrapped asset? Vitalik said the following about it:  https://www.crypto-news-flash.com/vitalik-buterin-sceptical-about-ethereum-tokens-pegged-to-bitcoin-price/

 

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18 hours ago, Julian_Williams said:

Your model is above my head, but it expect it makes sense.! 

0BA0F839-02DB-4EC9-A118-BA8F1B10E434.thumb.jpeg.2ab28643fbe9b91583abe9fe239afb98.jpeg

The above is an example of how large banks would make use of CBDC’s in a cross border payment. As you can see, both banks hold accounts in both CBDC’s (Fed & ECB). Pretty much the same as now without the middlemen and with the added benefits of DLT. 

That model is the top diagram here:

0F30E7F7-2D48-4371-B72D-B6FA4C54C08A.png.7978df9dd208c4b4ed14b616d57cc28d.png

Bit of a read, but a good bit of info regarding CBDC’s https://essay.utwente.nl/78027/1/Ginneken_MA_BMS.pdf

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6 minutes ago, Flintstone said:

0BA0F839-02DB-4EC9-A118-BA8F1B10E434.thumb.jpeg.2ab28643fbe9b91583abe9fe239afb98.jpeg

The above is an example of how large banks would make use of CBDC’s in a cross border payment. As you can see, both banks hold accounts in both CBDC’s (Fed & ECB). Pretty much the same as now without the middlemen and with the added benefits of DLT. 

That model is the top diagram here:

0F30E7F7-2D48-4371-B72D-B6FA4C54C08A.png.7978df9dd208c4b4ed14b616d57cc28d.png

Bit of a read, but a good bit of info regarding CBDC’s https://essay.utwente.nl/78027/1/Ginneken_MA_BMS.pdf

The bottom diagram is more undestandable to me

 

What is an ING and BNY balane?

Edited by Julian_Williams
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1 hour ago, Julian_Williams said:

What is an ING and BNY balane?

Example banks: 

ING: The ING Group is a Dutch multinational banking and financial services corporation.

BNY: The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American multinational investment banking services holding company.

Those balances are the banks funds in their CBDC wallets for settling payments. Note the perforated lined boxes on the diagram represent a CBDC Ledger. ING need a funded wallet on each Ledger. If ING want to process CBDC payments from the ECB Ledger to Mexico, then they would have to fund a wallet on the MEX CBDC Ledger too. 

1 hour ago, Julian_Williams said:

The bottom diagram is more undestandable to me

Yes, it highlights the simplicity of just one intermediary connection as opposed to opening an account in every currency.

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11 hours ago, jn_r said:

Atomic Swaps should have led to a trustworthy 'foreign' coin on the Ethereum network, but can you point me to a trustless wrapped asset? Vitalik said the following about it:  https://www.crypto-news-flash.com/vitalik-buterin-sceptical-about-ethereum-tokens-pegged-to-bitcoin-price/

You can do atomic swaps between Bitcoin and Litecoin without wrapping anything. An atomic swap between 2 chains means that if I hold coins in chain A and you hold coins in chain B, we can swap our coins so now you hold the coins in A and I hold the coins in B and in a trustless and atomic way. 

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3 minutes ago, XRPage said:

You can do atomic swaps between Bitcoin and Litecoin without wrapping anything. An atomic swap between 2 chains means that if I hold coins in chain A and you hold coins in chain B, we can swap our coins so now you hold the coins in A and I hold the coins in B and in a trustless and atomic way. 

Ok, I see that's true. But still you need some kind of trade platform where the price is determined. That will not be with the native assets then, at least one will be an IOU.

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2 hours ago, XRPage said:

You can do atomic swaps between Bitcoin and Litecoin without wrapping anything. An atomic swap between 2 chains means that if I hold coins in chain A and you hold coins in chain B, we can swap our coins so now you hold the coins in A and I hold the coins in B and in a trustless and atomic way. 

I’m not an expert and could be wrong,  but it seems to me that is like saying IF I have a teleporter then I can swap over to India by atomic swapping my position.

 

Sure.   But where is this teleporter?   Same with different chain atomic swaps.  It requires either a meta chain or trust between parties and the burning of assets.  Things that are possible in theory but don’t happen in the real world.

 

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41 minutes ago, BillyOckham said:

I’m not an expert and could be wrong,  but it seems to me that is like saying IF I have a teleporter then I can swap over to India by atomic swapping my position.

 

Sure.   But where is this teleporter?   Same with different chain atomic swaps.  It requires either a meta chain or trust between parties and the burning of assets.  Things that are possible in theory but don’t happen in the real world.

 

No atomic swaps are swaps between chains without trust. 

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1 hour ago, BillyOckham said:

I’m not an expert and could be wrong,  but it seems to me that is like saying IF I have a teleporter then I can swap over to India by atomic swapping my position.

 

Sure.   But where is this teleporter?   Same with different chain atomic swaps.  It requires either a meta chain or trust between parties and the burning of assets.  Things that are possible in theory but don’t happen in the real world.

 

Yeah, you are not an expert. 

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