When JP Morgan announced plans in February for its own cryptocurrency, I wondered what this would mean for Ripple. The San Francisco crypto company has long touted its favored currency, XRP, as a type of bridge money for financial firms to use in international transactions. Those ambitions could be dashed if most banks decide to use an in-house currency such as the so-called JPM Coin instead.
So is Ripple worried? Apparently not. I put the question to CEO Brad Garlinghouse at the company’s offices last week, and he seemed outright pleased that JP Morgan’s CEO, a famous Bitcoin skeptic, was hatching a cryptocurrency.
“If you told me two years ago that the guy who called Bitcoin a fraud was launching a coin, I would have said you’re on Market Street sniffing fumes,” said Garlinghouse, referring to a San Francisco’s thoroughfare popular with drug users.
Garlinghouse added that he thinks the arrival of JPM Coin is a good thing because it underscores the legitimacy of blockchain technology for money transfer, and that he doesn’t view it as competition for Ripple’s XRP aspirations.
“I don’t understand the value proposition of JPM Coin. Is BoA or Citi going to use a JPM coin?” he said, suggesting the banks’ rivals would probably prefer to use digital coins of their own design. This would, in turn, create a token Tower of Babel and defeat blockchain’s promise of an open and interoperable money transfer system.
Garlinghouse has made this point before and he’s probably right. The big banks’ experiments with digital currency are unlikely to become a lynchpin of worldwide money transfers. That said, it’s unclear if Ripple’s promotion of XRP will achieve this either.
The story of Ripple, as it’s been for years now, is of a company that’s gained traction selling blockchain-based messaging software to banks but has yet to make a clear-cut case for XRP. Ripple’s own interest in XRP is obvious enough—the firm is sitting on a hoard of the stuff, and people who work there will become very, very rich if the financial industry embraces it. But will this ever happen?
Garlinghouse insists that XRP adoption is now for real, adding that Q4 of last year was the first time that Ripple’s finished XRP product was available. He says that eight or ten companies are now using it in commerce and that their ranks will soon expand to include some giants of the finance industry. As for simply settling for being a successful messaging company, Garlinghouse says that’s out of the question.
“I won’t be happy being a boring software company. Software is a means to an end and it will help drive liquidity of XRP,” he said.
We’ll see. Meanwhile, we’re getting excited as the inaugural edition of Brainstorm Finance in Montauk is now less than three months away and our list of prominent executive speakers keeps growing. Come join us on June 19-20!