Ripple at Money 20/20: “We are a payments company”

At Money20/20, held in Amsterdam this week, fintech outfit Ripple announced plans to support 17 universities – including MiT and UCL – to perform research into distributed ledger technology and the wider payments ecosystem.

“There are 4,500 job listings with blockchain and crypto out there so we’re confident this investment will arm the skill set of the future,” said the company’s CEO Brad Garlinghouse.

“The hype and reality in the blockchain space is way out of whack,” he said. “There’s a lot of excitement and it reminds me of when I moved to Silicon Valley in 1997. There’s was a lot of hype around platforms back then and they are now massive.

“People ask me, are we a blockchain company? Are we a crypto company? No, we’re a payments company.” he continued. “We sell software to banks and financial institutions to dramatically enable cross-border payments.”

The sector has seen a surge in activity in recent years with new entrants such as transferwise, MoneyGram and Revolut vying to challenge SWIFT.

Garlinghouse also took a swipe at legacy and cross-border payments technology, saying many of the systems still in use provide “a painfully slow process and dependent on 50 year old infrastructure”.

“It still bothers me,” he said, “that the easiest way in this modern day to get money to San Francisco from New York is to take it on a plane.”

Infrastructure might not be “sexy” but it is the first step to innovation, according to Garlinghouse.

“To truly unlock innovation in the payments system, you start with the infrastructure and disrupt the very base rail. If you can start at the base layer, you can innovate up the stack.”

But he also acknowledged that innovation rarely moves past the sandbox phase.

“Experimentation is not a business model. Ripple has been fortunate because we’ve focused on a very clear customer and if you solve their needs, you’ll gain traction.”

Profound change doesn’t just come from the more efficient debiting and crediting of accounts, but upon the trillions of dollars prefunded across the network, he said.

“We’re solving an institutional problem our core customer is a bank. Clearly you have speculative interest across the XRP [Ripple’s cryptocurrency] ecosystem and want to participate in that. We care about providing that liquidity. How do we enable liquidity? Our Xcurrent real-time liquidity funding benefits from both speculative and institutional investment.”

However, Garlinghouse was keen to differentiate the digital asset and the company.

“We use XRP as a tool to fund real-time liquidity. The Ripple company owns a lot of XRP – the XRP miners and creators allowed us to buy 80% to develop our use case and drive Xcurrent and the ecosystem. Over time we’ve sold that off and now own 60% of XRP.”

XRP’s open source ledger makes it possible for future buy-ins and shares. Garlinghouse said this should appeal to the market.

“XRP is going to two KYC nostro and vostro accounts, both of which are regulated,” he said.

“When you can prove you can make 40-70% cost savings – as we have with our public partners – banks will come on board.”

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