The pitch was that Ripple, the company, was going to sell XRP, the cryptocurrency, to the general public in order to fund all of their growth. Then, when banks ostensibly adopted XRP for their banking needs, the banks would be forced to pay exorbitant amounts of money to buy the artificially-scarce XRP from all of the speculators who got in early.
Everyone conveniently ignored the fact that large banks are not dumb, and they had no real reason to use a currency literally invented out of thin air to power their transactions. If banks really wanted to use cryptocurrency to trade among themselves, they'd obviously just roll their own cryptocurrency. Or they'd just copy-paste the permissively licensed Ripple code and call it something like BankCoin. No one could ever give me a good reason why banks would have no choice but to buy up arbitrary XRP from general public speculators.
To achieve that speed, banks transfer a digital currency (XRP) issued by Ripple instead of traditional currencies. It takes a few seconds for XRP transactions to settle, instead of days for traditional currencies via SWIFT.
The value of this currency is decentralized, in the sense that people trade it with other currencies (which is also how Bitcoin, Ethereum etc. are valued).
In the eyes of the SEC, the fact that XRP is directly issued by Ripple makes it similar to issuing shares. Even if Ripple doesn't control the value of the shares (XRP), they still manage the supply.
For small payments though, I've just used something like TransferWise which is great and really fast too.
The biggest problem with Ripple was that there was never actually any compelling need for the XRP token, because you'd need an extra currency conversion for a cross border payment... So I believe mostly the only way that they'd got partners to test out their system was to actually pay them from money they'd got selling XRP tokens to speculators.
1. https://www.swift.com/our-solutions/swift-gpi/instant-cross-...
Cross-border payments have usually taken longer, but the point of my comment is that that is very quickly changing (and already has come a long way in just the last few years). So you may be thinking of older technology or places with less advanced banking systems than what a lot of countries have now?
>If you suspect you have been tricked into paying someone you should contact your financial institution immediately and report it to the police.
If you pay erroneously, what happens next?
If someone tricks you into sending them money, that's just fraud same as credit card fraud or wire transfer fraud or crypto scamming fraud. What are you getting at?
This is exactly as safe as the previous system which took up to 48 hours to transfer the money.
Just want to note that interbank transfers via Fedwire are (a) close to free and (b) instantaneous.
International wires are a bit of a mess. But there are alternatives to SWIFT.
Also, SWIFT is just a messaging protocol. The actual settlement is handled separately. This was Ripple’s original pitch, but it changed along the way.
If I want to send someone a few USD and I know their IBAN or SWIFT + name, address, what does my bank do? Is there a Visa/MC for wire transfer? (I know that SWIFT operates a network for banks, but then how do banks settle? Is the SWIFT message a legal claim?)
1. Your bank sends a secure message to the overseas bank through the SWIFT network (this is where the SWIFT number is used for routing the message) to the recipient's bank, detailing the transaction.
2. Through the SWIFT standard message format, the overseas bank validates whether the account exists in their bank. Some additional screening is done at this stage to detect fraud, money laundering, etc.
3. Your bank and the overseas bank have a predefined agreement on a correspondent account, i.e. a bank account in the US owned by the overseas bank to receive USD. If everything checks out, your bank wires the money via a domestic system like Fedwire to settle the transaction.
4. The overseas bank confirms that the money was wired to their US account, and then adjusts the recipient's balance accordingly.
Or have accounts with banks that have accounts overseas, yes. For example, Fidelity piggybacks on JPMorgan for a lot of its overseas transfers.
Is there a routing system between SWIFT members based on who has settlement (nostro/vostro) accounts between each other?
As far as I know Libra/Diem is more customer-facing, whereas Ripple is mostly marketed to banks for faster international transfers.
As I recall Ripple was originally a network-of-issuers for multiple issuer-specific tokens model, it wasn't supposed to be a single-issuer/single-token. The XRP token itself was never intended to be the asset, it was only a cost-token that fuelled the exchange of other issuers' tokens, similar to offline community exchange systems (CES). Ripple the company post-dates Ripple the project, which AFAIK was originally solidly non-commercial in motivation. I was part of the early commercialization of Ripple sort of by proxy while building Kraken, although I was opposed to the move. Aside from the money people, there were some good engineers involved with the right intentions, drawing from solid experience and with an awareness of CES and attempts at networking thereof.
The whole central banking thing was a post-facto marketing push as crypto went mainstream AFAIK. I believe some of the people changed at some point, but I didn't have time to focus on Ripple and never met them. I believe the Ripple narrative mirrors my overall experience with crypto: nice technical ideas by people with positive social visions, suddenly people get paid to do it, utopian visions rapidly replaced with money people, regulatory ingress effectively destroys the USP, whole thing turns in to a scam, regulations become warped in to a system of protectionism and government effectively in cahoots with the dominant players. A real education in human behavior.
> whole thing turns in to a scam
Ironically, the narrative that Ripple the project was unrelated to Ripple, the scammy company, was also frequently used to hype XRP in the early days.
It was a convenient way to give two narratives to the same cryptocurrency. People could either choose to believe in the Ripple (the company) banking system, or they could choose to believe in Ripple (the project, the technology). Win-win for speculators.
No one is really disagreeing that Ripple was something else entirely before it became the popular Ripple/XRP scam, but that doesn't really matter in the context of this SEC lawsuit.
i doubt there was much logic applied, past the idea of getting rich, to the few thousand crypto currencies that were born in the last decade.
But you can if you hint that if they buy your crypto tokens, those tokens will go to the moon.
Is it supposed to be a faster Bitcoin? Is it supposed to be a less Chinese-controlled (supposedly) cryptocurrency than Bitcoin?
Let's for the sake of discussion give them the benefit of the doubt.