Say Something Nice About XRP, TBI

The latest episode of the Unqualified Opinions podcast with Bitso CEO Daniel Vogel is one that the #XRParmy is going to love, and details how XRP the asset (not ripple software) is actually being used for cross-border remittances.

Before we get to that, contrary to what you might think, I don't hate Ripple or XRP.

Yes, I've called out the company leadership for lack of transparency, and yes, I've compared the company to Dr. Jekkyl and Mr. Hyde because of its strange business model. But I actually think Ripple's tech is interesting, and the asset could prove successful under a certain set of (admittedly unlikely) scenarios.

Here's what I said recently on Abra's Money 3.0 podcast when asked about Ripple:

"Well, I think Ripple the company has built one of the more impressive tech stacks and has much closer to product-market fit than 99% of other projects that are in crypto. The issue has always been what I’ve called the Jekyll and Hyde of crypto.

On the one hand, you’ve got Dr. Jekyll who’s trying to dis-intermediate SWIFT and working with all these banks and got this phenomenal team and board and advisory members and they are creating interesting tech, solving real problems, and were very early as pioneers in the industry. But then there’s Mr. Hyde, who comes out with these bullshit transparency reports where they kind of obfuscate how funds are actually flowing and they’re not quite transparent about the actual funding model for the company, which is more or less a continuous fundraise, but one that’s treated as revenue.

The party line is that they just stumbled across this 80% of XRP that was gifted to their balance sheet - a "found asset" like oil - rather than being sold as a security. But we don’t really care about the securities law aspect of it. What we do care about is whether the XRP currently outstanding is truly circulating or whether it's encumbered in some way, shape or form.

If a sizable portion of XRP is encumbered, then two things happen:

One, they’re understating the amount of sell-side pressure from insiders that will happen over the course of time. And this is what’s actually played out over the course of the last 18 months.

Two, their market cap is overstated, which means that anytime that there’s a basket weighted index with XRP, the index creator is going to go overweight XRP even though a good chunk of that XRP is either in escrow by Ripple, or is currently held by one of the insiders. It’s subject to some sort of structured reselling agreement. When we started to look into this, it was more about that issue of whether that’s at all sensible as a way to report on the supply.

But I’ll tell you right now, I still think that Ripple could end up doing very well if the banks take the bait and are offered sweetheart deals to buy some of these assets for pennies on the dollar, 50 cents on the dollar in return for actually partnering very publicly with Ripple. So, it’s like "fake it until you make it coin." The revenue model and what the company actually delivers are two very, very different things."

The point of contention for me has always been how much XRP is actually being used within the company's core payments platform! And the answer has typically been: not really!

But this interview with Daniel Vogel, CEO of Mexico's largest crypto exchange and remittance company, Bitso, is illuminating. It highlights how Ripple could deliver on the sky-high expectations they've set for XRP adoption. And it's one the #XRParmy is going to love.

Vogel explains how the company is utilizing XRP to catch a piece of the $35B in remittances that flows across the US-Mexico border each year. Sourced mainly from (Ripple porffolio company) Moneygram in the US, Bitso saw $18M in XRP remittance volume in the final week of December, a figure he claims has been growing 15-20% each week.

Daniel says they're aiming to capture 20% of the weekly US-Mexico remittance flow by the end of 2020!

Beyond highlighting a clear win for the Ripple team and XRP, this conversation sheds light on a region of the world that is ripe for crypto adoption beyond pure speculation. Bitso's home country of Mexico is home to 125 million people, 87 million of which have smartphones while only 40 million have bank accounts - only 22 million of these bank accounts are active. Basically, the perfect ingredients for crypto adoption.

For now, it's at least one example of a market where Ripple and XRP are seeing real traction. Time will tell if that recipe is replicable in other markets.

-TBI

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