Chris Larsen Of Ripple (XRP) @Google

Chris Larsen Of Ripple (XRP) @Google
<a href="">iq501</a> / Pixabay

Chris Larsen founder of Ripple (XRP), and (very ) briefly one of the richest people in the world, talks at Google on Published on Feb 23, 2018 – topics of course include Ripple, Blockchain, Bitcoin and related cryptocurrency topics- below is an informal transcript of his talk for information purposes only, and it contains errors, please watch the video for a fully accurate version. First an excerpt:

I think this is a critical point. I think we came to the realization that a block chain was not going to be the solution to the biggest problem. We think the world has right now in this whole fintech area which is there is no Internet of value. And why block you in a lot of people talking about bitcoins can be a new protocol for money. Well it’s really a database right. So a single database or a single net network cannot be the network of networks and so that was kind of the big flaw and that’s what led to I think you know Stefan having this kind of aha moment of need for something like ILP? which was a dangerous moment for it was scary at first like we were we were out there promoting this acid likeXRP like telling everyone Hey you should put all your balances on this ledger you should do all your transactions through this one system.

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Enter Dave. I’m not the man of the hour though. These two are we have the founder of RIPL Chris Larson and we have it’s current CTO Stefan Thomas. We’re very very excited to have them this can be an awesome talk a little kind of brief intro.

Chris got his MBA from Stanford he started you own which is kind of a mortgage lender. It was actually the first platform to really give out piko credit scores to its users. He started prosper which is actually the first P2P peer to peer lending marketplace in the U.S. And famously he cofounded RIPL Labs which is the subject of today’s tof.

Really excited to have Chris here. Stefan Thomas is the CTO of RIPL labs. He was the CTO of numerous tech companies like you load and tech spare.

He founded we use coin’s which created this kind of bitcoin primer video which amassed 8 million views and was a primer for a lot of people to just learn about kind of the basics of bitcoin and kind of blew up on the web so check that out.

And he’s a board of directors. He’s on the board of directors sorry at the JSA Foundation and he’s the current CTO ripple ripple is describes itself as the only enterprise solution for block chain.

It allows institutions to send money globally in a fast frictionless and cheaper way and it’s brought its kind of broader eventual aim is to create an Internet of value which I’m really excited to talk to both of these guys about.

So without further ado please give give a hand for Chris and Stefan awesome guys.

So can you guys just give us kind of a brief bio in your own words your career and how you came to founder Apple labs and then get involved.

Great to. First of all thanks for having us and thanks for making a Bart Simpson joke.

Appreciate that.

So yeah we’re getting Sentech for about 20 years now with kind of two startups previously e-learning prosper a kind of a common thread there. Those were focused on the consumer RIPL obviously focused on enterprise and there’s some learnings that I had from that I’ll share later. But the idea there was using the Internet to democratize finance. I think we did a lot of good there but we were always limited by just a fundamental lack of infrastructure in contact. So in my view fintech really hasn’t started. It has sort of been a stepchild of the Internet boom because fintech really has to involve both data and money. And so far you’ve only had the ability to move data. So we both a lot of excitement a lot of frustration that we couldn’t go further at the same time was always keeping an eye on what was going on with virtual currencies and you know bitcoin obviously was a real breakthrough. But there’s been a lot of attempts over the years. So we are watching things like Linden dollars which was currency and that kind of existed in the early days of Second Life. Phil Rossdale kind of an amazing guy is still the coolest guy in crypto right. You know things like Ramond dollars kind of this idea of local currencies in a very small community. Super interesting.

Obviously beans and floors which were to be a well funded projects during the first dotcom boom that are you know fields actually but it just seemed like as a matter a matter of time before you’d have a global digital asset with no kind of government backing and no counterparty as far as ripple itself that routes actually go back to about 0 4. There was something called the ripple project created by Ryan Fugger a Canadian gentleman. He was just a really neat guy and he tried really to kind of give birth to this idea of a peer to peer platform for people exchanging their own credit and essentially their own currency. Every person would have their own currency. Super interesting concept. That was a big part of what influenced us. Of Fast forward to 2011 and there was these three geniuses that got together. Arthur Breteau Jetton McCaleb and David Schwartz. And this is of course after Bitcoin was created a couple years earlier. They were fascinated by what bitcoin did but they were frustrated by the enormous waste of energy that is sort of at the heart of mining that’s a core part of Bitcoin. So they set out to build a more efficient consensus algorithm and they came up something really beautiful.

They also were inspired by what Ryan Shuger had done at the project and also brought in that idea of kind of pathfinding algorithm so that anything of value can be exchanged along with that digital asset to really I think that was kind of the birth point of this Internet value the intelligent protocol which will show a little bit actually has it’s almost like an overlay protocol over block chains but then also traditional financial systems and that allows you to innovate in different parts of the network independently instead of having the sort of central governance model where everyone has to agree to any rule changes that are happening.

I think this is a critical point. I think we came to the realization that a block chain was not going to be the solution to the biggest problem. We think the world has right now in this whole fintech area which is there is no Internet of value. And why block you in a lot of people talking about bitcoins can be a new protocol for money. Well it’s really a database right. So a single database or a single net network cannot be the network of networks and so that was kind of the big flaw and that’s what led to I think you know Stefan having this kind of aha moment of need for something like ILP which was a dangerous moment for it was scary at first like we were we were out there promoting this acid like SRP like telling everyone Hey you should put all your balances on this ledger you should do all your transactions through this one system.

And we knew the friction from that. But then again like stepping back from that and suddenly saying like oh they’re going to be many systems was very scary. And so we actually waited almost a year to publish the white paper until we had you know in our minds the result the strategy around what’s next for his role in this new world and how do we make sure that our technologies are still needed and still necessary and can benefit this new world. Like how do we architect everything to serve this new world. So I think we’re still in the process of like rolling out all the different pieces but it was that sort of one year period from I would say you know mid 2014 first had the realization to October 2015 when the white paper friends villager came out.

What we tried to kind of put all the pieces in place for RIPL always was different from Bitcoin and that you could put anything of value in it. Right. So this idea of kind of we call IOUs or balances but really being value agnostic and that being the engine for the exchange of that thing of value.

But having the combination of ILP with SRP we think that’s the that’s kind of the killer formula that you can have any type of value any currency at all so any type of Legers like anything from a centralized lender to a block chain gets a term and we look at them with that kind of the macro problem that we think the world has its lack of any interest or value. You could kind of argue that this gets to the heart of the problem with globalization which is obviously under a lot of stress. Today it’s kind of not working for a lot of people and we kind of we don’t think of it as like is bad and we think of it globalization is actually incomplete until you have an internet value you really can’t have true globalization. You sort of need these three core interoperability technologies working all together you need interoperability of data of goods and money. Right. So the world today of course has interoperability of data. It’s simply transforming the world of the last 20 years. It has interoperability and goods through a simple thing called the shipping container which you know before that was invented shipping stuff was incredibly inefficient and labor intensive stuff right. One Port had to be ripped apart and reshipped with a shipping container. You know your ship to train the truck. Any port in the world you have in trouble the goods since the 1950s. That’s sort of what an Internet value is. It’s like the shipping container for value.

And again that can’t be a block chain of watching it is like a single shipping company that will know you’ll Max out that shipping company and you’ll have a dependency on that one shipping company shipping container you can create endless shipping containers it has no effect on any other shipping containers that deploy. That’s sort of what is almost the ultimate decentralization.

So that’s kind of what we’re thinking about are the technical people in the audience as a stateless protocol.

So you can just run it over different systems so it doesn’t keep any balances central and then we think really good things happen when the world finally has a full kind of globalization platform. But this has to happen. And and again what does this mean now that we don’t have that right now. It means you know we all know about 750 bucks. Europe is kind of impossible right. Yeah we know they could be example with the Air India hosted in Tanzania who should be making 29 bucks on a rental and by the end of days nine bucks is showing up as an actual example right. So that’s that’s a problem with relatively big amounts of data. You think about the 2 billion people in the developing world the Gates Foundation would say they need to be able to send 50 cents to be reopened as happens in the global economy. Take that even further if you think about all the connected devices and applications that probably should be empowered to send value that might need to be you know thousandth of a penny. That’s just not possible until you have this internet of value in place so the world is being held back by this and we think that’s the true breakthrough that this whole whatever you want to call this industry really is all about.

There are some detractors of RIPL that say it’s kind of the centralized block chain or the enterprise block chain. You know a lot of bitcoin loyalists and bitcoin in general have come out of kind of an anarchist or cypherpunk kind of movement early on as part of that. And so that’s kind of the general criticism. So to give you guys a chance to respond to that and then I’ll combine the second question because Stefan as an awesome presentation is going to give the second question is. We are living in a crazy kind of environment in terms of cryptocurrency just speculation on the price of tokens and block chains. What do you guys think we’re in 1999 right now is this that you know kind of a dotcom bubble that we’re experiencing.

So yeah those two questions I’ll take the first one you can share. So first of all the enterprise part I take as a compliment. I think that’s precisely what we’re trying to do is we’re trying to build the first Lockshin that can actually be used for real no real use cases you know like when you think of you know any system when you take a certain systems class the first thing your professor will tell you is like you distribute system was still only going to be as good as the notes it runs on. And so if you think of bitcoin miners they’re only incentivized to basically hash as efficiently as possible they’re not incentivized to provide physical security for the data centers. They’re not incentivized to make decisions in the interest of the network. So you have a very pure incentive to just have so much as possible get paid. Rinse and repeat. And in the case of polls since the volunteers are chosen by the users if a validator for example votes against a block size increase or something like that if that were an issue and ripple then you would eventually find that users would no longer add that validated to that list and so that validated would slowly lose influence. And so it’s not as much of a system that’s like tailored to users like bitcoin is where you know anyone can just run a node and it just auto configures itself that connects to the network. You do have to do that validator selection manually to think about you know politically speaking like bitch validators do you want to empower with your note etc..

So it is more targeted at like you know actively being managed by companies things like things of that nature. But I think the reason that that makes a lot of sense is because when you actually go out there into the market you know the evil people you mentioned I’m an anarchist. So I really want to empower people. Right. But the people you’ve got to fight are not the like all the banks there are a few very very powerful players in the market that that sort of take a bit off the top and those are the people that you want to bypass. And then everyone else like there’s a lot of small banks and regional banks and so on that we’ve talked to that are really trying to provide better user experience to really trying to provide lower fees et cetera. Those are the companies that we want to work with and empower and it’s not just banks and payment providers. Mobile money providers and so on. So that’s kind of where that different approach comes from. And on the centralization point I would say that there are a lot of different definitions of centralization and you know we’re slow going down the list of meeting and more of them as we progress. One of the ones that we we don’t meet yet is that we still run a majority of the trusted validators but that’s something that we’re this year we’re going to start rolling out in terms of we have already got a lot of third party validators running. So people are going to start trusting them this year. And so is just one more step to kind of go in that direction.

And I think if I compare it to where we were with bitcoin like with bitcoin we had some level of decentralization again meeting some of the definitions but not all. For instance there is no geographic diversity it’s very concentrated in China right now. But we didn’t have a very good roadmap in order to how to overcome that because the system is really just sort of incessant centers are set up in a in a sense now say a bad way. Whereas with RIPL we have the incentives are in order. And so it’s just a matter of like you know Baldur’s having the right amount of operational histories of people actually start trusting them and having enough confidence in the software to actually you know continuously let go of more and more of the reins here. So I think it’s for RIPL it’s a clearer roadmap to get to a very high level of decentralization and bottom and decentralization is there’s kind of a bright line.

If Rebelle did not exist would the network continue to function. Yes. So that’s kind of know hard line. Which side you’re on. And then I think it’s Stefans point right. I’m kind of creation’s from there. And then second I think on what’s going on the market today. So obviously a really interesting time in the space. Clearly there is a lot of speculative interest that’s going on and I kind of break that into kind of two parts. One is there’s clearly a lot of almost like Krypto day trading going on. It’s almost like the days of the early Internet with all the day trading. And I think you could probably if you look back on most people that were day trading back in 2000 I bet it didn’t work out that well for people that were doing that. People shouldn’t do that. You could lose all of them. You know you can lose everything. It’s just not a good plan. People should not be putting their retirement money to work day trading. You know crypto currencies. And there’s a lot of skepticism that you see out there. Nathaniel Popper for example the New York Times you know he writes about that skeptically and he’s right to be skeptical. So we think that people should be very careful with that. But there’s a second part of speculation I think it’s being now increasingly driven by institutions so institutions funds that we call it The Wall Street tidal wave is sort of come in coming into play here.

And I think what’s going on there is that very sophisticated people are saying investors are saying look there’s some meaningful percentage of this is in fact a second internet and this entertainer that you can be as transparent transformational. That’s a longer term sort of call that that’s going to happen.

And as I’d say that’s more constructive speculation and I think those institutions and those kind of professionals they’ve seen what’s happened in this last 20 years of the net the great promise the over hype the you know the total bubble the crash and then kind of fast for 20 years where we are today. If you look back you probably say probably the early promise was probably it was probably under hyped. Given the impact that all of this has had on human existence so you know that’s a more constructive view.

They use cases for industries enterprise payment providers and other things that is coming on board. So I suspect that a ratio of sort of hopefully the long term speculative activity and the use case it starts to look more like what you see in normal markets because there’s things can actually work pretty constructively together.

One last point that I think interesting is in the first Internet that kind of started with institutions VCs and Wall Street and then kind of went on to sort of this daytrader you know dynamic that you saw is kind of the reverse of actually kind of started with individuals and now the institutional wave is coming on board. That’s a little bit different you know kind of flavor. But definitely think the world’s never seen anything like this before. So it’s trying to grapple. What are the metrics. What is it compared to VCAT Picard. Gold is it the first protocol that can be monetized. Watson new questions.

Awesome guys really appreciate it Stefans. Now we’re going to give an awesome presentation about what’s in store on the technical side for RIPL and then Chris is going to stay here.

It’s going to come back and we’re going to do a little Q and A with the audience. Take it away.

So what this is trying to illustrate is if you deploy intelligence some network and we envision that there will probably be sort of a global instance of it just like the Internet has a global instance.

Then you have these different nodes these little blue nodes here. And we call them connectors but they’re basically like routers in IP. So they basically take in packets on one side. They look at the destination on the packet they compared to the routing table and then they forward that packet towards that destination. Whenever you look at any kind of Blokland presentation there there’s a pretty good chance you’ll see some kind of graphic that has you know nodes connected by lines some kind of graph and you know you’ll hear things like bitcoin is the TCAP IPO of money. And when we hear that we cringe a little bit because if you know anything about how TCAP IPO works and how bitcoin works there are very different protocols the two very different things in a very different way. And so the challenge that we always have when we talk about intelligence is it is actually a lot like TCAP IP and in this presentation I want to try to convince you as to why I say that. But you know people already have usually seen some kind of blocking and presentation that looks a lot like this but is a little bit more superficial in terms of the similarities. And so if I want to send a packet into this network I just send it to whichever connect I’m connected to and it should find its way to whatever receiver receiver I’ve put on it. So in that way it’s a lot like TCAP IP you now you might say okay so are you routing these packets but how does actual money really move.

So the way that that works is that once you have sort of a path and you’re sending these packets each link is responsible for its own settlement. So what we tend to do is if you have two connectors that have peering relationship with each other they’re going to have this like pay packet traffic going back and forth. And so they’re going to look at those packets and then they’re going to eventually settle and for the core of the network it makes the most sense to settle through a digital asset. And the reason for that is that they are very easy to move internationally across borders. You have very low costs in terms of when you move them and since you’re going to have a lot of inbound and outbound traffic it’s makes sense to stay in that digital asset to do all of your settlements. But of course the majority of people users out there don’t actually have easy access to digital assets yet. And so you do need some kind of some form of support for traditional payment systems. And the interesting thing is that all these settlement networks really do is move payments across or move money.

And so that’s something that is supported by all the legacy payment networks that we where we can actually do as we can just aggregate to a greater degree so we wait a little bit longer before we settle and then we send a one big payment across you see that kind of at the beginning here with the sender done there and the receiver end up right where those settlements are happening a lot less frequently and they’re a little bit bigger and probably a little bit more expensive but they can settle lots and lots of these individual packets and so with this architecture what that means is that from an end to end perspective we can send a packet at incredibly low latency we can send it at an incredibly low incremental cost. And so that’s really what makes it feel a lot like the Internet you can really just connect to lots of different services and pay for lots of different things without accumulating a lot of fees while doing that and then sure as a settlement eventually and hopefully these last mile sort of settlements will get more efficient just like Internet connectivity went from you know 56 K modems all the way up to what we have now where I have Google Fiber so very happy with that so here’s a little chart of like the actual architecture. And again if you’re familiar with TCAP IP you know they draw the same kind of picture with the four layers. Which is you know something called the Internet architecture. It’s a little bit less detailed than oocyte architecture but I won’t bore you with that it’s just a reference for people that didn’t know that. So the four layers actually work a lot similar to the very similar to the four layers and TCAP. So I just want to go through those four and kind of give you a sense of how this all works together. The way you should think about the intellectual layer is essentially an abstraction layer.

So that’s basically the thing that you have all the different ways of moving money below it and then you have all the different use cases for moving money above it and it kind of brings them all together. So in the case of the internet it would be the Internet layer has all the different ways of moving information below it and all the different use cases building on top of it. And so now you can have all these different combinations I can make a Skype call over my Wi-Fi I can make a you know send an e-mail over my satellite internet. So it really doesn’t matter what use case I’m using and which network I’m on I can combine in different ways. And so this is kind of doing the same thing for money.

OK. Now on the application layer this would be the equivalent of like HD PSM t.p. Is this use case specific you would make different application layer protocols for different use cases. So one that we’ve designed so far is called ASP PSP or simple payments set of protocol and basically all that does is it defines what a internet identifier looks like so think of that like an email address. And you could send to that type of identifier if you wanted to pay somebody is on a putit peer basis or you could build that into simple apps. It’s not super efficient. It’s kind of like HTP or a general purpose application layer protocol. You could make a much more specialized one. So for instance we did an experiment where we built payments into BitTorrent. So basically to pay the app loaders. But also the content creators which I think is a really cool aspect of. It’s like it’s efficient enough that you can pay a lot of different parties in the flow of whatever app or interaction that you’re part of and we’ll see a demo of that in a bit. But I think this is where I expect a lot of variety is on that application layer. Now we’re talking about the transport layer. So if you’re familiar with TCAP if he does this where you find your TCAP and TCAP is really common to a lot of different application layer protocols that build on it and it gives you some sort of basic services. It gives you a sequencing of packets so that data comes out the right order.

It gives you retransmission if a packet gets lost it’ll send it again and so on. And we have a transport layer protocol called PIAs K2 and it does a lot of the same things it’s responsible for doing things like if you send a large payment it’ll split it into smaller chunks and then reassemble them it will do things like retransmission of payment packets et cetera. So again like I’m trying to really get across like we are copying from the Internet a lot and you have to give them a lot of credit because a lot of things that they do actually apply to money very well. Now the intellectual layer is is kind of an interesting one because that’s where all the routing happens and when we first started out of tell you one anecdote about the design of the Slayer which is when we first started out we assumed that the rodding would have to be quite different because we’re talking about money after all we’re not talking about information and so we know we knew about BGP and how it works and so on. But we thought a lot of those things wouldn’t be applicable. We wanted to route by the lowest cost path. We thought that that was the most important thing was to minimize the fees. But as we actually building it we realized that if you optimize by fees what can happen is somebody in the network that advertises absurd rate. So they just advertise hey I can exchange one dollar for 600 euros. Now that’s suddenly the best path to take for absolutely every payment in the entire network. Now what do you think is going to happen so that node is going to go down.

Obviously that rate was never real to begin with. And so you just the whole thing just breaks down. And so one of the reasons for the way the BGP is designed is to make the length of the path one of the primary metrics. And what that does is if someone advertises some ridiculous metrics you are still only going to take down his immediate neighborhood because everyone else is still going to look like a big detour the long path that they don’t want to take. And so it turns out that even for money the length of the path it’s a very good proxy for all the other things you might be interested in like how reliable is it what’s the latency or what’s the fees. Those are all lower or tend to be lower for shorter paths. And so we can do exactly what BGP does in terms of routing by shortest path first and then using other metrics to kind of tiebreak if path is same length. Picking the best one and we just basically add fee is another metric just like the Internet has latency every kind of talked a little bit about the settlement. The key thing to mention here is that all we need from the settlement layer is that it can transmit money it doesn’t have to be very fast it have to be very cheap if it’s slower we just settle less often. And just to give you some examples of the kinds of things we’ve integrated with already. There is Exar patient plug in so that’s settling using the XP ledger. That’s the most efficient plug in right now.

That’s one of the reasons that we feel good about this strategy it’s like we actually seeing in practice that our own products score really well on these different metrics in terms of like what Ledger would you actually choose for settlement. We’ve done a lightning integration. So we did a little test where we actually connected the bitcoin lightning network and the lightning and lightning network together you know familiar with lightning. It’s basically a scalability overlay network for currencies like Bitcoin and then you could do something like H.H. you can even do cash if you want right so you can have a relationship with an intelligent service provider where it basically says like I give you cash up ahead of time or you give me cash ahead of time. And then we can exchange packets up to that amount until we reach that balance and then we have to settle up again. OK. Now with all that prefix I’m going to give you a bit of a live demo and is going to go fairly quick. So pay attention. So basically what we’re going to show here is the easy website maker website maker is an app that somebody put together and just uploaded it to get to. And basically it allows you to create a Web site from just having a sketch. And now obviously we didn’t build all the difficult part is the eight parts of what that’s where you guys are for them. But we did do all the payment stuff so all the payments are actually going through into Ledger this actual payment packets being exchanged and we tried to visualize that a little bit later by having like a log of packets.

And basically what it does is I put in a sketch and it goes to one vendor that’s offering an API update API that can turn sketches into an actual email and then it’ll go Pan other vendor to actually package that into Docker container and upload it somewhere and then another vendor to host the actual live Web site and then another vendor to buy a domain. And finally we’ll tip the developer so I’ll go sure what that looks like. So first thing you need to do is I need to pick my sketch so I’m just going to grab one here and so this is the sketch of my web site. This will be small to see but it has like some tax than it has a little chart and has some more text. And just to be clear again like the AI’s marked out we didn’t actually create the eye just for the demo that would be ridiculous. But yeah in the future this could very well be possible. So I’m going to say make my site. And now things are going to happen very quickly so it’s gonna upload that sketch to that AI. It’s already done and now it’s uploaded the finished HD Imelda get back to a service that turns into the docker container and as you can see on the right and I might do the demo twice so you can see it again. On the right you saw the total amount paid. This is an excerpt drop’s this would be one millionth of an excerpt.

So total paid would be point one excerpt which is about what is that like two cents three cents to three dollars and cents point. What is it like. That’s like 30 cents or something whatever.

So you can see like the individual packets and there’s a couple of things going on. And I think it will run through the demo again just so you can see. So first when we paid that AI we paid a sort of one lump sum amount and then the packager is actually a streaming paid endpoint so that’s a Paden point where as we sended data and we ask it to do things will stream packets to it to keep it paid. And if we ever don’t keep up it’ll like Stob working until we pay it more and then we deployed it to a host and bought a domain and then sent a tip to the developer that I can actually click the button here and and look over here and as you can see our website is now up and I can show you it’s like all of us running locally but we’ve got a domain set for it it’s like set it up so let’s go through them all over time just to see you can see kind of the streaming payments part a little bit better so I’ll pick the one and website so you are right. You can see like total paid right now as 500 drops to pay for the guy. Now we’re streaming to pay for the packager so this is going and 250 drop intervals and then we have a large expense to host the Web site 9000 drops. It’s over 9000 to actually buy the domain. And then finally we tip the developer a thousand drops.

And so if I make an app like that I have a built in business model and I think that’s really the key point to get across here. I think this will have a huge impact on the web where think about if I started convenience store. I don’t need to think about what my business model is. My business model is people pay me when they come buy things when I open a restaurant I don’t think about my business mom business model is people pay for the food that they eat on the incentive we have this weird thing where like that isn’t a good way to charge people for using your website. And so we build advertising we build subscriptions and all kinds of Hakki work arounds for like how to get money out of people just from visiting your website. And I think this will present a pretty efficient alternative in the future where people can just pay you for using your site.

So that’s it. And again back to this. Thank you.

Thank you Stefan.

Now we’d like to open it up to questions from you guys. Does anybody have any questions.

Thanks for that presentation again. Yes so there’s like a lot of different coins that deal with payments like RIPL like coin steller for example that I’ve heard of. Can you go like a little bit over. What’s the difference. Like the basic differences between all those different payment platforms. And then also do you see like one payment platform just dominating and we all just use one of them or can these somehow like live in harmony kind of like USD in euros and whatnot.

So the second part I think it’s going to shape out a lot like what you’re seeing with fiat currencies. I mean you know the world kind of has four major maybe five majors and then there’s kind of a you know everything else. And I think that probably plays out here simply because particularly with the sort of Wall Street wave that’s coming a lot of those institutions they’re not buying in May 2000 different kinds of coins and platforms out there. There’s sort of a grab on her now top ten or five or it’s some smaller number. And you know in currencies liquidity begets liquidity. All of this is about how much liquidity is kind of you know kind of supporting these platforms and these and these these currencies are commodities wherever you want to call them. There’s still a lot of debate on what they actually are. So I suspect that’s going to accelerate and that liquidity then attracts more use cases like for example ripple a company focuses on the enterprise use case. But you know we see the thing we see SRP is very much a general global digital asset without a counterparty. So you know you’ll see more and more use cases popping up from different angles and that just kind of drives more liquidity. So I think that’s probably the way it might be and how it pans out.

Yeah I think the reason we developed into Ledger and the reason we built an insurability protocol was because of that exact realization that wasn’t going to be everyone using one system that was going to be a number of different systems and actually behind it is another realization which is you know my goal has always been you know to solve the problem of you know friction payments right. And so I realized that decentralization wasn’t necessarily the solution because you see PayPal they come out they have free then eventually to jack up their fees when they have the established market position. But then you see bitcoin doing the same thing not necessarily with us as much sort of agency but it still happens that way. And so when you think about is right now when you’re on a payment network you can only send money to the people on the same network. And that’s kind of like pre internet online services where you could have like CompuServe and you can email anyone on CompuServe and you can you know use any services that are on CompuServe but you can’t access any services that are on. Right. And so CompuServe has its like Moat’s. They have a defense ability around their reach. And so that’s really what you got. Commodities are what you got to attack. And so with payments it’s still that way today. If you are on the same network you can pay each other if you on different networks you want if you want to pay from your PayPal account to a mobile money account and Tanzania is. You can’t yet.

I can totally go on my mobile phone in Tanzania and open any website in the world right. And we need that kind of interoperability and that’s really what creates the competition that drives down the cost. The reason we think that XP is going to have a role in this system is because we’ve been doing. I mean not to toot our own horn too much but like we’ve been doing really well in terms of like the performance and the characteristics of the protocol. So I think a lot of people will choose to use XP if there is sort of a lot of competition like right now use bitcoin even though it’s expensive use bitcoin even though it’s slow. I think if there’s a lot of competition people will pick the most efficient which would be XP right now.

You know that as well. It’s kind of an environment where a lot of the volume I think is speculative I actually think that kind of use case has a greater tolerance for cost speed. Kind of didn’t really care right. Where is as you start getting into kind of these these cases we need like you know millions of some kind of unit that matters a ton. Right. So has the kind of the ratio of real use cases just speculative volume changes.

I think that dynamic becomes more important. You start. Next question. Thanks. Thank you.

Hey thanks so much for coming. My question is around so if you’re talking about that SRP and cryptos or the internet of money the big difference between money and data is that money’s regulated and banks certainly you know if the word that you like the equivalent of running the phone lines before have a pretty big incentive to innovate and sort of get ahead of a change that that is coming. So you could see the easily upgrading the swift protocol to be able to move money internationally a lot quicker. And so I’m curious how you guys see specifically SRP living in a more regulated space. I think you know crypto sort of took the world by storm and governments are going to certainly respond the next year too. So why do you think that SRP is going to be able to live in a much more regulated industry then. Data is especially because like you could see banks upgrading swithe to be able to support you know maybe like submitted transactions instead of transactions that take days. Yes.

I want to quickly question some of the privacy isn’t there. So I think a lot of the people in the room I think are very young and so we grew up after the deregulation of data. So like the Internet came out and a lot of the laws that were around before that copyright law you know cryptography laws export restrictions around algorithms things of that nature you know actually got removed and their safe harbors God created because the Internet kind of post the technology that was on the one hand very useful and on the other hand kind of in a legal gray area. So I think that the technology that’s if you use it it just feels so incredibly useful that it’s hard to imagine how regulations wouldn’t be built around it. I think that there is definitely an opportunity for people to be thoughtful and intelligent about how to approach the technology in the meantime like you want to be compliant. You want to do everything that you can to kind of stay within the letter of the law. But there are going to be ambiguity in terms of like just the law is written for these kinds of use cases. So I think that’s one thing. And then as far as like Exar thing handed off to Chris.

Yeah I mean. You’re raising a key part as I mentioned before the Internet of value is kind of equal parts capital technology and compliance compliance is hugely important and the reason is simple. I think it’s just because governments sort of want to have a monopoly. I think it’s actually more a question of you know data is powerful but money is more powerful. Right. You know data can show you you know lifesaving medicine that your family might need.

You can’t buy it. Money can buy. On the flip side you know data can encourage a terrorist to do something awful. Money can buy the weapons right. So the stakes are higher which I think actually this is going to have maybe a more profound effect on earth good and bad. So regulators have got to be there every step of the way. This fantasy that somehow this is going to bypass governments and bypass compliance. You know what. That’s just that’s just B.S. And you know nobody wants that. Nobody wants that. That is a champagne problem with a bunch of rich young people that can sit there behind their computer screens and like block out a lot of bad things that can happen. So it just can’t go that way. And so I think we’re trying to think about that trying to be pragmatic about that because that’s the only way we’re going to have impact. And if you look at people who are trying to support what’s going on in the developing world they are very much wanting to work. They’re not trying to go around. They’re trying to work within the system because they know that’s how you can have impact. So that’s just kind of the way we see it. Your question about swift by the way. The problem with that point of view is swift only deals with the data. They have a correspondent banking partner that deals with the value and that’s off any sense of an Internet value.

The whole point here is that something like ledger and SRP can eliminate the correspondant which is actually where all the juice is read that’s where all the waste is. That’s where the settlement risk is that’s where the failures are that’s where the time is so swift actually doesn’t have the combination of capabilities to do what you’re saying.

All right Gary thank you for the question.

That’s a pretty good demo. And I just want to be do behind the scene next for example AI how to build a haunted mining goes to that age.

But OK so we built a protocol that kind of takes into Ledger on the one side and takes HTP and the other side. And essentially you’re making rest calls you’re making API calls to these back ends and the first time you make the call they’ll respond with 402 payment required which is sort of an error code. Peter was already reserved great works for these guys and basically it sends you back a header that tells you all the information that you need to know to make intelligent payments to that exact point of the API server that runs the endpoint. So that server will be listening for intelligent packets in addition to the HTP requests.

And so when you start paying. Yeah it’ll go back into that same receiver and then the receiver will then create a year where we call like a token and then next time you make a request that has in the header your token and so the receiver will know that you’ve actually funded that with some packets and then you will you can proceed through the program. The streaming version of the demo to you saw that’s a little bit more complicated as probably goes beyond but we can maybe catch up about it later. And then one thing that’s also interesting is that one of the services which is the thing that builds a static site into a darker container actually itself pays another API right so we have another API behind that.

And so one of the things that’s really cool is with these streaming payments we can actually have sort of an API that takes in money and it immediately spends it as during the process the request and then maybe sends a little bit as profit to the developer and then return as a result. So there’s a lot of cool stuff you can do with it.

Thanks thank you guys for coming to speak today. I’m kind of curious to learn more about how you might prevent money laundering and companies that participate. You know you don’t like the payday loan type companies from coming on the system and exploiting people financially. I’m interested to learn more about that sort of thing. Yeah.

So I mean I think we we really try to focus on kind of the bottom of the payments stack so kind of on the infrastructure part of it. The reason for that is that a lot of the things that prevent bad things from happening are kind of top of the stack and a lot of that actually doesn’t need to be reinvested right in the way we kind of think of it as like let’s focus on what’s really changing and we think this is the interoperability. It’s the idea of a digital asset with no counterparty that can be sent anywhere in the world that’s neutral.

So those are the things I think we can we can can change and then piggyback off of what we like the Enterprise focus now is for that first beachhead. You know piggyback off of what already exists for hundreds of millions of people. The other thing I would say is that if this internet value becomes a reality I think you know the prevention of things like payday lending. Obviously there has to be regulated.

That’s a big part of that at every level. But the other big thing to Stefan mentioned before is sort of the commoditization of reach.

If you have that you suddenly now. Every market has way more competitors for financial products. It was something we saw at prosper and we got frustrated with because we were kind of us only you couldn’t you couldn’t transport it to a market because you were in another network. This future vision I think is that the world is one big financial supermarket and you know everybody’s competing in every market. I think that goes a long way. But you still need all the other kind of regulatory components pretty much existing. Some may go away but I’d say probably most of them don’t.

Know when you add to that like with with you know you mentioned end money laundering I think there’s sort of a long list of things that are actually completely separate issues right there sort of consumer risk. There is any money laundering there is anti terrorism finance like there’s all kinds of different things that you have to think about when you’re building a payment system. And so if you have a stack like this they’ll fit in different parts of the stack. Like for instance consumer protection that would fit in the application layer. So if you’re building an application where consumers are sending money you have to think about you know how to protect those consumers from sending it to the wrong people. If you if you think about risk a counterparty risk that would fit in the sort of the ledger layer. Right so you have a counterparty they settle with you on a certain schedule how do you make sure they actually settle with you. So there are a myriad of things to think about. I think that it’s kind of illusory for us to come up with all the solutions. I think we’re trying to be thoughtful in terms of like getting it to a point where we can start experimenting with it and kind of get more experience with it but that’s going to require sort of commercialization of the technology to really think about you know all of those use cases. And I would also highlight that you know RIPL has a commercial you know stock in a commercial feature set and that is very much like Chris said writing within the existing regulatory framework.

And then we have the open protocols which are maybe a little bit more forward looking. And I think some of those questions are more difficult there. So what you saw is present today is the more forward looking stuff. So I think some of those questions are still open there.

Thank you very much. Thank you.

Hi thanks for the presentation. So since that tech is currency agnostic. Why what would be the incentive to choose IPO over fiat or any other cryptocurrency.

So this is where it almost looked like as my colleague up on stage because you know we have our team who is actually trying to integrate with these different digital assets and you know different payment systems and it’s just a like many orders of magnitude of difference between XP and let’s say Bitcoin is still several orders of magnitude between XP and something like like Koine which is known as a more efficient asset.

And like it’s just a pleasure to work with. And part of it is it’s been designed for that right like it’s been designed to be used as the settlement asset and into a ledger and so has a lot of functionality like payment channels built in a certain way that are incredibly efficient for this particular use case. And so I think the big answer the main answer is right now it’s just the best thing to use. Like we talk to people hey let’s set up a connector. Well what do we do with what we could use light coin or we could use X or P but XP will just be cheaper. So let’s use XP. And so I think as much to the extent to like these connectors are going to be competing with each other and they’re trying to think about their margins.

XP is just going to look like a very good option for them in this world you’ll just you’ll need some digital asset that is super fast super cheap endlessly scalable that will serve the world very well right better than let’s say using a dollar or using a euro rate something that is a neutral to any network. So we’re absolutely confident that some digital asset will be a key part of this internet of value but we think that sort of fast cost in scalability are going to be those key things and that’s what’s going to drive the liquidity that’s going to make these things really useful like XP is not static either.

It’s like we’re constantly thinking about how to help improve it. There’s a community out there it’s thinking about how to improve it so you can expect that it will get better as well as as time goes on.

Final question I saw something in the very beginning of your presentation about how you think peace over Bitcoin. In a sense that bitcoins I lost lower on my expensive but. But is there for a reason. Because it requires like at least 6 confirmation across the network in warfare since actions happen and dies. There is a trusted public spending problem. So I ask. Just curious like in your own words how does the SRP address that problem. If it’s just a confirmation between the two notes. Yep.

So if you’re not technical please you know do something else a little bit because there’s no way to answer a question without getting into some of the technology. So Bitcoin uses a consensus process which is essentially based on the assumption that a majority of hashing power will never be held by a coordinated malicious attacker. And so if you’re watching what the majority of hashing power is doing you’ll tend to be on STATE OF THE network that is reasonable and it doesn’t contain you know reverse the transactions and so on. However the protocol as such does allow rollbacks right so you can if somebody else presents you with a chain that’s longer has more hashing power behind it you will rollback your transactions and switch to that. And I know that because I was one of the first person people to implement a full node bitcoin reimplementation from scratch. So I wrote that code and it’s very complex annoying code to write. So I will remember that forever on the ripple side such code does not exist there there’s no way to roll back the network. Now how is that possible. Well the way that RIPL works is as I mentioned before the users select these validators and then we essentially use that input as a as an input to sort of an algorithm where we look at the graph of what people selected and then we run a consensus on validators that are central to that graph that are highly trusted within that graph. And so it’s one of this two step process.

And what that means is that when the first step is complete and you try it you have identified which validators you’re looking for. You don’t have to worry about there being more hashing power just over the horizon like once you hear from the validators that you’ve identified as being the ones that are validating or like the ones that you’re listening to then you don’t have to worry about some of the other validator coming in later saying no actually we decided this you just didn’t hear about it yet. And so there’s no need to roll back or 2 to review rewrite history once volunteers have committed to a decision they can’t change their minds essentially. And so that has a couple of impacts. Couple of ways that the protocol is different because of that. Number one you only have to wait for one confirmation and you wouldn’t wait for multiple confirmations because values can change their mind you can roll back so there’s no probabilistic aspect to it. Number two is we can process or we can’t trade blocks on a cadence that we can create blocks and like a fixed interval as opposed to a random interval like bitcoin where you know blocks come out very close together that could be no block for a long time because we know which Felder’s are supposed to generate blocks they can generate them on that cadence. And then finally I think the clever thing.


Yeah whatever. There’s a really good to talk on why I shouldn’t call it really good.

But there’s a talk by myself on concerns that you can find from the consensus 17 conference where I go until a bit more detail. And I’m also happy to talk to you afterwards. But that’s kind of a high level quick description.

Cool Chris guys thank you so much for coming. Do you have any final statements or do you want to tell people how they can get involved in the rebel community at all.

Yeah so for into ledger there’s inclosure org which at the time of recording is horribly out of date but hopefully by next week should be you know showing all the latest great stuff. There’s a community group at the 3C called the intellectual community group that’s open to anyone to just register with a mailing list where we discuss how these protocols work together. All the code for you know the demos and everything you can find on GitHub com slash into ledger and slash into legit J.S.. And then for RIPL purple dot com if you’re a bank is now reach out if your payment provider maybe you worked for Google payments or anything like that. Let us now and then for another project which we didn’t really mention today. But that’s also was also using a demo in the background which is called Codys. So that’s basically the hosting system that’s paid within the ledger and we uploaded that website to it. There’s a lot of cool use cases around hosting if you think about server list hosting etc. It’s into that there’s coziest the org as well cod ODI us that are.

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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