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1/24 Why the XRP Ledger's ability to transport any digital asset makes it perfect for stablecoins and CBDCs, and why this will skyrocket the price of XRP over time.
(Video version @ )
A thread.
(Video version @ )
A thread.
2/24 Let's say you want to start a farm-to-table restaurant that serves fresh veggies. To accomplish this, you could start a farm, tend to it, wait, harvest the veggies and serve them with your dishes. While the produce may be wonderful, this has many drawbacks.
3/24 The cost involved in managing your own small farm is enormous. The planning, wages, management, expertise etc are not easily produced from scratch. If you've ever started even a small business you know how much more difficult it is than it seems when you're just spitballing.
4/24 Then there's the time problem. You have to wait for the right season to harvest the veggies. What will you serve in the meantime? What if there's a drought or a pestilence of some kind? You would have to have contingencies for all of these things.
5/24 That's why restaurants don't usually manage their own farms. Farm-to-table restaurants usually partner with local farms that already have all those processes in place. It just makes more sense.
6/24 Now apply that analogy to Central Banks and CBDCs. Let's say you are a Central Bank, and you want to create a digital currency. You could have the entire system designed from the ground up, but this has many drawbacks.
7/24 First, you need to hire a crack team that knows how to build blockchain technology. While the pool of developers is growing, it's still small, and most of them want to work on more exciting projects like DeFi. So you'll need to pay for good talent.
8/24 Once you have a team, they'll need to build and test the system. These are complex systems, and most blockchain IPOs launched years after development began. With the world economy screaming toward a train wreck, you need a faster path off those tracks.
9/24 Then, of course, there's the problem of releasing the digital currency "in the wild". Security holes and bugs are very difficult to completely account for with in-house testing, and we're talking massive amounts of people's money on the line if you got it wrong.
10/24 Central Banks creating their own CBDCs is the equivalent of a restaurant operating their own farm. Unless it's the only solution, it just doesn't make sense and comes with many risks. Fortunately for banks, there's a much better solution: the XRP Ledger.
11/24 The XRPL was designed to be able to transact any type of digital asset. It has what's called an API, which is just a way for any software developer to plugin to its functionality. No need to reinvent the wheel. You just use what's already there.
12/24 As a software dev, when a new project lands on my desk the first thing I do is shop around to see what APIs/libraries are available that already provide the core functionality I need. If it already exists and the price is right, I build on those. Why start from scratch?
13/24 Another advantage of an API/library that has existed for a long time is that the bugs have been worked out. "It just works" because it's been used so much in production and the bugs have been found and fixed. This makes software that uses established APIs more secure.
14/24 Then there's the issue of server resources. Some functionality requires a huge amount of capacity, maybe even a full blown network. An API gives me access to all those resources without having to pay for the entire infrastructure. Cost gets spread across all users.
15/24 Well, what platform was designed from the beginning for fast, efficient, cheap payments, has been in full production for a decade and already has a large established network that makes it all work? Again, the XRP Ledger. It just makes sense for banks to use it.
16/24 However, most companies don't hire their own software teams. They're expensive, hard to manage (us software devs can be a real pain in the ass), and because IT is so competitive they don't usually stick around longer than 18 months or so before moving to another company.
18/24 To save all of that headache, companies will contract with software firms to build out the software they need based their requirements. This offloads the management and hassle to a third party that's built for that, freeing the company to focus on its core strengths.
19/24 Well, what company exists whose CTO is one of the original designers of the XRPL, is already working with 100s of financial institutions (including many large banks) and understands a bank's concerns, security and other requirements right out of the gate? Ripple, of course.
20/24 When it comes time for banks to create their own stablecoins and CBDCs, what do you think these institutions will do? Take on these projects all by themselves (with all the costs and risks discussed), or turn to Ripple and the XRPL? The answer is obvious.
21/24 Now, set aside banks for a minute and consider any other startup looking to use blockchain in the payments space. Given the huge time and money saved by working with the XRPL, startups can get going on a shoestring budget and build apps quickly w/o reinventing the wheel.
22/24 FUN FACT: Did you know the US Postal Service filed for a patent for a blockchain-based voting system? Now, I'm not saying they're using the XRPL, but they COULD. A "vote" could easily be one kind of digital asset that is immutably stored on the XRPL. https://www.forbes.com/sites/vipinbharathan/2020/09/20/us-postal-service-files-a-patent-for--voting-system-combining-mail-and-a-blockchain/
23/24 The more projects that build on the XRPL, the more XRP liquidity will be needed, and the higher the price of XRP will need to go to provide that liquidity. This is great news for XRP holders looking for increases in their investment. https://wietse.com/xrpl
24/24 SUMMARY: XRPL can transact any digital asset (even votes!), has an API w/access to all that functionality, already has a network built out, and is fast, efficient and dirt cheap. It's a no-brainer for any co looking to build w/blockchain, including (but not ltd to), banks.
More XRP explainer threads: https://twitter.com/xrpartisan/status/1347653134504652801
