Ripple CEO Brad Garlinghouse says the problem with payment software today is not a problem. They are not built to communicate.
Speaking at an event, Garlinghouse compared today’s payment networks to the early days of the Internet. Garlinghouse compared today’s payment apps to old closed networks like AOL once, pointing out that Venmo and PayPal could not move money between them until recently, even though PayPal owned Venmo.
Why sending money abroad is so painful
Garlinghouse said the biggest friction in all payment systems is seen when people try to send money around the world. It’s slow, expensive, and error-prone, sometimes leaving money flowing for weeks while people track it down. That’s the problem that Ripple has fixed.
What makes XRP useful
Garlinghouse was careful to base technology on what customers care about, not jargon. XRP transactions settle in about four seconds anywhere in the world, he said. Moving money using XRP costs fractions of a penny per transaction, he said, making speed and cost the only two things that are important to people using the technology.
He directly compared it to Bitcoin to make the point clear. A Bitcoin transaction can cost about $10 and take 10 minutes to set up, according to Garlinghouse, who was quick to add that this is not a knock against Bitcoin. Different blockchains, he said, are designed for different purposes, just as different Internet protocols serve different purposes.
Selling to banks, not people
Instead of offering XRP to individual users, Ripple chose to sell its technology directly to banks and financial institutions around the world. Garlinghouse also reported on the SEC’s case against Ripple, noting that it left the company’s business in the United States after settling for nearly five years before things changed.
A quick word on what blockchain is
Garlinghouse also gave an explanation in plain language of the blockchain itself: an open ledger of debits and credits that anyone can see, where past transactions cannot be changed. For Ripple, the goal was not to use blockchain because it is an interesting technology. It was applying it to a real problem that financial institutions and their clients already have.
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