Brave New Money

I am not an investment advisor, financial analyst, accredited investor, or any other imposing title. This is just my opinion; always do your own research.

For the vast majority of my working life, I’ve been consummately conservative when it comes to investing. VOO & QQQ (S&P and NASDAQ index funds) have been my idea of risk exposure, and I always squirreled away a stack of silver as insurance again them. Consequently, like many others I instantly ruled out Bitcoin and other cryptocurrencies as Tulip Mania.

It wasn’t until I thought to sit down and read the white papers (formal business proposals) of Bitcoin and Ripple [XRP] that I began to decouple the thing itself from the greed-hysteria surrounding it. Satoshi Nakamoto’s paper read like a practical Wittgenstein, packing so much condensed brainpower that some have argued–ala Shakespeare theorists–that it must be the product of a group rather than an individual. And Ripple’s read like the cynical–and thus realistic–appraisal of Satoshi’s ideal. When I was done reading both, the comparison that sprang to mind was MP3 technology and what it did to the music industry–at first transgressive and terrifying in the guise of Napster, but quickly coopted and commodified by the likes of Itunes.

Like Napster’s triumphant P2P file sharers, quite a few early crypto adopters–particularly those branded “Bitcoin maximalists”–seem to labor under the impression that the banks of the world will willingly throw themselves upon Satoshi’s sword. The sentiment seems to be that regulators and old money are so slow and so stupid that they will never be able to catch up with this innovation or dream up a way to stop it. I would humbly suggest that however dimwitted the average politician may or may not be, the persons who really fund their reelection campaigns bear little resemblance to them.

Facebook’s Libra is a prime example. No one in D.C. (not even the politicians in sync with Zuckerburg’s stereotypical Silicon Valley politics) seems to welcome the thought of a tech corporation competing with central banks. To me, this suggests that Mark once again prioritized coding over communication. He lately seems an unintentional, even bewildered Ayn Rand protagonist, backed into a corner not because he was unwilling to grease palms but simply because he forgot.

Unfortunately for the proof-of-work cryptos like Bitcoin (indeed, perhaps almost all of them excepting Ripple’s XRP and Cardano’s ADA), Libra has brought them the wrong sort of publicity and attention despite how little they have in common with it. The bear has been poked, metaphorically and perhaps economically. What comes next is anyone’s guess, but it doesn’t take a genius to see that if someone got it in their head to take out all cryptos that don’t cater to Uncle Sam, a good place to start would be the dubious if not downright fraudulent Tether stablecoin that props much of this speculative market up.

But despite D.C.’s curmudgeonly view of Bitcoin, Libra, and co., that doesn’t change the fact that blockchain technology stands to make them and more importantly their puppeteers a lot of money in the coming years. Remember, you can get rid of Napster but keep MP3. Or, to bring things even closer to home, you can screw over a Tesla if you have an Edison.

I am of course referring to Ripple and their XRP (“booo, banker sh*tcoin!” echoes down from the rafters). Ripple CTO David Schwartz is a mind powerful enough to give Satoshi a run for his tulips; heck, some think he is Satoshi. But, far more importantly, he is surrounded by a team of cold, hard, Machiavellian pros who knew the second they read Bitcoin’s white paper that they should keep the MP3 and ditch the Napster. You know that Hollywood “7 Degrees of Kevin Bacon” thing? Well, it isn’t an exaggeration to say that Ripple is fintech’s and maybe even business’s current Kevin Bacon. It is downright bizarre just how many known names in finance and law have left behind “sure thing” positions to join Team Ripple. And there are several characters outside of staff, most noticeably the IMF’s Christine Lagarde, who are clearly playing favorites with them at every turn. (Listen for “level playing field” in financial/political discourse going forward–I am personally convinced this phrase is a substitute when referring to Ripple).

Alright, but what does XRP actually do? Well, unlike speculative cryptos that are merely “stores of value,” XRP is positioned to solve specific problems. Most pressingly, these are international remittance (banks and other financial institutions like Western Union and Moneygram moving money across global borders) and nostro-vostro accounts (the necessity of one bank having to keep a large sum in another bank so it can cover remittances that it sends into that other bank’s jurisdiction, basically). But there is also the futuristic proposition of “universal liquidity”–something like a global, digital reserve currency that can seamlessly transition payments from one currency to another, be it fiat or crypto. (“…Or crypto” meaning XRP’s success does not necessarily mean BTC or anyone else’s demise). These are the problems that stand in the way of instantaneous transaction, or money changing hands as quickly as texts and emails do.

When you combine what XRP does (or can do) with who Ripple is, it becomes clear that Ripple XRP is an attempt to make Satoshi’s tech palatable to central banks and thus governments. Whether they have already succeeded is the juicy question. I believe the immediate fate of Moneygram will be an excellent indication. Western Union and Moneygram are the big boys in the world of non-bank remittance. Western Union halfheartedly “tested” Ripple’s tech, panned it in the press, and kept doing what they’ve always done. Moneygram, on the other hand, has recently embraced Ripple tech with open arms, which sent Western Union’s CEO scrambling to the nearest journalist to proclaim that he and Ripple could sign a deal any time if the price is right. Point being, if the underdog Moneygram suddenly seems as though it has a mysterious advantage over Western Union (current stock prices circa $2.00 and $20.00, respectively), this will be the best and perhaps final hint that Ripple has already sealed the deal with the powers-that-be behind closed doors. But if they have, the amount of ironclad NDAs that have gone out recently must be record-breaking.

So, with all that hinting, flirting, and general beating around the bush out of the way, I’ll now take a proper guess 25 years into the future. We’ll see if I look back with pride or embarrassment…

Bitcoin is a relic, but a very expensive one. Ripple is THE fintech company, with whole XRP tokens at a very respectable (but nowhere near 20K BTC) price. They’ll go public at some point, and the stock will be worth more than the token. What with instantaneous transaction now being taken for granted, they are primarily known by businessmen as the universal liquidity behind Quant’s Overledger (or something like it that hasn’t yet been invented). The average person won’t think about XRP at all; they’re getting paid and paying with cryptos such as or similar to Cardano’s ADA and even BAT, funneled through Overledger but meant to be nothing more or less than digital money mostly paid out in fractions. Amounts, to a certain extant, have become meaningless to regular folks–watch enough ads, post enough cool content, or do enough community service, and your creature comforts are covered without much thought. Indeed, buying things is nearly antiquated; now you mostly just subscribe to tokenized services. You don’t buy groceries; you subscribe to Walmart or Amazon and the drone drops your foodstuffs off every-so-often. But how will you get what you like? Easy; algorithms. Products trend and go viral; every object and software reports back collective metadata, rearranges itself to be optimal, becomes inherently desirable thanks to this automatic molding by the market’s “hive mind.” Conspicuous consumption on steroids? Yes, but tempered with self-righteousness. If California crops had a rough year, that popular bottle of Merlot will have to wait. Indeed, if you take one for the team and preemptively defer that Merlot, your stream of micro-payments will get a handsome boost, and pump some social credit-score along with it. Like a spooky synthesis of hardcore capitalism and hardcore socialism, the corporate-government is the godlike provider without whom all will starve, but it also inherently obeys the “free market” by “giving the people what they want” whenever possible.

…So, full disclosure: I own some XRP and Moneygram, but, as Ripple’s own Bob Way has put it, “not enough to make me worth kidnapping.” I also plan on acquiring some apartment REITs and BOTZ (a robotics/A.I. index). Now you know why.

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