Name: Balancing the Ledger: Ripple CEO Brad Garlinghouse Talks XRP, Lawsuit, and Facebook Libra
Uploaded: 2019-10-07
Duration: 13 min 26 s
Description: “By the end of 2022, I think Libra will not have launched.'

[ MUSIC ] Welcome to Balancing The Ledger where tech and finance intersect. I am Jen Wieczner. And I am Robert Hackett. And we are very lucky to be joined by Brad Garlinghouse, the CEO of Ripple. Thank so much for being here Brad. Thanks for having me. So, you've had a lot of updates this year with ripple and the ripple net, which is your blockchain that many financial institutions are using. Can you give us an update on what's going on and how they're using it? Who's using it? Absolutely. So I think ripple I think has been really fortunate in the context of broader. Blockchain and crypto ecosystem. We've been very focused on a specific customer set, a specific problem around cross border payments. We've been selling into banks and financial institutions for a few years now. We've signed up over 200 banks and families and globally. Recent ones we've talked a lot about with things like Money Graham, we announced a very big partnership with in August, June. They went live in July and August. And actually even in their earnings call in August, we're talking about how they're tangibly seeing the benefits of using XRP to help facilitate their liquidity needs. And so we feel really good about the momentum we have there. And even this week and now some partnerships in the crypto specific area, with Bitpay, a company that allows you to use Crypto currencies to check out at like a PayPal checkout or Visa Checkout now will be supporting XRP and Coinme, an ATM network that'll also be supporting XRP going forward, so excited about both those. If I understand correctly, Moneygram is actually using XRP in its transactions, which marks a big evolution for you because there are some financial institutions who are Using ripple but not actually XRP Can you explain how that evolved and how that's done? So I think you know, a lot of times you know, I talked about the the more than 200 banks of the institutions we're working with, most of them sign up and engage us on a fee basis, you know, dollar yen dollar to Mexican peso dollars Argentinean peso. And that's because that's how the correspondent banking network works today. In effect some people describe what ripples original product is an initial product. It's called kind of swift 2. 0. Swift is what correspondent banks use for messaging to debit and credit the pools of liquidity and when I say pools of liquidity I mean like pre funded accounts. The Bank of Japan and the Bank of Brad, would have accounts at each other's banks. And you might be Mexican peso I'd be dollar and read debit and credit those with messaging. That works if the accounts are pre funded. And what we have found in is, there's more efficient ways to manage liquidity. If you as a bank, don't have to put money in my bank account, I don't have to put money in your bank. I can use that money for other things. It's working capital. MoneyGram as an example, has several hundred million dollars of negative working capital. Their public company, that's materials it's business for sure. If I work with them they can reduce the amount of refunding that is very creative to How they think about the use of capital and what they can do with that if they didn't have that negative working capital out there. And if some of the hesitation from some of these financial institutions is that XRP being a cryptocurrency has some added volatility risk, as opposed to you know, fiat currency dollars pesos, whatever it might be. How do you get over that or how do you overcome that risk. It turns out this is a risk that it's a little bit of red haring and it's born of use Bitcoin as example, a Bitcoin transaction has taken as long as that you know, eight or ten hours on you know highly in ten days of activity the Bitcoin blockchain. So if you have to hold BitCoin for eight hours while you settled a transaction that's a lot of volatility risk. An XRP transactions always about four seconds long. So if you're only holding a highly volatile asset for three or four seconds, versus holding [ UNKNOWN ] a low volatile asset, for a swift transaction, maybe three days, it turns out the volatility risk because it's such a short amount of time is lower. Using an XRP transaction than it is using a swift transaction that might take three days. Now, I think people don't really understand that today, and part of the misinformation and education for us is helping people understand that. But I think that's part of the crawling, and walking, and run, as crypto goes, from, think, kinda the shadows, frankly Into how do we solve real problems or real customers at scale? Well, one thing to jump off of that point, stable coins are all the rage right now everybody's coming out with $ 1 backed or some other sort of asset backed coins that they can conduct trades. Quickly seem as ley but also with out the vaultality so what would be the advantage of using QRP for instance rather than using one of this more sort of designed to be fully stable assets. A stable coin like USDC for example the coin based and circle have done I think that is interesting and many get vultality but you still want to go from Dollar to Pasle. Right so at some point you have a bridge, somebody has to bridge that. And in effect what ripples doing is let's make XRP the most efficient the most liquid in the easiest to bridge by selling the fact of the connectors on both ends selling API's to allow people to connect to both ends of that. If we have Hundreds of banks interconnected to use XRP. For that, I think that bodes well for the liquidity of XRP. Especially who has the most liquidity is gonna win this game. I mean, that's what I believe. I think different people believe different things, that's okay. You have all these financial institutions who are now using XRP. Sounds like more people are using it and yet the price has declined this year recently. Why do you think that is? I think if I could predict the price of Crypto, I would, not be here, I mean, the Crypto markets are harder to predict for sure, in many cases, even now, the olt coin, basket, is very corelated. And so, when I say olt coin I mean, everything but Bitcoin. Bitcoin has outperformed the rest of the crypto industry this year. You know what that looks like in the future hard to predict. I think over the long term, meaning two, three, four, five years, that correlation I think will start to reflect those that have a real use case. You know, I'm very enthusiastic about not just what Ripple is doing but the community of companies working around the XRP ledger. Coils various a company doing something around micro payments using XRP where you really can't use something like Bitcoin for the purpose of micro payments in terms of the cost per transaction or speed of the transaction. It's much more appropriate for XRP There's a lawsuit hanging over ripple right now a group of people are saying that XRP and ripple are sort of tied together and that they XRP could considered an unregistered security. What would you say to them? Well, it's pending litigation, so I'll probably a little bit muted on the topic. Suffice it to say we don't think it has merit. These are people who didn't buy XRP from us. We also don't believe XRP is a security. I think one of the Pointed arguments in my point of view is, you know, if I went back to the office and said to the team at ripple, hey, we're shutting down XRP trades on 130 hundred 40 exchanges around the world XRP would keep trading. like wait a minute, okay. So if the security security of what It's not a security of Ripple. It doesn't give you rights to dividends or ownership of Ripple the company. We have shareholders of Ripple, right? We raised a series A financing, a series B financing and we own a lot of XRP, but they're two separate things. At the same time, we've seen recently Block. one had the hammer come down on them from regulators. They were Basically said that they were selling an unregistered security $ 24 million. [ CROSSTALK ] Just essentially call that a hammer they raised 4 billion and they hammer. [ LAUGH ] Either way, so what's the difference between Block One and their token EOS versus what you guys are working on? I think one really important distinction is, the XRP ledger existed before Ripple, the company. Yeah, it's a public blockchain, you can go back and see kind of, transactions zero, one, two, three. You can see when Ripple was incorporated and the Secretary of State of California Ripple didn't create the XRP Ledger. The XRP Ledger had utility prior to Ripple's existence. Certainly we are an interested party the success of the XRP Ledger for sure. We own a lot of XRP. Preferably like saying Exxon owns a lot of oil. It doesn't make oil a security. Exxon clearly interested in how to we can argue about the health of the you know, I'm not here to debate carbon emissions- [ CROSSTALK ] >>here but it's wise to say Exxon cares a lot because they have a lot of exposure to a in this case commodity called oil. Is Exxon doing things that are trying to drive a healthy ecosystem around oil. Yeah You were at our Brainstorm Finance Conference in Montauk Britain in June. Thank you. You it was the same week that Facebook announced their Libra project and at the time on stage you said this was a great week you were super happy about it Now we've seen there's been some backlash from regulators with the Libra project in some doubts from their partners about whether it will proceed. How are you feeling about Libra now? Look, I think anything is good for the crypto ecosystem is good for ripple. It's good for XRP it's good for Bitcoin. So good for the whole nine yards. That week was a great week for us, because I think the way Facebook announced Libra. And I use that it whether I should say they announced the Libra white paper, is they talked about in context of in one particular quote I thought was maybe got a lot of good attention for ripple was this idea that. Level successful is going to put Western Union out of business. And I think that was a quote by a Facebook employee. And you know, if you are a financial institution and you hear that, you are like, Wait a minute, you are coming after me. And I think a lot of financial institutions recognize that as digital first companies enter financial. Transactions, it's not going to take three days to settle a transaction or to London, right? It's, in order to compete on a level playing field you need to have, you know, not just today's set of technologies because even going forward tomorrow set of technologies and a lot of triggers are cross border payments. You're stuck in a technical architecture built 50 years ago. What Ripple is doing is saying, look, we can take that way beyond where we are today and make it far more efficient. So what happens with Libra and their white paper initiative, hard to predict. I think maybe that would have been better received had Facebook not been the point of the arrow. Facebook has been in the crosshairs of a bunch of governments around the world And I think what we saw happen was, not surprisingly, in my opinion that you know, the regulator's saying, we'll wait a minute. There's a trust issue over here that we're concerned about. And now you want to go into consumer financial services and, again, the way that the initial white paper is positioned Libra, Libra coin, was really a competitor to fiat. You know, I think that's a different animal and certainly how we think about using XRP in the role of many digital assets in the future. Argue bullish on Facebook's ability to execute Libra as they originally laid it out in the whitepaper No. I mean I just bypassed your question exactly do I think that type of company to do that sure? But. I think in the regulatory hand wins they are facing I think our substential and should have they predicted that we can debate that. But I think, what they have said publicly, I believe is that they will not. They don't intend to launch anything until they've made regulators comfortable. I've read some of the statements from some regulators and I think it's gonna be it's gonna be a tough road. So you don't think it'll happen. If I were a betting man or take an auger bet on, will Libra maybe there is actually- There should be- There should be, yeah, I would bet that Libra, I think there's a time based on an order as well. So I'll say I'll take the over under of, the end of 2022. I think Libra will not have If there were if Facebook isn't the right company to do this now, given the, regulatory headwinds, is there another company or organization that you think would be better suited to launch this project? I don't know. I think the problem is the genies little bit out of the bottle. if. If the two of you got together and launch something, it wasn't called Libra that looked a lot like that a lot like that and got some of the same participants to come together could likely achieve a little more success maybe. I think now, you know, Libra at least from a regulatory point of view has you know, it's viewed as a Facebook project. And we can debate that, but it the perception is a 100 % that it's a Facebook project. Yeah. Well, it'll be interesting to see how it all plays out. For sure. Hopefully have you back before 2022 [ LAUGH ] We have Brad, thank you so much for being here. Absolutely. Thanks for having me .>> I'm Jen [ UNKNOWN ] I'm Robert Hackett for more balancing the ledger come to fortune dot com. We'll see you next time. [ MUSIC ]

Balancing the Ledger: Ripple CEO Brad Garlinghouse Talks XRP, Lawsuit, and Facebook Libra

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“By the end of 2022, I think Libra will not have launched."