Jay:  I was recently invited to attend Ripple’s annual conference called Swell, which was held down in Singapore this year. Ripple is a US-based fintech company whose main goal is to enable banks and financial institutions to easily send money across the globe by leveraging blockchain technology.

I was also given a rare opportunity to sit down and interview a number of the company’s executives to discuss their vision for what is call the Internet of Value. We also talked about the company’s main product offerings, their native digital asset called XRP, and the independent decentralized cryptographic ledger, which XRP runs on called the XRP Ledger.

For those of you who have already been involved in the blockchain or crypto space for a while, you will be quite familiar with the tribalism and polarity that exists in this space, particularly among the holders and supporters of the various cryptocurrencies. 

With this in mind, the format of this week’s program will be slightly different than usual. I’ve taken the most salient discussion points from the various four interviews I’ve had and merged them into one longer deep-dive episode with the goal of giving you the most unbiased, objective, and comprehensive overview of what Ripple does as a company and what their plans are for the future. 

Our exploration begins with a high-level discussion with Brad Garlinghouse, the CEO of Ripple. He gives us a solid background of the current banking system, an overview of Ripple’s business model, and the big problem that Ripple is trying to solve. Brad is the CEO of Ripple and a member of the Board of Directors. Prior to Ripple, Brad held various senior executive positions at Hightail, AOL, and Yahoo! 

Part 1 – Brad Garlinghouse

Jay:  We’re here with Brad Garlinghouse, CEO of Ripple. Thank you for welcoming me to the Swell Conference here in Singapore. How are you liking Singapore? How was your trip in and everything?

Brad:  It’s been phenomenal. Other than some sketchy weather today, Singapore has been a tremendous host for this. Probably why we chose Singapore, frankly, is it is, obviously, a hub for a lot of activity across APAC. About 40% of our customers are in the Asia Pacific region. There’s also a lot of regulatory clarity — more regulatory clarity here than a lot of other markets. That’s, obviously, good for the blockchain industry at large.

Jay:  Yeah, it’s fantastic. So we’re going to get into all of that. I’m going to try to breeze through the 101s quickly, but let’s get some background on you quickly for people out there that don’t know who you are, where you’re from, what got you into tech because I know you’re a long-time tech person, and why you ended up joining Ripple back when you did.

Brad:  So I grew up in the United States in Kansas and went to the University of Kansas. I have always gravitated toward technology. The extra level of detail there is my dad bought us a TRS-80 computer, which some of your listeners will know what that is. Most won’t. So got exposed to computing and programming at a very early age, and it stuck with me.

So spent part of my career on the infrastructure doing network stuff, Telco, coaxial cable stuff, but ended up at Ripple. In large apart, I’ve always gravitated towards the leading edge, and at times, bleeding-edge areas I thought could in some way change the world. I got involved in the internet very, very early. I got exposed to the Mosaic browser in 1993. One thing led to another and spent a lot of time on the internet side in a long career at Yahoo!

But, for me, blockchain represents what crypto represents is a 10 or 20-year evolution where I think it’s going to impact more and more industries in more and more ways in which global commerce operates. I mean that in every definition. So I wanted to get involved with it. I got involved with Ripple and feel, through a little luck and a little bit of skill, we find ourselves in an interesting spot.

Jay:  Yeah, that’s a good intro of Kansas. The reason I know, I’m a Carolina grad, so Roy Williams and Jayhawks.

Brad:  Yeah, we’re friends then.

Jay:  Yeah. We’re friendly. Competitive.

Brad:  We both hate Duke.

Jay:  Absolutely, yeah. So that’s a good common ground for us to start with. Let’s hear the one-liner, elevator pitch if you will. What is Ripple as a company, and what problem are you trying to solve?

Brad:  Ripple is a company, effectively in its simplistic way, is an enterprise software company selling software to banks. The tech stack we use includes both an open-source digital asset called XRP, as well as some onramps and offramps. They’re proprietary blockchain capabilities that allow for banks to do real-time settlement.

So today, as many listening here are familiar, cross-border financial transactions, whether it’s remittances, corporate, they tend to be very slow and very expensive. We have talked about, since the beginning of Ripple, the idea of an Internet of Value. How do we let value move the way information moves today?

You, based in Hong Kong, and I; you can watch a North Carolina game from anywhere in the world, any time, yet you can’t send a wire on Sunday. One of our panelists here at the Swell Conference yesterday made the comment that “We put a man on the moon. We found water on Mars, yet you can’t send a wire on Sunday.”

It’s pretty crazy that our global financial infrastructure is four to five decades old in terms of how it operates. All of the things that go with that — air rate, speed, costs — are four or five decades old, and we think it’s time to bring that to a modern infrastructure, and there are a lot of downstream implications that we think are pretty exciting for lots of people.

Jay:  It’s remarkable that no one’s actually looked that deep — or maybe people have, but no one’s really come forth. You see a lot of payment solutions that people are coming up with from the technology world, but they’re more for the consumer. I think a lot of people just didn’t know how archaic the infrastructure — the current plumbing is for institutional cross-border payments.

Brad:  If I might interject in that. I commented to this a little bit in my opening remarks to the Swell Conference yesterday, but a lot of the people doing interesting things — whether it’s consumer or otherwise in payments — they’re kind of hacks on the existing infrastructure where, because of the limitations of the system, they’re building workarounds that allow for a better experience. But they’re not actually changing the infrastructure.

So Ripple, from its earliest days, had this audacious goal. If you really want to enable the Internet of Value, you have to rework the plumbing, and that’s where Ripple has been focused. If we can reset the plumbing, and as I’m sure we’ll talk about, we now have a lot of customers and a lot of momentum towards that.

Jay:  Yeah. It’s pretty exciting. Were the founders of Ripple from the payment side? Were they from a bank, a financial institution? How would they even look to overturn that stone and be like, “Okay. This needs disruption.” Right?

Brad:  It’s a good question. Chris Larsen, who is the chairman of the company and was one of the co-founders, he founded Eloan, which was one of the first lending platforms on the internet back in the early days of Internet 1.0. Then more recently, he founded a peer-to-peer lending site called Prosper.

He, first-hand, had seen some of the limitations for a decade or two in thinking about how does fintech enable a broader community to be part of the banked community, the first-world financial system. For him, the Ripple vision came from some of those experiences.

I don’t come from payments. Actually, a funny story on this is when I first got the call asking — it was a recruiter calling me — he said, “Ripple’s looking for somebody.”

And I said, “I’m not your guy. I know some people at PayPal. I know some people at Visa. You should talk to them.”

What the recruiter said is, “Well, Chris Larsen feels like, in order to find somebody to change a system, you want somebody from outside the system to look at it differently.”

Jay:  That’s true.

Brad:  I don’t know if he’s right or not. But here I am five years later.

Jay:  There we go. Yeah. Well, we shall see. We shall see.

Okay. So the basic Ripple, the company, the basic revenue model, so to speak — selling enterprise software to financial institutions, banks, intermediaries — and within that, you have a couple of products. Your xCurrent product, which is the easiest first-step to get these guys on board. Then you have what used to be known as xRapid On-Demand Liquidity — the artist formerly known as —

Brad:  Prince.

Jay:  So maybe you can talk us through those two products because I think that there’s a little bit of confusion, especially from people that haven’t researched Ripple, the company, that well. The initial pushback was basically, “Oh. Well, you don’t need to use the digital asset. You could just do everything on xCurrent.”

Brad:  Yeah, we’ll talk through it. So the idea was exactly as you introduced. We wanted to bring banks, financial institutions into the opportunities represented by these new technologies. And, frankly, starting at the deep end — and I’ll say the deep end is going all the way into using digital assets to solve some of these problems as opposed to gradually working them into that.

We’ve found it much more effective to start having a conversation about how they can use products like what we’ve called xCurrent, which is when someone wants to connect to RippleNet using fiat. You can connect from the Bank of Brad to another bank using dollars to peso, but that’s using existing pre-funded accounts.

Now, if you have pre-funded accounts in your bank, this is a more efficient messaging system than it’s SWIFT, which is typically what people would use. It’s a more efficient version, and that’s good. What we have found is, by getting them on board, it gives us an opportunity to explain to them, “Look. There’s an opportunity such that you don’t have to pre-fund.”

That’s where On-Demand Liquidity comes into play. The idea being that when a financial institution — whether a bank or payment provider — is pre-funding, they’re taking working capital. They’re taking their balance-sheet resources, and they’re parking them someone such that they then can have that nostro-vostro relationship between banks as to how the correspondent banking system works.

Jay:  Yeah, so, literally xCurrent is essentially a better version of SWIFT. I don’t want to get you in trouble or anything, but essentially, that’s what it is. You’re going into that infrastructure. You’re basically saying, “Look. This is going to be just faster and better.” You don’t necessarily have to build out anything further. You guys go in and—

Brad:  Yeah. That’s basically true. It is a simplistic version, but, look. SWIFT, today, is a one-way messaging framework. I use the comparison, if you were to send me a postcard, you would fill out the postcard, “Brad Garlinghouse, blah, blah, blah. Nice to see you,” put it in a mailbox, and then you have no idea what happens. It goes in the mailbox. You have no idea what routing it went to. You don’t even know if I got it. You don’t know how long it took me to get it — none of those things.

SWIFT kind of works the same way. You execute a SWIFT wire transaction. The only way you know I received it is when I send you a note saying, “Hey, I got your wire.” So what we have done is taken that, I think, very rudimentary infrastructure that was built decades ago, and said, “Look. Let’s have a two-way messaging framework.”

And when I’m typing in, “I want to send a wire to Brad Garlinghouse,” you can in real-time verify, does the account number matched the name? One of the primary errors that happens through SWIFT is, somebody maybe fat fingers, instead of Brad Garlinghouse, they say Brad Garlington, and they put in the account number, and it goes to the other bank. And they’re like, “The account number doesn’t match the user name.” The account number and the account name don’t match, and so it’s rejected. That causes lots of overhead, and that type of stuff just doesn’t need to happen in a world where you can use better internet-based technologies to do this in real-time.

Jay:  Again, when you unpack this, it’s mind-blowing that this hasn’t been improved yet, or is in the processes still. Okay. Now, once a customer is onboarded onto xCurrent, On-Demand Liquidity is another solution. Does that come in the same enterprise software suite where they can simply flip a switch?

Brad:  Yeah.

Jay:  And, you’ve got to be careful with that, by the way.

Brad:  Again, it’s a little bit simplistic, but the idea being that when someone connects to RippleNet, they don’t have to think about, “I want this product, this product.” You’re connected to RippleNet, and we can offer different features and functionality within that. If you already have liquidity, you don’t need to use On-Demand Liquidity, and those payments don’t touch XRP.

If you don’t have liquidity, and you want to shoot payments into the Philippines, and you don’t have a corresponding banking relationship there, we can help you solve that, and we can do that in real-time. You don’t have to pre-fund, and you can shoot off payments into the Philippines using XRP as the payment mechanism.

Jay:  So if you’re a bank, if you didn’t have a corresponding-bank relationship, maybe you can talk a little bit about corresponding banks and the massive amount of business that they’re doing because some of these banks have to use them. They’re, basically, forced to use them until now.

Brad:  Yeah. You really didn’t have an option. The banking system — and I have pointed this out in your various interviews over the years — there are ten trillion dollars pre-funded in accounts around the world, which is effectively the grease, the oil, that is facilitating the engine that is correspondent banking. The oil has to be there, or correspondent banking won’t work. So, it’s the oil that sits there.

Now, if we can reduce the amount of oil, that improves the efficiency of the global economy. So we feel like bit by bit we’re going to be able to take that ten trillion dollars down to nine trillion, and then eight trillion. This is a journey that will take many years, but as I’m sure we’ll get into, we’re incredibly enthused by the progress we’ve made in a relatively short amount of time.

Jay:  From a customer perspective, then, there’s a significant cost savings, as well when they switch over to OnDemand Liquidity. So it’s more of getting them onto xCurrent, indoctrinating them into how it all works, and then basically, it’s for them to decide on their own.

Brad:  Yeah. Well, it’s a cross-sell. They decide on their own. We’re evangelizing if you’re working with a bank, and you’re a payment provider, and you’re saying, “Hey, here’s what we can do in this corridor, and that might be fiat-to-fiat, but hey, you want to open up a new corridor. You have customers in Brazil that you can’t serve.”

One anecdote I would offer, we were talking to one of the largest banks in Canada, and they were exiting their correspondent banking relationship in Brazil. Now, they still have customers that want to bank, to do business in Brazil, but they just decided the cost and the overhead of maintaining that relationship of a correspondent bank, maintaining that nostro-vostro account relationship, they decided that there’s too much overhead associated with that. So they closed that relationship, but they still need to enable payments into Brazil, so they used a different correspondent. That means they’re paying somebody else. But they still have customers who want to enable payments into Brazil.

Our viewpoint is, in the future — I think they told us this about a year ago, but what they basically said is, “Look. If you can enable us to be in Brazil without being in Brazil, that’s fabulous.” Now, when they were telling us this story, we weren’t ready. We first announced the product of On-Demand Liquidity at the time, as you described earlier, called xRapid.

We first announced our intent to productize that a year ago at the Swell Conference, and we went live in January. And again, we’ve got now over two dozen customers that are live using On-Demand Liquidity, which is huge progress.

Jay:  Yeah. I saw that press release yesterday, which is awesome. So, congratulations.

Brad:  Thank you.

Jay:  From the solution that you’re selling to enterprise customers, I guess it’s an annual fee. Is there someone that comes and helps implement this technology inside the institution? Then that leads to this question of anything using digital assets at this stage, or crypto, is a bit clunky to get on board.

Like, if I want to go and trade bitcoin, do they have to like fiat, put it into some sort of exchange that accepts it, trade it, there’s a freeze, there’s a spread? And then here comes the question of volatility and this sort of thing. That’s part of your tech stake that you put it in.

Brad:  We want to make it as simple as possible. We’ve been very public about the work we’re doing with MoneyGram. I’ll be on stage later this morning with the CEO of MoneyGram talking about the work they’re doing. So we want MoneyGram to see a dollar-peso quote.

What happens in the kind of plumbing of that transaction, at the end of the day, they just want to know that, “That’s the quote. I need liquidity in Mexico, and if I can get it at that price, great.” Done. Click. What ends up happening is, there’s a trade from dollar into XRP. XRP then moves to an exchange in Mexico. Then there’s a trade from XRP. You’re selling the XRP and buying Mexican pesos.

There’s a whole bunch of stuff that happens. Frankly, we want to make that as simple as possible to the customer. All that the customer cares about is, “I need a dollar-peso quote. I need a thousand dollars moved into Mexican pesos, and I need to do it right now.”

Jay:  So whoever’s trading under Internal Treasury Desk or whatever, you want to make that customer experience a seamless and—

Brad:  Yeah. Anything that causes confusion limits success. You asked earlier about how some of these contracts work. You’re right. When we go live with a bank, it isn’t just… Hey, it’s like a Salesforce seat where you’re lighting up an instance in the cloud. You actually are deploying technology typically today behind a firewall. We have integration engineers who fly around the world and go onsite with a bank, with a payment provider, and help with that deployment. That’s the nature of how this stuff works, and it’s part of our business model.

Jay:  Let’s talk a little bit about volatility because I know that this is a big issue, and a lot of people misunderstand this part of it, the volatility of holding a fiat currency or other cryptocurrencies versus using XRP for a transaction, which is very fast. And by virtue of the short amount of time that it actually takes to make transaction, in theory, it should be less volatile, but is there a black swan? There could be a situation where there’s a flash crash during those three seconds that it takes. That’s a real risk. Isn’t it?

Brad:  Let’s talk about volatility at large, first, and then we’ll talk about is that a risk. At the most macro-level, when you transact a low-volatile asset like fiat but it takes two to three days to transact, somebody is taking that volatility risk for that two to three days.

Now, what happens today is somebody is pricing that volatility. When you do a fiat transaction, somebody is selling you that volatility risk, and it’s embedded in the price. Today, oftentimes, that’s the bank you’re working with. Sometimes, they use somebody else. There’s an FX desk. It depends on which bank you’re talking about, who provides that insurance if you will.

Some people are like, “Look. We can’t use crypto to enable these transactions because there’s too much volatility.” Volatility, though, is duration, is time times volatility. And it turns out if you take a low-volatile asset over a very lengthy time, which is about three days is 260,000 seconds. Or you have a high-volatile asset, like XRP, over a very, very short amount of time, it turns out there’s less volatility risk in an XRP transaction than there is in fiat.

Now, as you’re describing, though, if somebody is selling you the risk mitigation in fiat because you don’t even really think about it that way. “Look. I priced it at that moment, but embedded in that price was somebody taking the settlement risk.”

Jay:  That’s right.

Brad:  Today, because it’s so fast, you don’t have that in the crypto space. Maybe you would need that in the bitcoin space because a transaction is quite slow, relatively speaking. An XRP transaction is three to four seconds, and so, is there a risk? We haven’t yet seen the risk of a “flash crash” as you’re describing. I’m not trying to pretend that’s a zero risk. I think if it’s a material risk, someone will come in and sell a product to risk-mitigate that.

Jay:  A credit default swap or whatever?

Brad:  Yeah. Somebody will build a product, and it will solve that problem, and if there’s enough demand for it, they’ll do it. I’m not sure that will ever be needed. I don’t know, but right now because it’s so fast, we haven’t seen it be a problem. We’re doing many millions of dollars a week over On-Demand Liquidity. We’re way past the experimentation phase. This is actually real. It is working. It’s at scale.

Jay:  Right. Okay. Fair enough. Last question, and thanks for taking us through the plumbing and technical side of your product offering. Ripple, the company, is one of the crypto unicorns out there, and it’s a strange one because you’ve taken venture funding, and then you also have this digital asset, which I don’t know how that accounting works, but that’s worth a lot of money.

A lot of projects I’ve seen have come and done these ICOs, and they don’t even have a main net. I can think of a couple off the top of my head. So you guys are in a unique situation where you might not necessarily need the funding, or you’re well capitalized at this point, I would say. How does that play out in the future as far as Ripple, the company?

You have your venture investors that, obviously, want a return. Then do you plan to basically grow the company separately? Not separately, but in the traditional venture funding path to some sort of exit, and then how does the digital asset play into the whole thing?

Brad:  Yeah. First of all, I’m glad that when you asked the question, you have an understanding that some of the markets still have confusion — what is Ripple, and what is XRP? I think one of the most important things to understand is XRP is an open-source technology, the XRP ledger, the digital asset itself.

There are lots of participants in the XRP ecosystem. Ripple is certainly the largest amongst them, but there are a lot of other people doing things in the XRP ecosystem, and we think that’s good for the whole category.

Ripple has shareholders, as you mentioned. We did seed financing back in 2012. That was before I was with the company. We did a Series A in 2013, 2014, and a Series B in 2015. We haven’t raised any money since — I guess that was 2016, the Series B was. But we haven’t done any financing since that time.

And as you described, we’re in a good position in that there are a lot of customers signing up by virtue of owning some of this digital asset that has given us a strength in the balance sheet. We put $50 million into MoneyGram, as an example. And we’ve made a bunch of investments across the crypto landscape, which we think is good for all crypto. We want all boats to rise.

I think there still remains a lot of tribalism, religiousness, within crypto, which I don’t think is actually healthy for the whole system to grow. I fundamentally believe that Ripple will do better if the whole category does better. So, frankly, I’m rooting for everybody to do well. I can’t think of anybody in the crypto space as “competing” with Ripple, so I look at it and say I want a lot of these projects to work. I think a lot of them are still in experimentation phase, but I think it’s good for Ripple and it’s good for XRP, it’s good for bitcoin, it’s good for Ether if everybody is doing well.

Jay:  To play devil’s advocate, could XRP have actually just been a private corporate digital asset that you didn’t offer to the public? In theory, if it was just that problem that you were trying to solve, then, in theory, that could have been just a —

Brad:  Well, sort of. First of all, one clarification. We, Ripple, didn’t “offer” XRP to the public, meaning the ledger XRP existed before Ripple, the company, was started. Some of the people who started XRP ledger started Ripple, so there is some common heritage. But the tricky part in what you describe is, could it work without some external market participation as effectively, I think, is what you’re asking?

Let’s think through that. So we’ve announced we are going live at the… So we’re live today with the Mexican peso through ODL. We’re live with the Philippines peso. And we are now live with the Australian dollar. We’ve announced the intent to go live with the Brazilian real.

Now, if we go live, and there’s no liquidity, there’s no clearing price between XRP and the Brazilian real, that’s a problem. The fact that there’s liquidity there organically, if you will… Because about 45 billion units of XRP trade out there. They’re not owned by Ripple. They’re owned by other people, and they’re trading.

Now, when we enter a market, there’s some liquidity there. We often will work with market makers to help make sure there’s plenty of liquidity and the spreads are tight, but if there’s zero liquidity, that would actually make it hard to enter a new market.

* * * * *

Part 2 – David Schwartz

Jay:  Towards the second half of our discussion, Brad and I discussed Ripple, the company, and XRP, the digital asset, and the important distinction between the two. XRP and the XRP ledger are open-sourced technologies, and while Ripple may be one of the largest participants in that ecosystem, there are many other participants in the XRP ecosystem which will still exist whether or not Ripple, the company, succeeds.

To gain a better understanding of the early days of the XRP ledger and the technology behind it, we jump to my discussion with David Schwartz, Chief Technology Officer at Ripple. David is one of the original architects of the Ripple consensus network.

He begins by sharing some of his background, including his work developing encrypted cloud storage and enterprise messaging systems for organizations such as CNN and the NSA. Then we jump into a more technical discussion about Ripple’s consensus network.

To be honest, a lot of our discussion was way over my head, at the time, but as always, David did an incredible job of explaining the technical details to me, a layman, in a non-technical fashion.

David:  Well, I was working for software companies and internet service providers building nationwide networks and then doing secure messaging and cloud storage. I focused more on the crypto side because I have a strong math background. I found bitcoin in 2011, and I fell in love with it. It had a sort of technical perfection where all the pieces come together in a way that I found really appealing.

So I started to dig into what was going on with bitcoin, and very quickly, Jed McCaleb was starting a project to see if you could have a public blockchain without proof of work. He was starting to anticipate some of the problems that would happen with proof of work, that it wouldn’t deliver on the promise of decentralization.

At first, that was the only idea we had. Like, do you have to have proof of work to have a blockchain? The XRP Ledger was the first blockchain that used something other than proof of work. Then we built a company to try to figure out how to get enterprise adoption. How can you match the cryptocurrency world with the financial world?

I think there were a lot of people who were focusing on a bottom-up strategy. Like you would go directly to mass retail adoption, and then that would be the way to change the world. I don’t think that works very well. I think that you almost have to try a top-down approach.

If people will look at examples like the internet, the first adopters of the internet were the government. They were universities, and they were existing information service providers that found that the internet was a better solution.

So I think that we pursued that. What will it take to get enterprise adoption? What kind of infrastructure do we need to get the technology mature enough that you can have mass adoption? I’ve been working on that since 2011.

Jay:  So, by saying, by dating it, timestamping it 2011, you immediately answered the question of if you’re Satoshi Nakamoto — because I know that’s floating out there. So we’ll go ahead and say perhaps you’re not.

David:  No.

Jay:  As far as how you decided to tackle this solution — the solution to the payments problem, I guess, or digital payments problem, it is true, indeed, that bitcoin, initially was meant to be a payment network. Now, because of the slow lag time and potential 51% attack that could happen, it seems like it’s becoming more like a digital gold versus solving the payments thing.

So I think it’s interesting that you guys had the foresight to see that mining thing, proof of work, might be a problem in the future and decide to start another venture, especially from the way that you guys did it from enterprise-adoption first. I think it’s very clever, and it’s very smart. So was that the time where you decided to start working on the XRP Ledger?

David:  Yeah. It began as just this idea of could you do something other than proof of work? That was the very first idea. Jed had the idea that we could use what is called the Distributed Agreement Protocol. And there were existing distributed agreement protocols. It’s just they had certain restrictions on them that made them not suitable for a public blockchain.

So the question that Jed first hired me to answer is, could we relax those restrictions without breaking the protocols? It only took us a couple of months to realize that the answer to that was yes. But the next question that we had is like, what is that good for?

If you discovered a way to make a new material, but it’s expensive, and it’s heavy, and it corrodes easily, like, “Oh, crape. We made this brilliant new material. It’s this clever combination,” but it isn’t good for anything. So we started to have to figure out, what is this good for?

We realized quickly that it had certain advantages over proof of work, including that it could be cheaper, that it could be faster. But some that are a little bit more in the weeds, technically, that there isn’t a dictator who chooses what goes in each block. So we started focusing on use cases that would take advantage of the benefits of the protocol that we had developed.

Then over the next year or so, mostly Arthur Britto and I wrote the software for the XRP Ledger and the features that we built to take advantage of the characteristics of the Distributed Agreement Protocol were things like a decentralized exchange and key rotation and other features that the XRP Ledger still has to say.

Jay:  Right. So in its core, the consensus protocol that the XRP Ledger runs off of is completely different than, say, bitcoin’s proof of work. Maybe in layman’s terms, you could explain to us the basic differences there, and then expand upon how the XRP Ledger — why is it so fast, and how is it so efficient? How did you make it so fast?

David:  I kind of approached bitcoin the way you might approach an alien artifact. Like, you find an alien artifact, and it does something incredible that you couldn’t do. It uses very little energy, or it goes very fast, or it has some characteristic. What you want to do is, from an engineering standpoint, you want to take it apart.

One of the first questions that you want to know is, does it have something you’ve never seen before? Like, unobtanium. Is there some unobtanium in there that someone discovered? Or is it just a clever combination of existing parts? And, of course, bitcoin doesn’t have any unobtanium. It’s a clever combination of parts.

Then you look at, what are the parts, and how are they combined, and what are the benefits you get out of it. Then it’s like, can I combine those same parts differently, or change some of the parts to get different benefits? A lot of people, at the time — and that would include me — thought that the proof of work was like that unobtanium. The proof of work was like the thing that bitcoin had that nothing else had.

It’s true that that was sort of the last piece. That was the piece that previous systems didn’t have. But, really, its secret was a clever combination of existing pieces. Those key pieces that the XRP Ledger also has are that all transactions are public, all state is public, and everybody knows the rules.

So I don’t have to trust anybody else. If someone says, “Hey, I have two bitcoins,” I say, “Show me the transactions. Let me check if they’re valid.” We kept all of that. So the only thing that we’re left with, the only problem that you had to solve was what we call the double-spend problem, which is if someone submits two transactions that conflict, how do you make sure that everybody eventually agrees on the same transaction?

What we rapidly discovered is that that problem is actually much easier than it initially appears. For one thing, we don’t care what dishonest people can tell themselves. Like, I can modify my XRP Ledger software, my bitcoin software to say, “I have all the bitcoins.” If I can’t get anybody else to believe me, that’s fine.

So what we care about is that it works for honest people and that malicious people can’t lie to honest people. It turns out that that breaks down very quickly. For example, if a transaction is invalid, there’s no problem. No honest person will ever think it’s valid. Invalid transactions present no problem at all. And perfect transactions present no problem at all. But if a transaction is absolutely perfect, every honest person will say yes to it. There’s no problem.

It turns out you actually have only one problem, which is what I would call a wobbler. It’s a transaction that might seem valid in some context and might seem invalid. An example of a wobbler would be I have one unit of value, and I have one transaction to send it to Alice, and one transaction to send it to Bob.

If you see the one to Alice, you might think the one to Bob is invalid. If you see one to Bob, you might think the one to Alice is invalid. These are wobblers. They’re not fundamentally broken, but they have a context in which they could be invalid. All you need to do to solve wobblers is agree to postpone one of them.

So if we confront the two of them at the same time, and if we agree to execute both of them, there’s no problem. We’ll execute them in the same order, and we’ll both agree on the first one’s valid and the second one’s invalid. The problem is if you execute just one, and I execute just the other.

So all we have to do on that is agree to wait one round. You say, “Okay. We’ll execute one, and we’ll wait on the other.” What the XRP Ledger’s Consensus Protocol does, it essentially agrees to defer transactions that some people think are valid, and other people think are wobblers. It sounds perverse that that weird little technical thing is actually all that’s left. That’s really all proof of work is doing.

Jay:  That’s quite interesting. So the mechanism by which you’re able to batch them so you know which one’s a wobbler or not is basically by the validator nodes on the network that they go in some sort of order, or there’s a certain consensus or majority that needs to be voting in the right way so to speak. Right?

David:  Right. So what will happen is each validator in a round will say, “These are the transactions that I think are valid and should be executed this round.” Then they actually go through a process of agreeing, and the agreement process is biased in favor of excluding transactions. The reason you need to do that is because otherwise it might never terminate.

Like, if people could keep introducing new transactions into the discussion, you might never finish and have agreement. So what you do is you work on a process of excluding transactions. You might think that a malicious actor might be able to keep excluding valid transactions. But here’s the interesting part.

The only valid reason — the only reason an honest participant would exclude a valid transaction was because they didn’t see it on time. If it paid the right fee and there wasn’t a conflicting transaction and everything was fine, the only reason you wouldn’t vote to include it is because if you saw it too late.

Well, if you saw it too late in the previous round, you certainly didn’t see it too late in this round. Like, if you told me you didn’t see it in the previous round on time, and the previous round came before this round, you necessarily saw it before this round. No honest participant can saw a valid transaction shouldn’t be included two rounds in a row.

Jay:  So what happens to that participant, then, if he’s not honest?

David:  So the honest participants identify the dishonest participants by them violating these rules, and they simply stop listening to them. So the thesis is, the honest participants will stick around, and the dishonest participants, as soon as they do something bad, they will get excluded.

Jay:  I see. So an honest or dishonest participant that is basically a validator node — each one of those represents a validator node. Okay, then there’s the other question that I know has been out there, asked many times is, the centralization of the validator nodes, how many does Ripple, the company, own, and does that pose an issue out there?

I’m curious. Does it cost money to set up one of these nodes? How does that work? How many nodes are there out there right now?

David:  I would start out by saying that the validators don’t really control the network. They’re really just agreeing to advance the ledger. There’s nothing a validator node can really do other than stall the network. Like, if a validator node refuses to come to an agreement, then it could break the network. It has to sign all of its messages.

So it’s kind of like the same thing with bitcoin. Mining either works or it doesn’t, and if mining works, you shouldn’t care about it. It’s not something that affects your ability to interact with the ledger. That said, the cost to run a mining node can be from very cheap — it depends on how you want to do it.

If you just want to run a validator, and you want to do the minimum necessary — there’s someone who sent me a picture of a validator running on a $300 computer in their living room next to their TV. And that works just fine. We would prefer to see validators that were more maintained and higher quality because you don’t need a lot of them. Quality is definitely more important than quantity here.

If you could have 32 validators run by 32 completely different entities that were reliable, that would be great. And if anyone of them becomes unreliable, we would hope people would stop listening to that validator and listen to some other validator.

We’re trying to get down to the point where Ripple is running just one validator, and we have at least 32 of them out there. That’s fine. You don’t need our permission to run a validator. You can just download the software, fire it up, and literally, you enter one command, and you’re a validator. Just like, “I want to be a validator.” You’re a validator. That doesn’t mean that anybody’s listening to you, but you can then convince people that you’re operating reliably and that they should try to come to agreement with you to advance the ledger.

Jay:  Right, and so, going back to your previous argument, it’s almost like game theory. Like, the market will decide, in the long run, if you’re honest or you’re dishonest. If you’re dishonest, then eventually, you would hope that the rest of the people on the network, the Ledger, would ignore what you’re —

David:  You have two choices. You can pretend to be honest, and the longer you do that, that’s fine. At some point, presumably, if you pretend to be honest forever, well, that’s fine. It doesn’t matter. At some point — and really about the only thing that you can do is you can try to censor, or you can stop advancing the ledger.

But in order to do that, you have to sign the statements that you’re doing. The reason people are listening to you is because they’re coming from your validator. And we would hope that if the other people using the network want the network to work — and if they don’t, why are they using the network? — they would then see who was provably being malicious and stop listening to them.

It is a different philosophy. It is a different design. Most of the other systems are using incentives. My argument is that incentives force a race to the bottom. I’ll give you an example. If you’re a bitcoin miner, you want to make money mining. If it costs you more money to run a mine than somebody else, you’re going to go out of business; you’re going to lose money.

So it forces a race to the bottom. So miners are running in the most weird corners of the world with unreliable power and cheap hardware, and if it breaks, that’s fine, but they stop making some money, and they’re okay with that because they’re making money while they’re operating.

But their incentives are not aligned. Everybody who mines increases the mining difficulty for everybody else. So it becomes this race to the bottom with misaligned incentives. If the only incentive to run a validator is that you want the network to be more reliable, all of the incentives are aligned.

And as long as the cost is low, as long as there’s some set of people who find the network useful — if there aren’t 32 people who find the network useful enough to run one computer, then it probably should die. It probably doesn’t deserve to keep running. Again, it’s worked for a couple of years. It is a somewhat newer technology, and I think we got it right, and time will tell.

Jay:  Of the 32 that are running enterprise-grade validator nodes, are they customers of yours or partners or just friendly XRP entities?

David:  All of the above. There are a lot of them that are universities, and some of them are doing it for research purposes, and some of them are doing it just because they want to improve and help the ecosystem. Some of them are businesses or investors that have positions in XRP. Some of them are XRP community members. Some of them are Ripple partners. Yeah, it varies.

And I think variation is what you want. What you don’t want, like the nightmare scenario or the worst-case scenario is if the validators collude against a particular party. So the more diverse they are, the less likely they are…

My friend, Arthur Britto, one of the other developers, he would say like, “I don’t trust Thomas, and I don’t trust the CIA, and I don’t trust the government of Israel, but they’re not going to collude against me.” Right?

Jay:  Right.

David:  It’s kind of silly. It’s an unusual type of trust. You’re not trusting them to act in your interest, or you’re not trusting them not to do specific things like in general. You’re trusting them not to align against you. The hope is, if the stakeholders of XRP, the people who are using the ledger don’t want it to be fair, and they don’t want it to be censorship resistant, then it won’t be.

There’s no power that can force a system to be fair and wonderful if the people using it don’t want it to be. What you want is a system that enables censorship resistant if that’s what its users want. If validators were to somehow start colluding to censor transactions or colluding to stop the network, we would hope that the users would stop listening to those validators because they find the network less useful if it behaves that way.

But an interesting thing about public blockchains and the lack of counterparties and the lack of centralization is if I were the centralized operator of bitcoin or the XRP ledger, I could promise you things that you might want. Like, I could promise you that there won’t be censorship. I could promise you that there will never be more than 21 million bitcoins. I could promise you things.

But since there is no centralized operator, there’s nobody who can promise you those things. So it’s nice that there’s nobody who can betray the promises, but it’s not nice that there’s nobody who can make the promises.

These systems will do what their stakeholders want them to do, as we saw in the bitcoin forum. People disagreed over what the block size should be, and so nobody could say, “No, block size shall be X, and that’s what it’s going to be.” They kind of had to fight it out. So that’s the downside of decentralized systems.

Jay:  From your perspective, what’s the greatest risk to the XRP Ledger right now? Is it a handful of validators, bad actors that are in there that all decide to collude for no incentive, for whatever reason they want to, and basically disrupt the consensus protocol?

David:  I don’t think so because I think even if they did that, it would be a short-term speedbump. The things that I worry the most about is a defect in the software that nobody’s found yet. Because who knows what damage that could cause in the short-term. Almost anything you can repair. If you have a historical snapshot, you can rewind. But, obviously, it undermines conflict. The value proposition is that these transactions are irreversible.

Let’s say I found some bug or exploit that let me do something on the XRP ledger I’m not supposed to be able to do. Like I found a way to create a whole bunch of XRP. We could agree to rewind the ledger, but then anybody who accepted that XRP as payment for something, they would lose out.

One of the biggest things that I think we did in the XRP ledger software that I’m very proud of is we built what we call an invariant checker, which is a specific security module to detect any transaction that violates a key rule.

Prior to that, if you said to me like, “I’m worried that someone’s going to find some way to create new XRP and break the system,” I would have to say to you — and this is a terrible answer — “Look at the code, and you’ll see there’s no place that anyone can create new XRP. Look at these thousands and thousands of lines of code, and if you find a way to create XRP, tell me, and we’ll get it fixed. But I don’t think there is one. Do you think there is?” That’s a terrible answer.

What you want to be able to do is point to a line of code that says, “This line of code says nobody should ever be able to create XRP.”

Nick Bougalis and I developed a system called the Invariant Checker. What it does is it executes transactions in what we call a sandbox. It executes the transaction without actually making any permanent changes to the ledger.

Then the invariant checker looks at the sandbox and says, “Did this transaction create XRP? Did this transaction do anything that’s not supposed to happen?” And if it did, if there’s a bug that allowed a transaction to do something terrible, it throws the sandbox away and puts an entry in the Ledger that says, “This transaction broke a system rule.” Fortunately, that’s never happened.

But those kinds of scenarios, we put all this effort into preventing them from happening, but there’s no way that I can promise you that there’s no bug. So that’s what I think is the biggest threat.

Jay:  Yeah. And there’s also the trust issue. Even if something like this came up and you were able to resolve it, then there’s the community trust issue, which, for whatever reason, the community’s quite polarized in how they view the various projects, unfortunately.

David:  Yeah. Well, you know, the Concord had no accidents, and it was like the safest airplane. Then it had two accidents in a short span of time, and it went from being the very safest to one of the least safe.

When you have such a good record — if you look at the XRP ledger’s uptime, and you look at that there’s never been a reverse transaction. There’s never been censored There’s never been a rewind. It’s like, “Well, can I promise you that I…” There is good evidence to suggest that there might not be, but of course, one incident, you would go from 100% to a number that’s got a bunch of 9s in it, but still, you really want that enterprise-level of reliability. And that makes development very slow. Anytime you want to add a new feature, you take risks.

A terrible answer to people is like, “You’ve been relying on this blockchain for billions of dollars in value, and it hasn’t done anything terrible. I’ve made some changes to it. Rely on that for billions of dollars, and we’ll see if it does anything terrible.” That really, to some extent, obviously, we’re as careful as we can be, but really, with other pieces of software, you might tell people, “Okay. Some people try the new version; some stay on the old version.” It’s hard to do that in a blockchain because everybody has to agree on everything.

So we put out new versions, and we have test networks, but people will never use the test network the way they’ll use the real network. It’s a little scary. It makes development slow. The pace of development was super-fast when we had zero customers and nobody was using the XRP Ledger, and the day that we opened it up to the world is the day that development just became maybe one-tenth the speed.

Jay:  Wow. Okay. Interesting. Just to make it clear, the XRP Ledger is its own entity. Ripple is a company that sells enterprise software solutions to financial institutions and banks that happen to use the XRP Ledger, and XRP the digital asset in their enterprise technology package platform.

David:  That’s exactly right. The XRP Ledger is open to anyone. Anyone can use it. It’s a public blockchain. You don’t have to ask Ripple’s permission, and if Ripple says no, you can use it anyway. Ripple is a company. We’re a traditional company. We have shareholders. We have a CEO. We have a CTO, which would be me. We have customers, and we can provide you technical support. You can’t call up the XRP ledger or bitcoin. Those are public blockchains.

Jay:  Bitcoin, Ethereum, XRP — I kind of tick off the box of there’s a certain use case — I don’t know whether it’s right. Maybe bitcoins that are gold; Ethereum might be the smart contract platform; XRP is this payments thing. Someone coming newer to the system, a lot of talent is accruing from Wall Street, and new grads now, they want to go into blockchain. They don’t want to go anywhere else.

Any area segments, verticals that you feel needs disruption. And there might be stuff that you guys are working on because I know that you guys are doing a lot of stuff behind the scenes, as well. What piece of advice could you give someone coming into this space?

David:  I think where you’re going to see it first is the more adjacent the vertical is to the verticals that we have already, the earlier and the better the target. So payments were terrible. We’re making payments better. Store of value, means of exchange were terrible; we’re making those things better.

So the logical next thing is, what is something that’s terrible because payments are terrible? What is something that’s terrible because we don’t have a good store of value? If we have a better store of value… What I would give as an examples of that are things like lending, things like trade finance, things like equity settlement, tokenization of assets. Like, “I want exposure. I live in New Zealand, and I want exposure to Apple stock. How can I get it?”

Or “I live in Brazil, but I’d rather have exposure to the dollar than the Brazilian real.”

Those kinds of things that are really close and adjacent to payments. What I would also — and this is a little crazy — if you want to have small companies that compete with things that big companies do.

Like, Airbnb, for example, is a big company. They have a large number of payment engineers that allow them to take money in and pay money out around the world. That’s what enables them to be so big.

But if I want to compete with them, let’s say I know the Portland, Oregon area super well. And I’m going to inspect every property, and I’m going to come up with an algorithm to help them price it right. And I’ll adjust their pricing to take advantage of supply and demand. I’m going to be fantastic. I want to be the best, like the Airbnb, in Portland, Oregon.

But if my first step is, I have to hire 200 payment engineers, that business is never going to get off the ground. So the thing is, who can provide me that type of infrastructure at a one-stop-shop, and then what can I do once I have that.

If I want to be an Amazon, or if I want to be an Uber, and I have to spend these millions and millions of dollars like with on getting my payments right or getting my ability to move money around the globe, my treasury functions.

If I can do all those things super efficiently, who’s going to give me the one-stop service, and then what are the new businesses that they become possible because they don’t have to spend all of that money building up that infrastructure? That’s where we’re going to go next, I think.

Jay:  Wow, that’s pretty interesting. Yeah, very interesting. David, thanks again for your time. The last two questions are related, but it’s basically who’s JoelKatz, and what is the best place to find you, follow you, and harass you on whatever social media platform you’re on?

David:  I’ll answer in the other order. The best social media platform to find me on is Twitter @JoelKatz. That’s where I’m the most active. You might say I’m addicted to Twitter. I kind of am. I like that platform.

Jay:  It’s great for sentiment and for jumping into conversations you probably shouldn’t be jumping into. It’s a lot of fun.

David:  It’s just weird that some random person can respond to the president, and hundreds of people, thousands of people who are looking at what the president said are seeing what some random person said. And then some other person who’s a famous celebrity will respond to that random person responding to the celebrity. It’s like, “Oh, my god. This huge celebrity just responded to this random guy from Arkansas,” or whatever. I like that.

Jay:  It’s great.

David:  So the JoelKatz thing came from when I was in high school. I had a friend who was setting up a bulletin board system, which is like a pre-internet-like communication system, and he asked me if I wanted an account. And I said yes. He asked me if I wanted to use my real name, and I said no. I didn’t know what I was going to do.

It’s actually an amusing story. Ren & Stimpy, which was a show on MTV, and he was a fan of Ren & Stimpy. So he made up a name for me. Stimpy’s name is Stimpson J. Cat. So he said, “You’ll be Stimpson J Katz. I used that name for a while, but then I started to do more serious stuff, and I’m like “I need a less ridiculous name.”

So I took some inspiration from 3M, which was originally called Minnesota Mining and Manufacturing, and they went through a rebrand over time to change their name to 3M. So I went from Stimpson J. Cat to Stimpson Joel Katz, because you’ve got to have a middle name.

Jay:  That’s right.

David:  And then I went from Stimpson Joel Katz to S Joel Katz because sometimes people have a weird first name. Then I just dropped the S, and I was Joel Katz.

Jay:  There you go, ladies and gentlemen. Thank you so much for explaining the story, and with that, we’ll end. Really appreciate the time and really excited about what you guys are building at Ripple, and we look forward to tracking your progress.

David:  My pleasure. Great talking to you, Jay.

Jay:  All right.

* * * * *

Part 3 – Marcus Treacher

Next up is an excerpt from my discussion with Marcus Treacher, who is the SVP of Customer Success at Ripple. Marcus has over 30 years of experience in transaction banking and payment technology, including 12 years in global leadership roles at HSBC. He served as a member of the Global Board of SWIFT from 2010 to 2016. Prior to that, he held leadership positions at Citigroup and Accenture. Marcus begins by sharing with us some more details about the 300+ customers that are using Ripple right now and gives us a closer look at the unique experience that Ripple provides to its customers globally.

Jay:  What do you spend most of your day working on? And it might be completely different every single day, but what would you say takes up the majority of your time as SVP of Customer Success?

Marcus:  It’s in the title. I spend all my time with customers. So I’m a very lucky guy. I get to work with very small startup, wonderful innovation teams, the biggest banks in the world, digital banks, platform companies. They’re all our customers. So I spend most of my time making sure we’re giving our customers a service, which enables them to add value for their own uses around the world.

And also, spending time getting feedback so we can fine-tune our product, so we can guide our roadmap, and also I spend a lot of time with helping our customers adopt our technology, integrate it in new ways, and helping them develop, really, kind of world-beating applications on their mobile devices or other services, which bring the Ripple vision to life.

Jay:  Got it. So it’s literally from onboarding a customer, trying to figure out the solution that would work best for their organization no matter how large or small it is, all the way through to working with them on a daily basis just to make sure that the relationship is intact and everything works.

Marcus:  That’s absolutely right. Ripple can enable a bank or a payment company to completely revolutionize all of its services. If you look at the payment world, actually, there are many, many different payment use cases that banks and payment companies offer today. So paying friends and family; funding; let’s say, property you may have overseas, small companies receiving funding; paying workforce; paying suppliers. It goes on.

So, what usually happens is a customer would use a report initially for, let’s say, one corridor. One country may be India to Thailand, for example, or the Middle East into Sri Lanka. Then for the corridor, they’ll use one service. It might be remittance payments through individuals. When that works, they then move on to open up more corridors.

They may create more services, let’s say, for small companies, big companies. Many of them run workshops with us. They kind of co-create new services that we can enable them to offer that aren’t possible today.

So most of my work is really about the journey. As you say, it’s from the initial onboarding of a customer, so we help them. We design how they are going to implement and use Ripple, and our project teams deliver that work with our customers.

Then our account management teams then work with our customers, we allocate key customers to specific account managers around the world. I grow the use of Ripple with them to make sure that we’re giving them strong, clear success, both in terms of their topline numbers, their P&L, their market share, as well as the efficiency which we can deliver for them or help them to deliver in their operation, because the Ripple Network is far more effective and efficient for the banks and the legacy networks.

We also have our support teams globally for tech support. It’s a whole service we offer from the initial sale. It’s because it’s an annuity, and the payment business is really about working steadily, thick and thin, building out use, building out volume. It’s a long game we play with our customers.

Jay:  You certainly have your hands full. I think, yesterday, there was a press release that said there are over 300 institutions or customers that are onboarded now on the RippleNet. So that number is only going to go one direction, Marcus. So your job is basically only going to be more and more full.

Marcus:  It is. Yes, it is. And each of those customers themselves contain many more customers, if you like. So let’s pick Santander. One of those 300 is Santander. Santander itself has many, many projects it’s running on Ripple. It has many connections that it’s running on Ripple. There is a whole line of interesting, really powerful projects we’re running with Santander, one of many of our customers.

So we’re also doing a lot of work in simplifying and improving how we onboard customers, enabling us to serve very large numbers of customers in a very efficient way as we grow. That’s a great challenge to have to be able to work with.

When I joined Ripple, we had one office outside San Francisco, and that was Sydney. We now have ten offices, including London, as you know, Singapore, here, Reykjavik, as well, for example.

Jay:  Wow.

Marcus:  São Paulo, Dubai, Mumbai, New York, Tokyo. So we’re growing very quickly globally. And one of the key things that we are focusing on is, how we gear up to support a very large number of customers because the volume is growing, and the customers are growing quickly, and do that in a way that’s effective, but also delivers the value to them and the service to them as the volume of customers grows.

Jay:  Absolutely. It’s a huge undertaking. Quick numbers here — if you had to write down the percentage of the 300 customers that are onboarded onto your platform, how many would you say are larger financial institutions versus startups? And how many of those 300 actually is it just the blanket-starter package of Ripple that can easily be integrated into their systems? Or how many demand a more bespoke solution?

Marcus:  So first off, a very broad categorization. About half of our customers are banks, and half are fintech payment providers, 50/50. If you dig a bit deeper within the banks, about 25% are the really big houses, the Bank of Tokyo, Mitsubishi, the Santander, the Standard Chartered. They’re the large institutions.

The rest are digital banks, startup banks, really interesting innovator banks, which we love to work with, as well, because they can integrate in very new ways with the Ripple technology. In the payment provider half of the customer base, again about half of pretty major, large established payment providers — massive volumes, fully established organizations looking to put much more efficiency into their payment networks.

The other half are early-stage startups, just companies getting moving who we refer to as growers. They’re organizations that we can help grow, and Ripple grows with them. So as a company, we have, I think, a wonderful range of customers enabling us to innovate, but also innovate at scale. That’s really important.

In terms of the type of use, the basic starter is the remittance payment. That’s a very easy thing to understand for banks and payment companies to get comfortable with. Also, it’s addressing a real pain point in the global payment world today. The underbanked to the unbanked in Africa and parts of Asia, Latin America. It really has value. That’s an important starter usage for Ripple.

Customers then often move on to the commercial side, so moving into serving small companies, SMEs, mid-sized companies. That’s where you get into more operational value-ette services, maybe collecting or effectively, paying stuff more effectively, where it’s not so much the speed that’s important but the certainty and the comfort that your payment really has got to where it’s going.

Jay:  The trust. Right.

Marcus:  The trust is important.

The other point, too, is if you look at the other end of the equation, every payment sent by a Ripple customer ends up with a Ripple customer before it dispersed. So many of our customers focus on being inbound, being receivers of payment, almost like the cross-border banking, the agency banking model that we’re familiar with.

That’s a powerful play because it means that banks that have strong clearing ability in a country or region, Siam Commercial Bank is a great example of the strong clearing bank in Thailand that is taking a lot of volume from Ripple, from customers worldwide, who are serving their own customers who are making payments into Thailand. They make that very high speed into Thai PromptPay to pay friends, family, or companies in Thailand. That’s the very, very important role that many banks find attractive to be that inbound player and, therefore, to pick up that volume.

Jay:  Okay. Well, thanks for introducing and explaining that a little bit further. So as far as the technology goes, once a customer is onboarded, part of your job is to handhold them and potentially come up with bespoke solutions regarding their various needs. Then, I guess it’s a matter of basically presenting the data and the numbers to them.

I was talking to Brad earlier about the On-Demand Liquidity product, which is now being more and more onboarded. I think 24 was in the same press release you guys announced, which is great. Is it a matter of basically getting them familiar with the product and then seeing the potential cost savings for them to eventually adopt that technology, as well, in-house?

Marcus:  Yes. I guess the first thing is to get a bank or payment company comfortable that we’re delivering value. So often, we get a corridor running. We demonstrate the value. In nearly every case, our customers are delighted at the price and really enthused about what we can achieve because most people are still thinking in old ways. So we have a very big impact when we go live into production. That leads to more usage and more application of the software.

Also important is to paint a quick picture of what we mean by Ripple bringing to the market. In effect, we have three killer apps. Three critical elements of Ripple, which we think are collectively so impactful. One is, we’ve created a governance structure, so Ripple’s rules, the methods of moving money between our customers, that’s governed by our customers in a governance body that we set up with them.

So it means that Ripple is serving a genuine community of customers — banks, and payment companies — which work together as a community. Not just customers of Ripple, but their own community. It’s really, really important. And that model enables customers to then find other customers easily. Matchmaking is more straightforward; connecting others is much easier.

Going one level into the Ripple solution, the next important piece is the interconnection. If you’re making a payment for somebody cross-border, you need to be able to move ownership of money from your account or wallet. Maybe in my case in sterling,let’s say to an account in Hong Kong dollars in a few seconds.

And we do that by synchronizing the ledgers of the banks, our customers, at either end, the sending bank and receiving bank. That very fast connection between banks using what we call the Interledger method, Interledger Protocol, that’s what moves a payment in an instant automatically.

So our banks, globally, are mostly using that immediate payment element of Ripple under the rules that they govern. That means they can pay each other in microseconds, incredibly fast, in now up to 45 countries, and very soon, global coverage. We’re well on the way to global coverage.

That, in itself, is an awesome game-changer, absolutely awesome. However, there’s a third play, which is actually arguably much more impactful. That’s to attack the liquidity problem. So, today, the numbers vary, but you can be comfortable quoting 10 trillion to maybe 20 trillion dollars locked up around the world — any one moment, all the time for payments to come eventually into a country and disperse.

It’s a huge load and drag on the global economy. So by developing our On-Demand Liquidity Solution, we can address that problem. So as well as enabling payments to move hyper-fast, we can deliver the liquidity into the country, into the account, the payment is going to run over at point when required.

So it means that our banks and payment company customers can, in future, hold their currency, hold their value in their home currency, which is far, far, less risk and deliver that — those liquidity polls at point of need.

There are three layers. It’s governance, hyper-fast delivery of payment between you and me, individuals, by our banks, and also, enabling our banks to manage their liquidity far more efficiently than they ever can today.

Jay:  Right. So I think that third layer is where most people, unless you are in the banking system or familiar with that, don’t know how it works, but essentially, that’s money… Let’s say my bank, SCB — let’s use that example — for me to make remittances or payments into Thailand, I would have to deposit a certain amount of money with SCB. Is that correct?

Marcus:  That’s correct.

Jay:  And then, that just sits there when it could be on my books as working capital, or whatever.

Marcus:  That’s right.

Jay:  So that’s a huge game-changer, basically.

Marcus:  It’s massive. Yeah. It’s massive. And the beauty of what we’re doing at Ripple, we’re not just building solutions, looking for problems like many blockchain companies do, actually. We’ve always been focused on taking friction out of cross-border payments. That’s what we do.

And because we have that mindset of: we’re going to fix a problem, and we’re going to deploy the best and most creative minds in industry against that problem, that’s how we’ve moved so far with the blockchain stack.

And, actually, the hyper-fast delivery of value, Interledger, the OnDemand Liquidity that complements that very powerfully, they both deploy elements of blockchain, fine, fine-tuned for those solutions. The use of XRP, the use of the Consensus Ledger, perfectly designed and fine-tuned for On-Demand Liquidity, the application of cryptography, for Interledger, the protocol that we created and we’ve given to the worldwide wed for Interledger, perfectly tuned for creating an internet for value.

We got there because we focused on the problem, and from day one, we’ve been working with banks and payment companies. It’s real world. And most of the history of Ripple is a combination of, in my humble view, fantastic innovative creativity and real hard graft grinding out solutions, fixing problems, speaking to customers. What we’re doing here with the Swell Conference, getting feedback and ideas, that’s how you do it.

Jay:  Marcus, let’s take the last few minutes here, and I want to talk about Asia specifically. Obviously, the Swell Conference is here in Singapore, and there’s definitely a statement there. You guys have a lot of partnerships here within the region. Maybe you could highlight some of the key partnerships that you have here, any plans that you have going forward with Asia in the region, and what excites you about Ripple’s growth here.

Marcus:  I’ll do it in reverse order. We’re massively excited about Asia and how Asia is driving fintech. Some of the innovations around wallet technology, open-network technology is pretty awesome. And that’s the key reason why we’re focusing so much on Asia and why we’ve recently opened up a permanent office in Singapore, and we continue to build in Asia, and we’re based in India and Singapore. We’re building up from there into other countries around China, Japan, Korea — very, very important.

We see Asia leading the charge into, almost reforming the world’s financial models in powerful ways that bring more people into the banking world, enable people to benefit financial services all over Asia. And, also, as Asia leads the innovation, other regions are following — so like, Africa, Middle East, Latin America.

We’re seeing what used to be called the emerging markets — arguably, most have emerged very well the past ten years — I guess because they have a fresh view of how finance could work versus being locked into old thinking — leading the charge.

Ripple went to market agnostically. So we weren’t over focusing in any one region initially when we went out of the USA. Having done that on an e-commerce, almost like an egalitarian basis, Asia, Middle East, Latin America are by far more traction than the OECD world. 

We think it’s because of two reasons. One, they’re far less served by the old banking networks. So if it’s painful for me to move money in Europe, it’s infinitely more painful to do so in Africa and parts of Southeast Asia. Secondly, you have this wonderful demographic of young, energized, and can-do people driving change and thinking differently.

And you put those two things together, and you get something very special, which is a complete transformation in goods and services and how things work and how people interact with each other. So we think Asia’s a fantastic place to be, and many of our most active and fast-moving customers are in Asia.

To answer your first question, I can call out SBI, SBI Remit, in Japan, a phenomenal partner of Ripple. Coin1 in South Korea. It’s great; fantastically, tremendous partner. Ripple Siam Commercial Bank and Standard Charter Bank in hometown, Singapore. Many of the Indian banks we work with: Hindustan, Kotak, YES Bank, Axis Bank — recently one, HDFC in India, QNB in Qatar, Saudi British Bank in Saudi Arabia. We’ve got NCB, Saudi Arabia, Al-Rajhi Bank.

So there’s a very long list of really powerful players. BDO, a major bank in the Philippines, which we’re delighted to have gone live with recently with a payment flow from Al Ansari. And, actually, United Arab Emirates, RAKBANK. It just goes on. We’re seeing these corridors build up quickly.

Back to my earlier point, the initial use cases have all been remittances — paying friends and family into Asia from the Middle East and other parts of the world. Very quickly, that’s moving to commercial flows. And, actually, in key corridors like into the Philippines and into Mexico, we are now moving in with the On-Demand Liquidity service to again make the payment super-efficient.

We’ve had some wonderful experiences with MoneyGram, for example, where 10% of their funding payments into Mexico now go over Ripple, ODL, which is pretty awesome. So you can see how you build the network. Most of the customers are really engaged. They’re getting value. You’re heading commercial value. You then use that to incrementally develop with them better propositions and then start working on that liquidity problem, as well, and that’s how you get the holsitic.

Jay:  Thank you so much for your time. It’s been such a pleasure sitting down with you and hearing about all the exciting things you’re working on. The last question is very easy. Where can people find you, follow you, and harass you on social media if they have questions?

Marcus:  I’m on Facebook and do look at my posts. The great thing we’re working for small companies, you can really make a difference. All the top teams are on social media. Ripple is often tweeting, and we’re often on LinkedIn. So look out for us, and it’s a great journey. We would welcome all support and any questions.

Jay:  Absolutely. We will be monitoring your progress, and we wish you the best of luck. Thank you.

Marcus:  Thank you.

* * * * *

Part 4 – Eric van Miltenburg

At this point in the conference, I was thoroughly impressed. Swell was unlike any other blockchain conference I’ve ever attended. In fact, it was much more of a fintech and professional financial services forum than a crypto conference. Everything from the leadership, the guest speakers, down to the technology presented really impressed me. But perhaps most impressive of all was the corporate culture that I witnessed directly from every single Ripple employee I met. I wanted to take a deeper dive into this, and for my final interview, I sat down with Eric van Miltenburg who is the SVP of Global Operations at Ripple.

Prior to joining Ripple, Eric held senior positions with high-growth start-ups and Fortune 500 companies such as Adobe, Yahoo!, Hightail, RedSwoosh, Work.com, and Excite@Home.com.  We begin our discussion talking about Eric’s day-to-day responsibilities as head of Global Operations. And then he gives us a little bit of insight as to how they maintain this great corporate culture.

Jay:  

So, Eric, why don’t you talk to us a little bit about your role at Ripple, what you do on a day-to-day basis? What do you spend most of your time working on?

Eric:  Yeah. Absolutely. So again, as head of Global Operations, there’s a handful of things that fall underneath that. One is what we call Business Operations. It’s the ensuring on a daily basis that the communications and coordination across the various functions of the company, especially at the leadership level, are going smoothly, we’re identifying where there might be problems or cracks and quickly addressing them.

I have a team that does everything from just making sure our leadership meetings are focused on the right topics and hold quarterly business reviews. And just business hygiene and maintenance along the way, which is important, especially as you’re scaling a company.

Then, in addition, we’ll embrace and drive other — I kind of hate to use the term strategic projects — but things that are cross-functional in nature and need some senior-level care and feeding to ensure we come up with real, clear, crisp, actionable recommendations as to how we might act differently as a company. So that’s business operations.

I have another group, which has been fantastically fun for me because it’s new, and that’s our corporate social responsibility or “Ripple for Good,” our giving. We’re a very mission-driven company. That comes from Brad, our CEO, Chris Larsen, our founder and chairman. We have a handful of activities that we pursue.

One that is near and dear to my heart, and actually is here in Singapore, we took it to the next level if you will. It’s called the University Blockchain Research Initiative. It’s a program we launched across 34 schools, 14 countries, where we are providing support of those institutions as they pursue research and blockchain digital assets, cryptocurrencies — really trying to increase visibility and understanding of what this technology can mean, but also preparing the workforce of tomorrow.

So one of our partners here in Singapore, is NUS, National University of Singapore. We’ve been working with them for about nine months. But this week, when I was in town, we actually launched their fintech lab, which we’re proud to be able to support. And this is going to be a hands-on environment for students to get practical, more-than-academic, theoretical knowledge and experience, working with industry.

They’re a fantastic partner and a great institution. We’re thrilled to be able to have a chance to partner with them. So that’s the second part. We do more than just that. There’s a philanthropic angle to what I’m involved with.

Then third, and probably where I spend most of my time, is around our global operations, truly. So we have offices in eight-plus cities around the world. In several of them, we are staffing up significantly because we need to be close to our customers. We need to be responsive to their needs in a timely fashion.

We need to understand the use cases in the market, the regulatory environment, and you can’t do that if all you do is sit in San Francisco. So it’s been a busy week. We opened up, officially, our brand-new office here. We’ve had employees in Singapore for a couple of years, but we’ve grown to a point where we needed our own space.

We were in a JustCo, a WeWork-type facility. That was getting a little cramped, so we have a beautiful new office. We’ve over doubled the size of the team here in Singapore in the past year. We’re 20-some-odd, and we will make continued investments in this market.

I recently hired a guy to run our Southeast Asia operations based out of here. I also have somebody in Mumbai who covers all of South Asia and the Middle East. In São Paulo, Brazil, somebody who’s covering all of South America. We have a joint venture with a Japanese company, so a woman on my team manages our joint venture relationship.

So, a lot of what keeps me busy is ensuring that we think holistically about how we run the global strategic offices and make sure there’s proper alignment and coordination with the rest of the company around the world.

Jay:  Obviously, you must travel a lot and increasingly more as you open up offices around the world. I guess your direct touchpoint would be the heads of each of these offices.

Eric:  Yeah, exactly.

Jay:  Congratulations on the opening of the Singapore office. I think that was very timely.

Eric:  Thanks. We’re excited.

Jay:  Yeah. I asked some of the other people that I was speaking to earlier about the significance of Asia in the roadmap and the grand vision of Ripple. What can you say about Asia, its significance? And obviously, you guys are making an investment here, now, with the team office and your Japanese partners, as you mentioned before. What’s your outlook for Asia?

Eric:  The outlook’s super sunny. You certainly caught the point that Asia’s an incredibly strategic geography, a part of the world for Ripple. As you’ve heard from my colleagues, we’re building a global payments network. Every financial institution that joins RippleNet is another node on that network.

So our goal right now is to light up the network, to create as many high-quality endpoints and financial institutions that allow more transacting. Each node can transact with another node. We listen to the market; we listen to our customers, and there’s a ton of demand coming from AsiaPac.

Honestly, about half of our customers are located in AsiaPac, which in and of itself says a lot about this. An obvious question is why? What is it that we’re doing that seems to resonate? I think it goes to the fact that our sweet spot is really addressing payment use cases where there’s low-value, high-volume payments being done, so low-dollar amount, but there are a lot of transactions.

Today’s — I’d like to say now, yesterday’s — infrastructure was well-suited much more to like big bulky payments that were — you know, every week you could send a payroll for a large corporation from Point A to Point B. The old infrastructure did that pretty well. But today’s economy, you’re looking at far more. The growth of remittances around the world has increased dramatically. It’s over $600 billion now. In India alone, there are $70 billion a year flowing into the country from a remittance use case.

So to address that, you can’t lean on the old infrastructure. The fact that Ripple is bringing the next generation cross-border payments technology into operations, we’re basically the only enterprise blockchain company that has an in-production, revenue-generating product out there.

The market tells us where to go. So as we build this network, our customers identify which corridors they’re looking to send or receive money from. And we, obviously, listen to that, and that helps us to identify which markets are important.

Again, Asia has been a consistent theme. We’ve leaned into that across AsiaPac, both in Mumbai, as I mentioned here in Tokyo with our joint venture partner. And we don’t see that slowing down. I think we continue to get a really warm reception. What we’re doing is resonating, so we will continue to lean into that, and I see our investment really growing in this region.

Jay:  Do you find that the customers that you’re targeting, they’re more or less receptive in Asia to this use of digital assets to solve this cross-border payment problem?

Eric:  It varies. Certainly, you look at certain jurisdictions, certain geographies where central banks have been at the forefront of providing that regulatory clarity. So we work with not only banks and payment providers as our customers, but within the ecosystem, we also have to engage with regulators.

We want to make sure that they feel comfortable with what we’re doing, and that they’re really clear about what we’re not doing. That clarity oftentimes is the leading indicator of where adoption is greatest.

It’s not unique to Asia. I think MAS has been super progressive. The Monetary Authority of Singapore has always set the tone for the region, and many other countries’ central banks take their lead from some of the innovative, progressive thinking that’s happening here.

I think the role regulators play is not only important; it’s challenging. They have to regulate and protect the greater populace, but they can’t do that if they’re simultaneously stifling innovation. So you’ve got to find that balance.

I think what is true in this part of the world is that the more forward-thinking regulators have noticed that some of the legacy providers, banks, etc., they’re short-changing the population. The quality of solution isn’t meeting the need, so, therefore, they have to adjust the regulation to let some of the fintechs come in, some of these new solutions — still regulated, still compliant, still keeping the greater population safe, but yet, allowing innovation and allowing these higher qualities of services, especially for the needs of the region to be delivered efficiently and quickly.

Jay:  So, yeah, it’s quite interesting to see what was last week… China did a 180 and they were trying to be in the forefront of digital assets, and encouraging that growth. India’s another interesting market. I’m not sure what the legal status is there, but there are] certainly a lot of unbanked there that could use a product like Ripple.

So you might have just answered that, but what’s the biggest pushback that you get from regulated when you go around the world? Is it basically that, what you just said, balancing the need to protect the consumer versus — or the user — versus stifling innovation? Would you say that getting them over that educational hurdle is the hardest thing or the biggest pushback that you get? Or are there other issues that you’re faced with?

Eric:  Yeah, I think maybe at a macro level, that’s true. I think mostly what we see is misperceptions. So a lot of what we’re doing is simply trying to educate. What does Ripple do? And almost equally as important, what is Ripple not doing? Right?

I think people still glom onto some of the early stories associated with bitcoin and blockchain, where all this sort of non-savory stuff was happening on the dark web. There’s a long hangover from that. So at first, banks hear “crypto” and they think sort of anti-government, anti-bank. We’re trying to circumvent the system, and avoid compliance, and avoid paying taxes, and all these things.

So when Ripple comes in and shares what we do, we work with banks. We’re sitting down and engaging with you, Mr. and Mrs. Regulator. We explain that what we’re trying to do does not replace fiat currency, the local currency wherever it may be, but we’re trying to make the movement of fiat currency from one country to another country more efficient.

We’re not trying to avoid compliance. All the institutions we work with go through the know-your-customer and anti-money-laundering checks. The level of anxiety goes down quickly. Now, that doesn’t mean in one conversation everybody gets it. But it’s not necessarily pushback after there’s a full understanding of what Ripple is all about.

Now, you’re right. Certain markets — India, for example — they have more of a holistic, anti-crypto stance right now. Is that going to last forever? We don’t think so because we’ve already seen other markets there has been an evolution. Thailand, for example, was rather anti-digital assets. They’ve done a — I wouldn’t say an about-face, but they’ve warmed up significantly over the past 18 months or so.

To us — and we’re in the middle of it — we think it’s more of a matter of time as opposed to an “if.” It’s when, not if. And so, we invest a fair amount of energy. We’ve engaged with 50 central banks around the world, and we continue to want to make sure they’re clear on what we do.

Jay:  So along the same vein, let’s talk a bit about the company culture there at Ripple. From the people that I’ve met — and this is a credit to your company and to you as the Head of Global Operations — everyone that I’ve met has been very of the same culture, just very modest, down-to-earth, no arrogance whatsoever. For a company of your size, operating at the scale that you guys are, it’s very impressive to see that.

Surely there are concerted metrics that are in place in this culture that you try to proliferate within the company walls. Maybe you can talk a bit about how you managed to create this type of culture.

Eric:  Thank you for noticing that because we are really proud of it. It is conscious; it is very proactive and purposeful. And it does start with our most senior leaders. Again, both Brad and Chris, our chairmen, take building the right culture very seriously. The philosophy of to create great products and user experiences, you’ve got to have good people. But to have good people, you have to make sure that they’re operating within the right culture.

So we have a set of values that we make explicit. On your first day, you’re introduced to Ripple’s values. We celebrate those on a quarterly basis. We have a quarterly all-hands meeting where we reward a member of the team who has exemplified those values, and we celebrate them, and that reinforces that need — not that need, but that objective.

One of the things we do is, we also, on a frequent basis, we survey the employees. We do employ engagement surveys. As a leadership team, we spend a lot of time on the results, and there’s always room for improvement, but we take very proactive steps with various specific owners if there are things that need improving. Or we’ve seen great areas of opportunity, and we can double-down and know that some of our efforts are going well. So you’re right. I’ve been at Ripple for three years. When I started, we were about 120 people. We just crossed 400 people around the world.

So it’s a fair amount of growth in three years. But it’s growth, for a company of our size, I think it’s very distributed. We have the team, as I mentioned, here in Singapore is over 20 now. We have 40-some-odd people in London, 30 in New York, 20-some-odd in Mumbai.

So we’re a distributed workforce for a company of our size, and so we know that we have to keep a real eye on the culture as we grow, not only just in size but also in geographic dispersity to maintain that. And I think we’ve done a pretty good job so far. But it’s a never-ending process. We always have to be conscious of it and investing in it, and it’s something we do take seriously.

Jay:  I feel like it’s going to be increasingly challenging as your company grows and sees more success around the world. We’ve all heard the stories, but I think the key, like you said in the beginning, it comes top-down as well. So when the leadership exemplifies this type of culture and doesn’t tolerate anything other than that, it usually tends to trickle down pretty well. So, kudos to you and your team there.

Let’s talk a bit about looking forward from the operations standpoint. Asia, obviously, we talked a bit about. Any particular markets within Asia that you’re particularly excited about or even the rest of the world that you’re looking to potentially add team members to service a lot of new customers, or leaning in heavily talking or dealing with central banks?

Eric:  There are a lot of markets we’re interested in. Again, we have our ear to the ground, so to speak. We’re always engaging with our existing customers and understanding the market dynamics. In Asia, specifically, we have seen some great success in Thailand, and we’ll continue to focus on our opportunities there.

The Philippines is especially exciting — one of the largest remittance markets in the world. We launched one of our key initiatives there. We call it Liquidity On-Demand. This is where we actually are able to leverage a digital asset to facilitate quick movement of value to the recipient using digital assets in the blockchain. That means, they don’t have to pre-fund accounts. I won’t get into the detail, but it’s a game-changer in the industry, and the Philippines is one of these countries where there’s been the regulatory clarity where we’ve launched the product, and as a result, we’re seeing some great response there. I think the Philippines will continue to be a market of interest.

With our JV partner in Japan, both Japan and Korea have also been real bright spots. So that’s some top-of-mind countries, but there’s plenty of opportunity across the whole spectrum.

For us, globally, in South America and Brazil, it’s been a fantastic market for us. I think there are some specific aspects of how money is allowed to move in and out of Brazil that our solution happens to address very effectively. So we’re seeing some good traction there.

We have been very methodical about how we roll things out. Again, we’re still, in the broad spectrum of global payments companies, we’re still relatively small. So we want to make sure that we focus on a specific set of things and get them right as opposed to trying to spread ourselves too thin. So as we get success in a market, we land and expand throughout the region.

One market that’s very promising, we haven’t — and this is by design — we haven’t leaned in as much there as Africa. There’s a lot of opportunity, and it isn’t for lack of interest. It’s more: we want to get our first set of markets done right. So I wouldn’t be surprised, as you look into the next year and beyond, that we do more in Africa to address that market.

Jay:  Eric, thank you so much for your time. Last question is, where can people find you, follow you, if you’re on social media, or learn more about the good work that you’re doing at Ripple?

Eric:  I’m EricvanM on Twitter, and you can definitely follow me there. I don’t know how exciting what I have to say is, but it’s worth checking in every now and then. But I appreciate you having me, and will look forward to continuing the conversation.

Jay:  Absolutely. I wish you guys the best of luck.

Eric:  Thanks so much.

* * * * *

[Part 5 – in closing]

I wanted to wrap up this program by jumping back to the end of my first interview with Brad Garlinghouse, who previously mentioned that 40% of Ripple’s customer base sits in Asia.

Brad leaves us with some forward-looking statements with regards to the region, in particular, his overall macro outlook on the crypto industry, and some sound advice for aspiring entrepreneurs looking to get into the space.

I sincerely hope you enjoyed the conversations I had with the executives at Ripple as much as I did. This project is certainly one that I’ll be keeping on my radar for the future.

Jay:  Let’s talk a bit about Swell and Asia specifically because you’re here. This is your third Swell Conference, and you decided to do it in Singapore. Why did you decide to do it in Singapore? What’s your outlook here in Asia? We’re very interested.

Brad:  Yeah. Singapore has been a hub of financial services for a lot of years, without a doubt, and I think particularly as it relates to blockchain and crypto, there has been a progressive forward-leaning viewpoint about how these technologies can benefit existing financial systems, existing payment mechanisms. So as we looked at various markets, Singapore and MAS as a regulator here locally has been open-minded to, as long as KYC regulations are intact, as long as anti-money-laundering regulations are intact, and things like that, they, I think, have had an open viewpoint to how these technologies can benefit some of these systems.

I mentioned earlier, about 40% of our customers are across the Asia Pacific region, and so we felt like it made sense to host the event here. A lot of the speakers… Our speaker in San Francisco Swell last year was Bill Clinton. Prior to that, we had the former head of the U.S. Federal Reserve, Ben Bernanke. Having Dr. Rajan, who used to be governor of Zurich Bank of India… Obviously, he’s not from Singapore, but certainly representative more of this region, and a lot of the speakers on stage – we had the CEO of DBS yesterday – are from this region and, I think, reflective of how this region is thinking about these technologies and how payments can dramatically improve.

Jay:  From a regulatory standpoint, you find that regulators in the region are more or less conservative than the counterparts in, say, DC where you just set up an office.

Brad:  I don’t think of them as more or less conservative. I think everybody is sensitive to fundamental financial regulation like “Know your customer.” I think that one of the things that has held back crypto, in general, is some of the arguably… There’s a community that I think is so wedded to this, “Hey, we need to enable anonymous transactions…”

Governments aren’t excited about anonymous transactions. They haven’t been for a very long time. I have said this publicly before. I think when people are out espousing anonymity for crypto transactions, I don’t think that’s good for the industry we’re trying to grow.

We have to be cognizant that we’re working within a regulatory framework of the traditional financial system. And taking the approach of “Down with banks and down with governments” I think is short-sighted in terms of the impact that these technologies can have to touch more and more people and to have more and more people benefit for these technologies through faster transactions, lower-cost transactions. There are a lot of ways that help society.

Jay:  Absolutely. Brad, as we look to wrap-up, thanks again for the time. It’s been very informative and insightful. Just the last few questions that I have for you. There’s been a lot of analog with where we are in relation to Web 1.0, which you were right in the thick of. I am, too. So that’s okay. We’re in good company.

When it comes to the crypto outlook in this space, there are only a handful of projects that have real utility. Ripple, being one of them. Where do you think we are? I think Marc Andreessen was asked this recently on a podcast and said 1993, ’94. What would you say? Obviously, things move faster now because of technology and this sort of thing.

Brad:  I would directionally agree with that. What year is always a bit hard to measure. I’m using a different analogy. I’ve said it. I do view this as a marathon run — mile 2 out of 26. So I think there’s a lot of road ahead of us, and I think that’s a good thing.

I think blockchain technologies are going to touch lots of industries. Ripple has decided to focus on cross-border transactions, cross-border payments today. We will pursue other verticals, for sure. But I think that it’s going to take a decade or two to see how it will all play out.

Quite frankly, if you use Marc Andreessen’s characterization, he says we’re 26 years into the internet. Could you have predicted in even 1999 that you could open your Grab app here in Singapore and have a car pick you up. I couldn’t have even fathomed that. And I was involved in the internet in the very early days of the internet.

I think the same thing’s true in blockchain. There are a lot of things where blockchain is going to touch how transactions happen. It’s very hard to predict all of the different ways that it will touch consumers and businesses. But it is a profound c-change, and I think people don’t fully appreciate that yet.

Jay:  Last few questions: you’ve seen a lot of talent accrue from both Wall Street and other parts of the industry into blockchain. If a young entrepreneur wanted to go out and join a crypto project, what advice could you give them?

Brad:  Two pieces of advice. One, try to avoid the hype; focus on the reality. I think a lot of projects spread themselves very thinly as opposed to going deep in a specific, “Here’s the customer. Here’s how we’re helping that customer.” I think what has served Ripple well is we’ve been very focused on a specific customer, a specific use case, and that has given us the ability to go deep there and a lot of momentum.

The second thing — and I do give this advice. Just last week, I was talking to a very talented guy, a marketer, who has zero experience in tech and zero experience with blockchain. We have a job posting for VP of Marketing. He was interested. And I said, “Look. You’re probably not going to get a VP Marketing job, but if you’re really interested in this space, don’t get caught up in the title.”

I think people sometimes get too focused on the title. If Ripple is going to be one of the major winners in the blockchain area, you want to be on a winning team. We have now over 400 employees. If you joined two years ago, you were one of the first 160 employees.

As we grow, that gives more opportunity for you to grow with the organization, whether that’s promotions or more responsibility, or what have you. If you believe blockchain is going to be profound in lots of ways, you just want to be on a winning team. What your role is, is less important.

Jay:  Awesome. The last question is an easy one. Where can people find you, follow you, learn a bit more about the good work that Ripple’s doing around the world?

Brad:  Obviously, Ripple.com. I tweet with some regularity. @bgarlinghouse.

Jay:  Apologies for the influx. You’re probably going to get swarmed now.

Brad:  We welcome it.

Jay:  Thanks so much for your time. It’s been really great sitting down with you, and we’re rooting for you. Looking forward to hearing all the good things that you guys are doing around the world. Appreciate it.

Brad:  Awesome. Thanks for having me.