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JPMorgan Executive explains XRP use

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For us Banking Technicians, the question is obvious. What is driving such massive partnership and adaption en-masse? lets keep up with a few more updates & we will jump right into the techncials. You have my word!

Continuing on their progress, AXIS bank of India & NBAD of Dubai have both partnered with Ripple, and are in the queue for remittance/cross border payments system implementation. And If you thought large international banks are the only ones Ripple operates with, you could not be more wrong. In a recent NACHA conference Ripple showed of implementing their international payments mechanism for a Credit Union.

Accurate reporting can be powerful. 

I like the paychan explanations as well - finally some explanations that are geared for the "common folk" to undesrtand:

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PaymentChannels does exactly that, The wallet for high speed Off-Ledger transactions are multi-sign wallets requiring signature of all the involved parties avoiding 'clandestine transactions'. and impressively it achieves over 10000 off-ledger cryptographically secure transactions per second which are 'Multi-Signed' by all involved parties, for transactions to complete. As the wallets are co-owned, each party can recover their respective funds, in case of failure.

fast ... very fast....:good:

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Good article, but as always things are not seen in a critic way, but in a cheerleader mode.

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Liquidity providers can bridge any currencies directly through XRP, saving them from having to maintain accounts with each counter party for each currency ( Ex: A 'Bank' or 'Remittance Operator', having to maintain an account in every regional currency they operate in, often with 'trusted' custodian and/or partner institutions acting as intermediaries: aka: nostro/vostro accounts).

This is not true! Liquidity providers still have to maintain accounts with all counter party, even if they go via XRP.

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Conversion between exotic currency pairs, might involve multiple internal currency conversions ( Ex: INR to MXN might actually go through INR->USD & USD->MXN ), bridging XRP directly, can avoid and save such convoluted costs and settlement delays associated.

Another ********! What's the difference of bridging via USD or via XRP? Still two hop path. And USD has a (great) advantage: the low volatility, which is a must for market makers.

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Also, XRP does not require bank accounts, service fees, counter party risk, or additional operational costs, and hence XRP is the true protocol enabler on the RCL, which is a public good, open for one and all.

XRP has counterparty risks! XRP has operational costs (servers, experts in RCL,...).

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1 hour ago, tulo said:

Good article, but as always things are not seen in a critic way, but in a cheerleader mode.

This is not true! Liquidity providers still have to maintain accounts with all counter party, even if they go via XRP.

Another ********! What's the difference of bridging via USD or via XRP? Still two hop path. And USD has a (great) advantage: the low volatility, which is a must for market makers.

XRP has counterparty risks! XRP has operational costs (servers, experts in RCL,...).

Is it best for Ripple to use a backed USDT type coin instead of XRP?

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2 hours ago, tulo said:

This is not true! Liquidity providers still have to maintain accounts with all counter party, even if they go via XRP.

i think the cost saving model ripple present is saying that BANKS no longer need nostro accounts

as for liquidity providers, i'm not sure -- is the point that xrp opens up the "third party" kind of "crowdsourcing" approach so that anyone with an account (or connecting account) can move funds on another's behalf, because xrp/ripple connects the accounts through the ilp network?

EDIT:

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Instead of holding local currency in nostro accounts around the world, trading parties (banks or third-party market makers on behalf of banks) can hold XRP on their own balance sheets and use it to make markets with any other  currency. The analysis in this paper is for a respondent bank providing its own liquidity to XRP.

By consolidating liquidity to service international payments from many, disjointed, international nostro accounts into one XRP pool, respondent banks allocate less total liquidity to service the same volume of global payments. Here is how:

  • The bank only has to hold its domestic currency and maintain one account with XRP.
  • The bank only needs enough XRP on hand to service its largest expected payment obligation.
  • By making markets directly between its domestic currency and XRP, the bank minimizes the number of intermediaries involved and their markup on spreads.

Highly liquid currencies like USD and EUR have served as intermediary currencies to bridge trades. However, only a small number of correspondent banks have the economies of scale to pool liquidity and offer markets in various currencies, limiting competition for rates. To access that liquidity, respondent banks must pay fees, maintain operational accounts, and assume the opportunity cost of capital tied up in these accounts. XRP by contrast has no counterparty costs.

 

Edited by Guest

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@tulo i think couterparty risk is therefore generally understood/defined as cost of capital, tied-up funds, fees, etc -- so technically they're right, and in some sense you're right too -- but not in the way it's traditionally used, i.e. risks of rcl network failure etc are a qualitatively diff assessment than the traditional mgmt of counterparty risk

maybe in future the counterpart risk will become the network provider i.e. ripple is the new "middle man" so to speak

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1 hour ago, PunishmentOfLuxury said:

@tulo Err, you know he is "Vice President, Automation, Global technology, JPMorgan Chase & Co." He may well know more about it than even you.

Or he might have invested some M$ into XRP <_<.

22 minutes ago, zerpdigger said:

i think the cost saving model ripple present is saying that BANKS no longer need nostro accounts

He wasn't talking about saving models, but about the fact that with Ripple, Market Makers don't need to have accounts at counter party. And it's not true...

14 minutes ago, zerpdigger said:

i think couterparty risk is therefore generally understood/defined as cost of capital, tied-up funds, fees, etc -- so technically they're right, and in some sense you're right too -- but not in the way it's traditionally used, i.e. risks of rcl network failure etc are a qualitatively diff assessment than the traditional mgmt of counterparty risk

The counterparty risk is only one: the risk that the party will default. Using some FIAT you have the risk of the bank going default (the risk exists), but for XRP you have the same risk too, but of a different nature. And probably right now the risk is higher than using a bank. We could have Ripple company failing and closing the validators, we could have unknown bugs exploited by attacker, we could have instability of the network, hackers stealing Ripple XRP,...

55 minutes ago, TJB said:

Is it best for Ripple to use a backed USDT type coin instead of XRP?

Well, for Ripple probably not :D, but for a market maker yes IMO. But that token has to be integrated in the ILP architecture to be functional as XRP, and possibly backed by an almost riskless counterparty (FED bank?).

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5 minutes ago, tulo said:

The counterparty risk is only one: the risk that the party will default. Using some FIAT you have the risk of the bank going default (the risk exists), but for XRP you have the same risk too, but of a different nature. And probably right now the risk is higher than using a bank. We could have Ripple company failing and closing the validators, we could have unknown bugs exploited by attacker, we could have instability of the network, hackers stealing Ripple XRP,...

i think you're mixing two different things here

this is not what's understood or meant by counterparty risk in ripple's materials

the counterparties are those exchanging funds, not the platform on which those funds are transferred, nor the risk of bank default

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@tulo correct me where i'm wrong, but this is what i understand by the risks here:

if transactions are cryptographically certain, there is no risk where there once was with manual escrow/agents etc

if xrp is used, there is no fiat risk where there once was in holding that asset/issuance

network failure / bank failure is a systemic risk perhaps

happy to be corrected

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5 minutes ago, zerpdigger said:

this is not what's understood or meant by counterparty risk in ripple's materials

the counterparties are those exchanging funds, not the platform on which those funds are transferred, nor the risk of bank default

I think there is only one counterparty risk definition :D, that is with one of the party involved in the transaction/lending/purchase doesn't respect its obligations. When talking about currency exchange and payments there are many risks, and the main one is the counter party going default (the bank where the MM has the funds for example). I see the idea of saying that using XRP is risk free, because there is no counterparty (it's a "decentralized" network), but still there are risks using it (the main ones are due to the non-decentralization story).

 

5 minutes ago, PunishmentOfLuxury said:

May I suggest you post your corrections/concerns/allegations in the Comments section of the Linkedin article and allow the author to respond? That seems only fair.

I would, but I don't want to link my real information (on linkedin) to this account. Unfortunately many know I hold SOME crypto, and I don't want to be exposed. But feel free to post it there, maybe with a link to this topic.

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