DeepTalk is an interactive series on emerging technologies where leaders, experts, trendsetters at the forefront of technological changes discuss and share their unique perspectives and knowledge with community professionals on disruptive technologies like AI, ML, Blockchain, Fintech and IoT.
The fourth episode of DeepTalk, “Show me the money” highlights the advantages of blockchain in a manner that is understandable to the layman. Is blockchain the way to course-correct falling economies in many countries? How can nations integrate blockchain technology with more applications and a wider network of individuals and institutions, both internally and internationally?
Santanu Paul, CEO & Co-founder, Talentsprint discusses how blockchain can grow beyond crypto-currency with Navin Gupta, Managing Director of Ripple, the largest user of blockchain around the world.
Founded in 2012, Ripple’s objective is to move money similar to how information is transferred. Gupta illustrates with a simple analysis of how blockchain can improve efficiency without a drain on the economy. A 30 day lead time is the norm for payment for goods; but it takes 33 days, including the transaction time, resulting in 10% of loss on working capital. With the frictionless movement of money, which is an instant transfer, 36 days’ worth of working capital gets added per year. This is something that would attract central banks and finance ministers alike.
Ripple at the moment focuses on high volume, low-value transactions like NRI money transfers to India and talent export from emerging markets where large amounts are transacted. Gupta narrates an interesting instance of Santander chairperson’s son who told his mother transferring funds through the bank was very complicated, and hence he makes payments through OnePay FX. That set her thinking about the need to change the bank policies inside out, which resulted in Santander’s adoption of Ripple. Aspects like interoperability and technology urge institutions to enter the network of Ripple. Though currently, networks operate in silos, Gupta envisions a world where there will not be one blockchain but pools of blockchain with connectivity like ILP, similar to TCP/IP.
So, how is Ripple defined in a nutshell? Ripple is a cross border payment and settlement network. It is just not a cryptocurrency but an excellent bridge currency in terms of point to point money transactions. Today people may use USD, GBP, INR or Euros and tomorrow they will use XRP [cryptocurrency used by Ripple payment network]. XRP is listed around 250 Exchanges around the world.
Is Ripple’s tipping point with respect to customer acquisition within sight? Presently there are about 30-50 heavy corridors across the world, and 80% of the money transfer happens in 20% of the corridor, in volume and value. Once there is a flywheel effect seen within those corridors, metrics can be obtained to see how long it takes for Ripple to cross that threshold after which acquisition becomes easy.
UPI works on intra-border, intra-country solutions, and hence there will soon be a possibility for UPI and Ripple to work together. Technology does not stand in the way of cultural integration and options are valuable, says Gupta, when right ideas occur at the right time.
The period that the digital asset is going through is akin to the dotcom bust. However, companies like Amazon and Google are building on it as they can see the change at the consumer level. For instance, to read Financial Times, one needs to subscribe for $60, and that is expensive. If a reader is keen on a single article which FT offers for a cent or two, there is no payment system at the moment that can enable this. Hence FT is losing millions of customers, and on the other hand, readers are not able to access specific content – all because there is no underlying payment system that can support billions of transactions at high speed and low cost. With digital asset system, when you access a blog or a content site, information flows on one side and money on the other. Readers can thus browse without hitting any paywall. Gaming and virtual goods are another big industry where nations can be considered as virtual communities, and underlying commerce can happen through the digital channel.
One of the ways to deliver growth is to embrace innovation or at least refrain from curtailing it. Blockchain technology is secure, but ironically people find technology hard to trust. Gupta says he works with regulators and there is the fear of the unknown with respect to technologies. But if regulators see value in it, they are sure to enable regulations to embrace it.
Looking around today, parts of the world which look progressive when it comes to blockchain, cryptocurrency, internet of value and so on are smaller nations like Estonia and Singapore, who by innovating early on are trying to attract global talent. These nations are faster in the regulatory space and have become the seat of innovation and experimentation.
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