Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network by Ripple. Also called the Ripple Transaction Protocol (RTXP) or Ripple protocol, it is built upon a distributed open source Internet protocol, consensus ledger and native cryptocurrency called XRP (ripples). Released in 2012, Ripple purports to enable "secure, instantly and nearly free global financial transactions of any size with no chargebacks." It supports tokens representing fiat currency, cryptocurrency, commodity or any other unit of value such as frequent flier miles or mobile minutes. At its core, Ripple is based around a shared, public database or ledger, which uses a consensus process that allows for payments, exchanges and remittance in a distributed process. - Wikipedia

Inspiration for writing this article are:

Investors who expect a cheap ride "to the moon" having already dreamed themselves a "lambo" or two

Realistic timeframe of Ripple protocol ('Ripple') + XRP implementation

Key message:

Ripple/XRP implementation in banking and finance will take time, and also dependent when or if use of XRP as a token gets past the regulators.

﻿Ripple/XRP Hype

I have been following XRP trading since it was priced at 17 cents in the second half of 2017; reaching an all time high of over $3 in Dec 2017 before dropping down to $1.20 as at the time of writing. The first time I have seen the XRP price rally, it was fuelled by a Ripple tweet countdown over 3 days: 3...investors going wild buying ripples as the price go up...2...even crazier than the day before...1...fasten your seat belts, off to the mooooo...errr...conference. Brilliant marketing and way to announce a conference. It sucked people into unbelievable XRP buying-frenzy. In fairness, Ripple Labs did what they had to do to create noise. The problem was the investors' delusional interpretation of what the countdown might mean; reading into things that are not there. XRP plummets back down to 17 cents.

Next, the anticipation of what the conference will bring. Within the first minutes of Day 1, the Gates Foundation partnership was announced. Happy XRP investors as the stock ticker goes up, and up some more until it reached its peak; at which point more announcements are needed to sustain the elevated price. Day 2 of the conference gone. Day 3, the conference is done. No further partnership announcement was made. Happy-turned-disappointed XRP investors but the seed of hope was planted. XRP price goes down.

Ripple Sales Pitch

Ripple Labs has a very promising future, thanks to the equally brilliant sales pitch that Ripple/XRP has a real-world use case, etc. Fancy technical-speak that people bought into and often repeat word-for-word in social media, while bashing Bitcoin and all the other altcoins as having "no real-world use case". XRP is like no other. XRP investors have become die-hards, the "hodlers" who readily abuse anyone who dares mention the words "sell XRP" or "short XRP".

Before getting completely off-track with the hodlers' illusion that they actually have a say in somebody else's money, let us have a closer look at the statement:

Ripple has a real-world use case.

Agreed. One hundred percent.

Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network by Ripple.

That is Ripple's use case, but not automatically and necessarily XRP's.

XRP investors either do not understand, do not care to understand or are in denial that Ripple is built upon a distributed open source Internet protocol, consensus ledger and native cryptocurrency called XRP (ripples). It supports tokens representing fiat currency, cryptocurrency, commodity or any other unit of value such as frequent flier miles or mobile minutes.

Deciphering the Ripple definition,

Cyptocurrency is only one of the many possible tokens that may be implemented with Ripple. This instantly diminishes the chances of XRP adoption.

There are hundreds of established and upcoming cryptocurrencies in the market. This further reduces the likelihood of XRP as cryptocurrency of choice.

The creation of cryptocurrency is open source so it is not far-off that enterprises will go for the whole shebang and create their own cyptocurrency. Applicable to larger, technology-inclined enterprises; and when deemed more beneficial and prudent to have their own cryptocurrency than rely on a 3rd party coin. XRP is out as a token.

Ripple Token Options

With endless token options that equally work with the Ripple protocol, what is the percentage left that XRP will be adopted in a Ripple protocol implementation?

Asking the question another way, how many systems get implemented into an organisation out of the box/without customisation?

This is a fair comparison to implementing the Ripple/XRP package.

Small to medium-sized implementation would go for the native XRP because it is already built by default. They have limited project budget. They outsource IT solutions.

Large implementation, such as big banks and financial institutions, are likely go for a proprietary, shiny new technology; essentially depending on the organisation's IT strategy and fit into their technology architecture and roadmap, how much project budget is approved and the appetite for in-house technology maintenance.

Ripple vs. XRP is Not Same Same

Ripple Labs, the company, is primarily invested in the Ripple protocol. It is their core product. XRP is an optional enabler.

To be clear,

Ripple is not XRP. Ripple protocol is not defined by XRP.

Unless XRP has an alternate use case, besides the native enabling option of the Ripple protocol, then XRP is Ripple. XRP is defined by Ripple. XRP is restricted by a Ripple protocol implementation, specifically implementation with XRP adoption.

XRP as Standard

XRP can be at par with Ripple's potential success: if XRP is mandated as the standard token across the whole wide world of finance.

Not. Gonna. Happen.

Not in the short or medium term, possibly in the longest of long term, subject to:

Universal acceptance and legitimisation of XRP and categorically of cryptocurrencies Maturity and wider acceptance of the Ripple/XRP technology

When I read the first point, I see pigs and cows flying. There is no way a heavily-regulated banking and financial services industry would allow a rouge technology (for the lack better word to describe cryptocurrency as not acceptable at the present time ) into their tightly-guarded systems.

Changing or enhancing a small component of a financial system requires a team of lawyers, risk & compliance and IT security officers, among the thirty other roles in a project. There is an endless red tape to ensure compliance to international laws, national/country laws, government body regulations, financial services standards, best practice standards and enterprise standards.

To put this into the context of Ripple/XRP enormity,

Ripple protocol implementation is replacing an entire payments ecosystem, from SWIFT or otherwise - the point being, from systems that are already in place: functional, risk-assessed and compliant. However in the name of innovation and improvement, there could be a compelling business case for Ripple implementation, such as an alternative system that (i) will deliver business benefits that are worth shaking up the core technology infrastructure, and (ii) more importantly, is compliant with laws, regulations and standards to keep their licence to operate - within the right timing that will not result to penalties due to early termination of 3-, 5- or 10-year contractual agreements with existing technology providers. This also comes with an assumption that the incumbent competition, e.g., SWIFT, is stuck in the dark ages and has no offering to rival Ripple.

XRP as a token for Ripple protocol. Hmmm...let me ask a couple of thought-provoking questions instead.

What are the chances that XRP, a cryptocurrency, is compliant with international laws, national/country laws, government body regulations, financial services standards, best practice standards, enterprise standards?

Why would the global banking and financial services industry effectively hand over the control of its "central bank", i.e., supply of XRP coins, to Ripple Labs - a fairly young start up, privately owned, technology company?

Ripple Labs' Interest in XRP

XRP is Ripple Lab's money-making machine, courtesy of the investors who want a share of the next-Bitcoin windfall. With the XRP's price surge in 2017, registering astonishing 37,000 per cent gains $0.0065 per token in January 2017, to $2.47 by the end of the year*, Ripple Labs founders and company do not need to sell a single Ripple implementation for money . They are loaded with ripples to cash in; not to forget the 55 billion** more tucked away in escrow.

This is not to suggest that it is all about money because there are technology innovation prestige and professional fulfilment to be achieved, which can only come with Ripple's success (to re-iterate, Ripple's success does not necessarily mean XRP success).

More Hype: Good and Bad News

Post Ripple conference there was the well-received escrow and more partnership announcements. Media exposures here, there and everywhere. XRP earned its name alongside Bitcoin; despite not comparable except they share the cyrptocurrency investment classification. By the end of 2017, XRP is king!

XRP investors kicked-off 2018 on a high until one and more January days with 40%, 20% and 10% dips became norm; consequently the rise of angry and/or depressed XRP investors blaming the price crash and dips on sellers (who probably closed an insignificant $200 position with $100 loss), the "whales" manipulating the market, XRP'S price correlation with Bitcoin, the "mooners" jinxing XRP - amongst all the reasons and excuses they tell themselves convincingly.

Spinning the Ripple Rumor Mill and the Fact of the Matter

All cryptocurrencies suffered price slump throughout Jan 2018. The poor lambo dreamers crying out for good news from the Ripple frontmen, CEO Brad Garlinghouse and Chief Cryotographer David Schwartz. Even without real news, hearing from these guys come as a relief to the small fish investors; as their words are taken in context and a new rumor begins. To the moon!

Although lately, as hard as Ripple Labs tries with rehashes of its funds-transfer-let-it-flow-like-water vision, its bright future thanks to an exceptional technology, and hints of partnerships-that-they-wish-they-could-name in the pipeline, there do not seem to be news good enough to move the price in the right direction - up rather than down or sideways at best.

Not unique to XRP however, the gloomy cryptocurrency prices are due to a number of reasons:

Increased regulations imposed by the governments across the cryptocurrency markets; stepping-in to protect investors from such volatile and unregulated investments (Food for thought: could it be wanting a piece of the action by cracking down on free money? It is tax time!)

January is historically a down month for cryptocurrencies

Hacking, alleged insider trading, withdrawal freezes and shut down of cryptocurrency exchanges

Future of XRP: What and How Long Will It Take?

Although Ripple + XRP is technologically and conceptually solid, it relies on two big sells that Ripple must close with a potential partner:

Ripple protocol adopted XRP chosen as the token

From the implementing organisation's perspective, these are two massive IT enterprise projects that will take at least 2 years*** to complete. Allowing for the guaranteed incompetency in IT enterprise project delivery that has a glowing reputation for failure (I have earned 20+ years of enterprise Fin-Tech projects first-hand experience to make this statement), the realistic timeframe to implement Ripple/XRP in an enterprise environment is between 3 to 5 years***.

Also let us not forget the remainder of the 3-, 5- or 10-year contract with existing technology partners, during which the potential Ripple/XRP switcheroo's hands are tied to the agreement.

Now do the mathematical calculations of the best and worst case scenario for a Ripple/XRP implementation.

Partnership Transparency

Without Ripple/XRP inside knowledge, the future of XRP is impossible to predict. It will either do very well with global adoption of XRP as the token for Ripple protocol; or the XRP price will remain stagnant with (hopefully many) spikes fed by hype; or free-fall as investors lose faith in the cyrpto king of 2017 because the investment return is not realised soon enough.

Transparency can be improved for the benefit of XRP investors. Three things come to mind when a partnership is announced:

Will the partnership with A result to XRP adoption? xRapid

What is the nature of partnership with B entail? Advisory, experimental, proof of concept, intention to implement

What is partner C "testing" exactly? Proof of concept (i.e., implementation is 5 years away), testing prior to implementation (i.e., implementation is 3 to 6 months away)

The answers to these questions are the key indicators of actual XRP adoption and implementation timeframe hence an idea of how long the holding-on-to-dear-life string is.

Ripple Labs is disclosing partnership information up to a point, possibly a little quiet on some critical details that you could not reasonably expect them to volunteer. In any case, Ripple Labs needs to manage investors' unrealistic expectations, particularly those who have pawned off their house, car, boat, push bike, playstation, spouse, children, dog and cat for ripples.

Ripple Partnership Relevance to XRP

While it is nice to know the 100+ brand partners of Ripple by name, take it as just that:

A partnership between brand name X and Ripple that may or may not have relevance to XRP.

Every partnership is great for Ripple Labs, good for Ripple protocol but does not mean anything for XRP unless used as token in Ripple implementation. Investors must not forget that your stake is in XRP - not in Ripple protocol, the product; and certainly not in Ripple Labs, the company.

Ripple's Risk Mitigation

Will Ripple share information that is crucial to make informed XRP investment decisions?

Hope so but probably not, particularly if the actual Ripple/XRP go live - in addition to existing implemented usage that warrants the current support level - is years away; and simply because investors are generally impatient. Investors want immediate profits yesterday, and not in 5 to 10 years time through belief in a piece of technology and to a great extent, trust in the faces of Ripple Labs.

Risk mitigation dictates that Ripple Labs will gladly announce the partner names but it will not openly advertise that x out of y do not care for XRP (assuming low XRP adoption rate) or how many and which partners will never adopt XRP. The thought alone would send the money-making machine that is XRP into meltdown!

To state the obvious, x billion of XRP that is worth nothing equals nothing. Without XRP, there is limited funding to support the continued development of Ripple protocol. Without Ripple protocol sales, there is no Ripple Labs.

XRP is a genius way of funding Ripple with 100% of financial risk transferred to XRP investors; while keeping them off-limits to Ripple's vault of digital gold. Thanks to XRP, Ripple is already halfway to the moon while investors impatiently wait for XRapid to take-off; currently proving not rapid enough in terms of adoption.

﻿In retrospect,

Only when XRP coins are getting burned due to actual usage that the prices will legitimately and consistently go up. Until or unless this happens, the XRP price will continue to be driven by hype and investors hoarding ripples. While Bitcoin and altcoins are traded through buy and sell of goods and services (coins are actually used in the real-word), XRP awaits its fate as a sweetener to the Ripple protocol.

To the small fishes in the ocean of cryptocurrency trading, XRP is a long term investment. Invest only what you can afford to lose; better yet for your own sanity, consider that you have already lost your investment. It is more of a windfall when you least expect it, and who knows, one day you might be rewarded with a hefty retirement fund.

To Ripple Labs, sincere best wishes. Ripple is a game-changing technology that requires hard work, perseverance, dedication, patience and more hard work to get into production.

Lastly, I am not anti-Ripple/XRP but there needs to be a reality check on what it will take to get this dazzling technology considered, accepted, regulated, adopted, implemented and operational. The technology is sold, i.e., the blink-of-an-eye funds transfer rate and all the wonders that come with it. We are done with how the technology works and the benefits it will bring to mankind. It is now time to acknowledge the mountains to be moved to get this big Ripple/XRP ball rolling.





Source:

*http://www.independent.co.uk/news/business/news/bitcoin-latest-value-ripple-xrp-best-performing-cryptocurrency-38-fold-increase-2017-a8138546.html

**https://ripple.com/insights/ripple-escrows-55-billion-xrp-for-supply-predictability

***Estimate based on extensive experience in IT enterprise projects





﻿This article is written based on observation, logic and general knowledge & experience in IT enterprise projects therefore does not constitute an investment advise. The author shall have no liability or responsibility to any person, organisation or entity regarding any loss or damage incurred, or alleged to have incurred, directly or indirectly, by the contained information.