Ripple – Enterprise Blockchain | Chris Larsen & Stefan Thomas | Talks at Google

[Music] kind of intro Dave I'm not the man of the hour though these two are we have the founder of ripple Chris Larson and we have its current CTO Stephane Thomas we're very very excited to have them this is gonna be an awesome talk a little kind of brief intro Chris got his MBA from Stanford he started alone which is kind of a mortgage lender it was actually the first platform to freely give out FICO credit scores to its users he started prosper which is actually the first p2p peer-to-peer lending marketplace in the US and famously he co-founded ripple labs which is a subject of today's talk so we're really excited to have Chris here Stephane Thomas is a CTO of ripple labs he was the CTO of numerous tech companies like eel owed and tax payer he founded we use coins which created this kind of Bitcoin primer video which amassed 8 million views and was a primer for a lot of people to just learn about kind of the basics of Bitcoin and it kind of blew up on the website check that out and he's the board of directors uh he's on the board of directors sorry at the Jay s Foundation and he's the current CTO of ripple ripple is describes itself as the only enterprise solution for blockchain it allows institutions to send money globally in a fast frictionless and cheaper way and it's brought it's kind of broader eventual aim is to create an internet of value which I'm really excited to talk to both of these guys about so without further ado please give a hand for Chris and Stefan awesome guys so can you guys just give us kind of a brief bio in your own words your career and how you came to found ripple labs and then get involved great habit – done first of all thanks for having us and thanks for not making a Bart Simpson jokes appreciate that so yeah as you mentioned in Infinite act for about 20 years now with kind of two startups previously alone and prosper kind of the common thread there those were focused on the consumer ripple obviously is what was not enterprise and there's some learnings that I had from that else here later but the idea there was using the internet to democratize finance I think we did a lot of good there but we were always limited by just a fundamental lack of infrastructure in in FinTech so kind of in my view FinTech it really hasn't even started it has sort of been a stepchild of the internet boom because FinTech really has to involve both data and money and so far you've only had the ability to move data so there's both a lot of excitement a lot of frustration that we couldn't go further at the same time was always keeping an eye on what was going on with virtual currencies and you know Bitcoin obviously it was a real breakthrough but there's been a lot of attempts over the years and so we were watching things like linden dollars which was currency and you know that kind of existed in the early days second life phil Rossdale kind of an amazing guy is still the coolest guy in crypto right you know things like Vermont dollars kind of this idea of local currencies in a very small community super interesting obviously beans and floors which were too big well funded projects during the first calm that sort of you know failed spectacularly but it just seemed like it was a matter of a matter of time before you'd have a global digital asset with no you know kind of government backing and no counterparty as far as ripple itself that really essentially go back to about oh four there was something called the ripple project created by Ryan Fuger a Canadian gentleman is just really a neat guy and he tried really to kind of give birth to this idea of a peer-to-peer platform for people exchanging their own credit and essentially their own currency every person would have their own currency super interesting concept that was a big part of what influenced us kind of fast forward to 2011 and there was these three geniuses that got together Arthur Brett Oh Jed McCaleb and David Schwartz and this is of course after Bitcoin was created a couple years earlier they were fascinated by what bitcoin did but they're frustrated by the enormous waste of energy that is sort of at the heart of mining that's the core part of Bitcoin so they set out to build a more efficient consensus algorithm and they can move something really beautiful they also were inspired by what Ryan Coogler had done at the ripple project and kind of also brought in that idea of kind of path finding algorithms so that anything of value can be exchanged along with that digital asset to really I think that was kind of the birth point of this internet value the intellectual protocol which we'll show in a little bit actually has it's almost like an overlay protocol over blockchains within also traditional financial systems and that allows you to innovate in different parts of the network independently instead of having this sort of central governance model where everyone has to agree to any rule changes that are happening I think this is like a critical point I think we came to the realization that a blockchain was not going to be the solution to the biggest problem we think the world has right now in this whole FinTech area which is there is no internet of value and why block you know and a lot of people talk about bitcoins gonna be a new protocol for money well just it's really a database right so a single database or a single network network cannot be the network of networks and so that was kind of the big flaw and that's what led to I think you know Stefan having this kind of aha moment of the need for something like IOP which was a dangerous moment for it was scary at first yes like we were trying we were out there promoting this acid like extra period telling everyone hey you should put all your balances on this ledger you should do all your transactions this one system and we knew the friction from that but then again like stepping back from that and suddenly saying like oh they're gonna be many systems it was very scary and so we actually waited almost a year to publish the white paper until we had you know in our minds have resolved a strategy around what's extra piers role in this new world and how do we make sure that our technologies are still needed and is still necessary and and can can benefit this new world like how do we we are kateri thing to serve this new world so I think we're still in that the process of like rolling out all the different pieces but it was that sort of one-year period from I would say you know mid 2014 when we first had that realization to October 2015 when the white paper for aunt Alicia came out what we tried to kind of put all the pieces in place for it because ripple always was different from Bitcoin and then you could put anything of value in it right so this idea of kind of we call it IO use or balances but really being value agnostic and that then being the engine for for the exchange of that thing of value but having the combination of ILP with XRP we think that's the that's kind of a killer formula yeah now you can have any type of value like any currency but also any type of ledger so like anything from a centralized ledger to a blockchain and if we look at kind of seventh way about kind of the macro problem that we think in the world has its lack of an Internet value you kind of argue that this gets to the heart of the problem with globalization which is obviously under a lot of stress today right it's kind of not working for a lot of people and we kind of we don't think of it as like well globalization is bad we think of it globalization is actually incomplete until you have an internet of value you really can't have true globalization you sort of need these three core interoperability technologies working all together you need interoperability of data of goods and money right so the world today of course has interoperability of data you know it's completely transformed the world over the last 20 years it has the interoperability and goods through you know a simple thing called the shipping container which you know before that was invented shipping stuff was incredibly inefficient and labor-intensive stuff would arrive one port had to be ripped apart and reshaped and with a shipping container you know your ship in the truck any port in the world you have interrupted goods since the 1950s that's sort of what an internet of value is it's like the shipping container for value and again that can't be a blockchain a blockchain is like a single shipping company that will you know you'll max out that shipping company and you'll have a dependency on that one shipping company shipping container you can create endless shipping containers it has no effect on any other shipping containers it deployed that's sort of what ILP is almost the ultimate decentralization that's kind of what we're thinking about it with the technical people in the audience is a stateless protocol so you can literally just run it over a different system so it doesn't keep any balances in subject and then we think really good things happen when the world finally has a full kind of globalization platform but this has to happen and and again what is this meaning now that we don't have it right now it means you know we all know 750 bucks to Europe is kind of impossible right yeah we know the example of the aaron b host in tanzania who should be making 29 bucks to on a rental and by the end of days nine bucks is showing up this is an actual example right so that's a that's a problem with relatively big amounts of value think about the two billion people in the developing world they the Gates Foundation would say they need to be able to send 50 cents to be real participants in the global economy take that even further if you think about all the connected devices and applications that probably should be empowered to send value that might need to be you know a thousandth of a penny that's just not possible until you have this internet value in place so the world is being held back by this and we think that's the true breakthrough that this whole whatever you want to call this industry really is all about there are some detractors of ripple that say it's kind of a centralized blockchain or the enterprise blockchain you know a lot of Bitcoin loyalists and Bitcoin in general might have come out of kind of an anarchist or cyberpunk kind of movement early on as part of that and and so that that's kind of the general criticism so I wanted to give you guys a chance to respond to that and then I'll combine the second question cuz Stefan has an awesome presentation he's gonna give the second question is we are living in a crazy kind of environment in terms of cryptocurrency just speculation on the price of tokens and blockchains do you guys think we're in 1999 right now is this the the you know kind of a dot-com bubble that we're experiencing so yeah those two questions because I'll take the first one you can cheer for calm so first of all the enterprise part I take as a compliment I think that's precisely what we're trying to do is we're trying to build the first blockchain that can actually be used for real you know real use cases you know like when you think of you know any distributed system when you take a distributed systems class the first thing your professor will tell you it's like your distributed system is still only gonna be as good as the nodes it runs on and so if you think of Bitcoin miners they're only incentivized to basically hash as efficiently as possible they're not incentivized to provide physical security for the data centers they're not incentivized to make decisions in the interest of the network so they have a very pure incentive to just hash as much as possible get paid rinse and repeat in the case of ripples since the validators are chosen by the users if a validator for example votes against a block size increase or something like that if there were an issue in ripple then you would eventually find that users would no longer add that validator to that list and so that validate it would slowly lose influence and so it's not as much of a system that's like tailored to users like Bitcoin is where you know anyone can just run a node and it just Auto configures itself and connects to the network you do have to do that validator selection manually you have to think about you know politically speaking like which validators do you want to empower with your node etc so it is more targeted at like you know actively being managed by companies things like things of that nature but I think the reason that that makes a lot of sense is because when you actually go out there into the market you know the the evil people you mentioned I'm an anarchist okay you know so I I really want to empower people right but the people that you got to fight or not the like all the banks they're they're a few you know very very powerful players in the market that sort of take a little bit off the top and those are the people that you want to bypass and then everyone else like there's a lot of small banks and regional banks and so on that we've talked to that are really trying to provide you know better user experience you're really trying to provide lower fees etc those are the companies that we want to work with and empower and it's not just banks as payment providers mobile money providers and so on so that's kind of where that different approach comes from and on the centralization point I would kind of say that there are a lot of different definitions of centralization and you know we're sort of going down a list of meeting more and more of them as we progress one of the ones that we we don't meet yet is that we still run a majority of the trusted validators but that's something that we're this year going to to start rolling out in terms of we have already got a lot of third-party validators running so people are going to start trusting them this year and so it's just one more step to kind of go in that direction and I think if I compare it to where we were with Bitcoin like with Bitcoin we had some level of the centralization again meeting some of the definitions but not all for instance there's no geographic diversity it's very concentrated in China right now but we didn't have a very good road map in order to how to overcome that because the the system is really you know it's just sort of the incentives are set up in a in a I would say now say bad way whereas with ripple we have the incentives are in order and so it's just a matter of like you know validators having the right you know amount of operational histories that people actually start trusting them and us having enough confidence in the software to actually you know continuously let go of more more of the reins here so I think it's for ripple it's a clearer road map to get to a very high level of decentralisation yeah and bottom line in the centralization is there's kind of a bright line you know you know if ripple did not exist with the network continued function yes so that's kind of that you know hard line of which side you're on and then I think it's Stefan's point variety what kind of gradations from there and then second I think on what's going on in the market today so obviously you know a really interesting you know time in the space clearly there is a lot of speculative interest that's going on and I kind of break that into kind of two parts one is there's clearly a lot of almost like crypto day trading going on it's almost like the days of the early internet with all the day trading and I think you probably if you look back on most people that were day trading back in 2000 I bet it didn't work out that well for for people that were doing that people shouldn't do that you could lose all you know you can lose everything it's it's just not a good plan people should not be putting the retirement money toward a training you know crypto currencies and there's a lot of skepticism that you you see out there nathaniel popper for example the New York Times you know he writes about that skeptically and he's right to be skeptical so we think you know that people should be very careful with that but there's a second part of speculation I think is being now increasingly driven by institutions so institutions funds we call it the wall street tidal wave it's sort of coming and coming into play here and I think what's going on there is that very sophisticated people are saying the investors are saying look there's some meaningful percentage of this is in fact a second internet and this internet value can be as transfer transformational that's a longer-term sort of call that that's going to happen inside said that's more constructive speculation and I think those institutions and there was kind of professionals they've seen what's happened in this last 20 years of the net the great promise the overhype the the you know the total bubble the crash and then kind of fast forward 20 years where we are today if you look back you probably say probably the early promise was probably it was probably under hyped given the impact that all this has had on human existence so you know that's a more constructive view the use cases for industries enterprise payment providers and other things that is coming on board so I suspect that sort of ratio of sort of hopefully the long term speculative injury you know activity and the use case it starts to look more like what you see in normal markets because there's things gonna actually work pretty constructively together well the last point on that I think interesting is in the first Internet that's kind of started with institutions VCS and then Wall Street and then kind of went on to sort of this day trader you know dynamic that you saw it's kind of the reverse of that actually it kind of started with individuals and now the institutional wave is coming on board so that's a little bit different you know kind of flavor but definitely think the world's never seen anything like this before so it's trying to grapple like what are the metrics what you know is it you compare the visa you because gold is it the first protocol that can be monetized lots of new questions awesome guys really appreciate it Stefan's now gonna give an awesome presentation about what's in store on the technical side for ripple and then Chris is gonna stay here Stefan's gonna come back and we're gonna do a little Q&A with the audience so take it away yep so what this is trying to illustrate is if you deploy intelligence on some Network and we envision that there will probably be sort of a global instance of it looks like the Internet has a global instance then you have these different nodes these diesel blue nodes here and we call them connectors but they're basically like routers in IP so they basically take in packets on one side they look at the destination on the packet they compare to the routing table and then they forward that packet towards that destination whenever you look at any kind of blockchain presentation there's a pretty good chance you'll see some kind of graphic that has you know no it's connected by lines some kind of graph and you know you'll hear things like Bitcoin is the tcp/ip of money and when we hear that we cringe a little bit because if you know anything about how tcp/ip works and how Bitcoin works there are very different protocols that do very different things in a very different way and so the challenge that we always have when we talk about IntelliJ is it is actually a lot like tcp/ip and through this little presentation I want to try to convince you as to why I say that but you know people already have usually like seeing some kind of blockchain presentation it already looks a lot like this but but is a little bit you know more superficial in terms of the similarities and so if I want to send a packet into this network I just send it to whichever connect I'm – and it should find its way to whatever receive you it receiver I've put on it so in that way it's a lot like tcp/ip now you might say ok so you're routing these packets but how does actual money really move so the way that that works is that once you have sort of a path and you're sending these packets each link is responsible for its own settlement so what we tend to do is if you have two connectors that have a peering relationship with each other they're gonna have this like pay packet traffic going back and forth and so they're gonna look at those packets and then they're gonna eventually settle and for the core of the network it makes the most sense to settle through a digital asset and the reason for that is that they are very easy to move internationally across borders do you have very low costs in terms of when you move them and since you're going to have a lot of inbound and outbound traffic it makes sense just stay in that digital asset to do all of your settlements but of course the majority of people users out there don't actually have easy access to digital assets yet and so you do need some kind of some form of support for traditional payment systems and the interesting thing is that all these settlement networks really do is you know move payments across or like move money and so that's something that is supported by all the legacy payment networks so we can actually do is we can just aggregate to a greater degree so we wait a little bit longer before we settle and then we send a one big payment across you see that kind of at the beginning here with the sender down there and the receiver and up right where those settlements are happening a little less frequently and they're a little bit bigger and they're probably a little bit more expensive but they can settle lots and lots of these individual packets and so with this architecture what that means is that from an end-to-end perspective we can send a packet at incredibly low latency we can send it at an incredibly low incremental cost and so that's really what makes it feel a lot like the internet you can really just connect to lots of different services and pay for lots of different things without accumulating a lot of fees while doing that and then sure there's a settlement eventually and you know hopefully these last mile sort of settlements will get more efficient just like in connectivity went from you know 56k modems all the way up to what we have now where I have Google Fiber so I'm very happy with that so here here's a little chart of like the actual architecture and again if you're familiar with tcp/ip you know they draw the same kind of picture with the four layers which is you know sometimes called the Internet architecture it's a little bit less detailed than the OSI architecture but I won't bore you with that it's just a reference for the people that didn't know that so the four layers actually work a lot similar to the very similarly to the four layers in tcp/ip so I just want to go through those four and kind of give you a sense of how this all works together the way you should think about the intellectual a ER is that's essentially an abstraction layer so that's basically the thing that you have all the different ways of moving money below it and then you have all the different use cases for moving money above it and it kind of brings them all together so in the case of the internet it would be the internet layer has all the different ways of moving information below it and all the different use cases building on top of it and so now you can have all these different combinations I can make a Skype call over my Wi-Fi I can make you know send an email over my satellite internet so it really doesn't matter what use case I'm using and which network I'm on I can combine in different ways and so this is kind of doing the same thing for money okay now an application layer this would be sort of the equivalent of like HTTP SMTP this is use case specific you would make different application layer protocols for different use cases so one that we've designed so far is called SP SP or a simple payment separate set of protocol and basically all that does is it defines what internet sort of identifier looks like so think of that like an email address and you could send to that type of identifier if you wanted to pay somebody is on a peer-to-peer basis or you could build that into simple apps it's not super efficient so it's kind of like HTTP you it's so the general purpose application layer protocol you could make a much more specialized one so for instance we did an experiment where we built payments into web torrent so basically to pay the uploaders but also the content creators which i think is really cool as if this is like it's sufficient enough that you can pay a lot of different parties in the flow of whatever a poor interaction that you're part of and we'll see a demo of that in a bit but I think this is where I expect a lot of variety is on the application layer now we talked about the transport layer so if you're familiar with tcp/ip does this where you find your TCP and TCP is really common to a lot of different application layer protocols that build on it and it gives you some sort of basic services right it gives you sequencing of packets so that your data comes out the right order it gives you a retransmission if a packet gets lost it'll send it again and so on and we have a transport layer protocol called PS k2 and it does a lot of the same things it's responsible for doing things like if you send a large payment it'll split it into smaller chunks and then reassemble them it'll do things like retransmission of payment packets etc so again like I'm trying to really get across like we're copying from the internet a lot and we have to give them a lot of credit because a lot of things that they do actually apply to money very well now the intelligent layer is it's kind of an interesting one because that's where all the routing happens and when we first started out I'll tell you one anecdote about the design of this layer which is when we first started out we assumed that the routing would have to be quite different because we're talking about money after all we're not talking about information and so we you know we knew about BGP and how it works and so on but we thought a lot of those things wouldn't be applicable we wanted to route by the lowest cost path we thought that that was the most important thing was was to minimize the fees but as we're actually building it we realized that if you optimize by fees what can happen is somebody in the network just advertised a absurd rate so they just advertised hey I can exchange one dollar for 600 euros now that's suddenly the best path to take for absolutely every payment in the entire network now what do you think is gonna happen so that notes gonna go down obviously that rate was never real to begin with and so you just the whole thing just breaks down and so one of the reasons for the way the BGP is design is to make the length of the path one of the primary metrics and what that does is if someone advertises some ridiculous metrics he's still only gonna take down his immediate neighborhood because for everyone else is still going to look like detour a very long path that they don't want to take and so it turns out that even for money the length of the path is a very good proxy for all the other things you might be interested in like how reliable is that what's the latency what's the fees those are all lower or tend to be lower for shorter paths and so we can do exactly what BGP does in terms of routing by shortest path first and then using other metrics to kind of tie break if paths are the same length picking the best one and we just basically add fee is another metric just like the Internet has latency I already kind of talked a little bit about the settlement the key thing to mention here is that all we need from the settlement layers that it can transmit money it doesn't have to be very faster than you have to be very cheap if it's slower we just settle less often and just to give you some examples of the kinds of things we've integrated with already there's a extra PPHN plugin so that's settling using the extra P ledger let's see if most efficient plugin right now that's one of the reasons that we feel good about the strategy it's like we're actually seeing in practice that our own products score really well on these different metrics in terms of like what ledger would you actually choose for settlement we've done a lightning integration so we did a little test where we actually connected the Bitcoin lightning Network and the light current lightning Network together if you know familiar with lightning it's basically a scalability overlay Network for currencies like Bitcoin and then you could do something like ACH you can even do cash if you want right so you can have a relationship with an intelligent service provider where it basically says like I give you cash up ahead of time or you give me cash ahead of time and then we can exchange packets up to that amount until we reach that balance and then you know we have to settle up again okay now with all that pretty fixed I'm gonna give you a bit of a live demo and it's gonna go fairly quick so pay attention and so basically what we're gonna show here is the easy website maker okay so easy website maker is an app that somebody put together and just uploaded it to github and basically it allows you to create a website from just having a little sketch and now obviously we didn't build all the difficult parts the AI parts that what that's what you guys are for but we did do all the payment stuff so all the payments are actually going through in there's actual payment packets being exchanged and we try to visualize that a little bit later by having like a log of packets and basically what this app does is I put in a sketch and it it goes to one vendor that's offering an API a paid API that can turn sketches into actual HTML and then I'll go pay another vendor to actually package that into a docker container and upload it somewhere and then another vendor to host the actual live website and then another vendor to buy a domain and finally we'll tip the developer so I'll go sure what that looks like so first thing I need to do is I need to pick my sketch so I'm just gonna grab one here and so this is the sketch of my website that's probable but small to see but it has like some text and it has a little chart and has some more text and just to be clear again like the AI is marked out we didn't actually create the AI just for the demo that would be ridiculous but yeah in the future this could very well be possible so now I'm gonna say make my site and now things are gonna happen very quickly so it's gonna upload that sketch to that AI it's already done and now it's uploaded the finished HTML they've got back to a service that turns into the docker container and as you can see on the right and I might do the demo twice too so you can see it again on the right you saw the total amount paid this is in extra few drops this would be one millionth of an extra piece so total paid would be 0.1 x RP which is about what is that like two cents three cents yeah sorry – three dollars nobody cents point what oh sorry like yeah it's like 30 cents or something whatever so you can see like the individual packets and there's a couple things going on and I think I will run through the demo again just so you can see so first when we paid that AI we paid us at a one lump sum amount and then the package er is actually a streaming paid endpoint so that's a paid endpoint where as we send it data and we ask it to do things will stream packets to it to keep it paid and if we ever don't keep up it'll like stop working until we pay it more and then we deployed it to a host and bought a domain and then sent a tip to the developer and I can actually click this button here and then look over here and as you can see our website is now up and I can I show you it's like all this running locally but we got a domain insect right it's like set it up so let's go through a demo one more time just to you so you can see kind of the the streaming payments part a little bit better so I'll pick the website website so here on the right you can see like total paid right now is 500 drops it's to pay for the AI now we're streaming to pay for the packager so this is going in 250 drop intervals and then we have a large expense to host the website 9000 drops it's over 9000 to to actually buy the domain and then finally we tip the developer a thousand drops and so if I make an app like that I've built in business model and I think that's really the key point to get across here's I think this will have a huge impact on the web where think about if I start a convenience store I don't need to think about what my business model is my business model is people pay me when they come buy things when I opened a restaurant I don't think about my business mom business model is people pay for the food that they eat on the internet we have this weird thing where like there isn't a good way to charge people for using your website and so we build advertising we build subscriptions and all kinds of hacky workarounds for like how to get money out of people just from visiting your website and I think this will present a pretty efficient alternative in the future where people can just pay you for for the for using your site so that's it and again back to this thank you thank you Stefan cool not now we'd like to open it up to questions from you guys does anybody have any questions thanks for the presentation again yes so there's like a lot of different coins that deal with payments like ripple like coin Stella for example that I've heard of can you go like a little bit over what's the different like the basic differences between all those different payment platforms and then also do you see like one payment platform just dominating and we all just use one of them or can these somehow like live in harmony kind of like USD and euros and whatnot so on the second part I think it's gonna shape out a lot like what you're seeing with fiat currencies I mean you know the world kind of has four majors maybe five majors and then there's kind of a you know everything else and I think that probably plays out here simply because particularly with this sort of Wall Street wave that's coming a lot of those institutions they're not buying how many two thousand different you know kind of coins and platforms out there they're sort of grabbed and I don't know top ten or five or it's some smaller number and you know in currencies liquidity baguette baguettes liquidity all this is about how much liquidity is kind of you know kind of supporting these platforms and these and these these currencies or commodities whatever you want to call them there's still a lot debate on what they actually are so I suspect that's gonna accelerate and Union that liquidity that attracts more use cases like for example ripple the company focuses on the enterprise use case but you know we see these things we see X R P is very much a general global digital asset without a counterparty so you know you'll see more and more use cases popping up from different angles and that just kind of drives more liquidity so I think that's probably the way my opinion how it pans out yeah I think the reason we developed in Taleggio and the reason we built an interoperability protocol was because of that exact realization it wasn't going to be everyone using one system there was going to be a number of different systems and actually behind it as another real which is you know my goal has always been you know to solve the problem of you know friction payments right and so I realized that the centralization wasn't necessarily the solution because you see PayPal they come out they are free then eventually to check up their fees when they have established market position but then you see Bitcoin doing the same thing not necessarily with us as much sort of agency but it still happens that way and so what you got to think about is right now when you're on a payment network you can only send money to the people on the same network and that's kind of like pre-internet online services where you could have like CompuServe and you can email anyone on CompuServe and you can you know use any services that are on CompuServe but you can't access any services that are on geni right and so CompuServe has this like moat they have a defense ability around their reach and so that's really what you got a commoditize or what you got an attack and so with payments it's still that way today where like if you're on the same payment network you can pay each other if you're on different networks you can't if you want to pay from your PayPal account to a mobile money account in Tanzania you're screwed you can't yet I can totally go on my mobile phone in Tanzania and open any web site in the world right so we need that kind of interoperability and that's really what creates the competition that drives down the cost the reason we think that XRP is going to have a role in this system is because we've been doing I mean not to toot our own horn too much but like we've been doing really well in terms of like the performance and the characteristics of the protocol so I think a lot of people will choose to use X or P if there is sort of a lot of competition was like right now you use Bitcoin even though it's expensive you use Bitcoin even though it's slow I think if there's a lot of competition people will pick the most efficient which would be X or P right now you know that as well it's kind of in an environment where a lot of the volume I think is speculative I actually think that kind of use case has a greater tolerance for cost speed kind of doesn't really care right whereas as you start getting into kind of these six cases we need like you know millionths of some kind of unit that matters a ton right so as the kind of the ratio of of real use cases too speculative volume changes I think that dynamic becomes more important next question Thanks thank you hey thanks so much for coming my questions around so if you're talking about that XRP and crypto czar the internet of money the big difference between money and data is that money is regulated and banks certainly you know if the word that can like the equivalent of running the phone lines before have a pretty big incentive to innovate and sort of get ahead of a change that that is coming so you could see them easily upgrading the Swift protocol to be able to move money internationally a lot quicker and so I'm curious how you guys see specifically XRP living in a more regulated space I think you know crypto sort of took the world by storm when governments are gonna certainly respond the next year too so why do you think that XR PE is going to be able to live in a much more regulated industry than data is especially because like you could see banks upgrading Swift to be able to support you know maybe like sub minute transactions instead of transactions that take days yes I want to like quickly question some of the premises in there so I think a lot of the people in the room I think are very young and so we grew up after the deregulation of data and so like the internet came out and a lot of the laws that were around before then copyright law you know cryptography laws export restrictions around algorithms things of that nature you know actually got removed and a safe harbors got created because the internet kind of post the technology that was on the one hand very useful and on the other hand kind of in a legal gray area so I think that the technology this if you use it it just feels so incredibly useful that it's hard to imagine how regulations wouldn't be built around it I think that there's definitely an opportunity for people to be thoughtful and intelligent about how to how they approach the technology in the meantime like you want to be compliant you want to do everything that you can to kind of you know stay within the letter of the law but there are going to be ambiguities in terms of like just the law is not written for these kinds of use cases so I think that's one thing and then as far as like X or P oh I think I'll hand it off to Chris yeah I mean you're raising a obviously a key part and as I mentioned before the internet value is kind of equal parts capital technology and compliance compliance is hugely important and and the reason is simple I think it's just because governments sort of want to have a monopoly I think it's actually a more a question of you know data is powerful but money is more powerful right you know data can show you you know a life-saving medicine your family might need it can't buy it money can buy it on the flip side you know data can encourage a terrorist to do something awful money can buy the weapons right so the stakes are higher which I think actually this is gonna have maybe a more profound effect on earth good and bad so regulators have got to be there every step of the way this fantasy that somehow this is gonna bypass governments and bypass compliance you know what that's just that's just be us and you know what nobody wants that nobody wants that that is a champagne problem with a bunch of rich young people that can sit there behind their computer screens and like block out a lot of bad things that can happen so it just can't go that way and so I think we're trying to think about that try to be pragmatic about that because that's the only way we're gonna have impact and if you look at people that are trying to support what's going on in the developing world they are very much wanting to work they're not trying to go around they're trying to work within the system because they know that's how you're gonna have impact so that's that's kind of the way we we see it your question about Swift by the way the the problem with that point of view is Swift only deals with the data they have a correspondent banking partner that deals with the value and that's off any sense of an internet avalue the whole point here is that something like inter ledger and XRP can eliminate the correspondent which is actually where all the juice is right that's where all the waste is that's where the settlement risk is that's where the failures are that's where the time is so Swift actually doesn't have the the combination of capabilities to do what you're saying sorry so thank you for the question that's a pretty cool demo and I just wanted to learn a little bit behind the scene like for example AI how the food pewter a Halle Manning goes to a pot okay so we built a protocol that kind of takes into ledger on the one side and takes HTTP on the other side and essentially you're making rest calls you're making API calls to these backends and the first time you make the call they'll respond with 402 payment required which is a sort of an error code and HTTP that was already reserved we were like great that works for our use case and basically it sends you back a header that tells you all the information that you need to know to make intelligent payments to that exact endpoint or like the API server that runs that endpoint and so that server will be listening for intelligent packets in addition to the HTTP requests and so when you start paying yeah it'll go back into that same receiver and then the receiver will then credit your what we call like a token and then the next time you make a request it has in the head or your token and so the receiver will know that you've actually funded that with some packets and then you will you can proceed through the through the program the streaming version of the demo you saw that's a little bit more complicated this probably goes beyond but we can maybe catch up about it later and then one thing that's also interesting is that one of the services which is the this thing that builds a static site into a docker container actually itself pays another API right so you have another API behind that and so one of the things that's really cool is with these streaming payments we can actually have sort of an API to take send money and it immediately spends it as it's trying to process the requests and then maybe he sends a little bit as profit to the developer and then returns the results so there's a lot of cool stuff you can do with it thanks thank you guys for coming to speak today I'm kind of curious to learn more about how you might prevent money laundering and companies that participate and you know you know like the payday loan type companies from coming on the system that exploit people financially you interested to learn more about yeah um so I mean I think we we really try to focus on you know kind of the bottom of the payment stack so kind of on the infrastructure part of it and got a reason for that is that a lot of the things that prevent bad things from happening are kind of top of the stack and a lot of that actually doesn't need to be reinvented right and the way we kind of think about it's like let's focus on what's really changing and we think this is the interoperability it's the idea of a digital asset with no counterparty that can be sent anywhere in the world that's that's neutral so those are the things I think what we can we can can change and then piggyback off of that's what we like kind of the enterprise focus now is for that is that first beachhead you know piggyback off of what already exists for hundreds of millions you know of people the other thing I would say is that if this internet value becomes a reality I think you know the prevention of things like payday lending obviously that has to be regulated that's a big part of it at every level but the other big thing to what Stefan mentioned before is sort of the commoditization of reach if you have that you suddenly know every market has way more competitors for financial products and was something we saw at prosperity law we got frustrated with because you we were kind of us online you couldn't you couldn't transport it to another market because you were in another network right that this future vision I think is that the world is one big financial supermarket and you know everybody's competing in every market I think that goes a long way but you still need all the other you know kind of regulatory components pretty much existing I'd some me go away but I'd say probably most of them don't know you yeah I think they with with you know you mentioned any money-laundering I think there's sort of a long list of things that are actually completely separate issues right they're sort of consumer or risk there is any money laundering there is anti-terrorism finance like there's all kinds of different things so you have to think about when you're building a payment system and so if you have a stack like this they'll fit in different parts of the stack like for instance consumer protection that would fit in the application layer so if you're building an application where consumers are sending money you have to think about you know how to protect those consumers from sending it to the wrong people if you have if you think about risk a counterparty risk that would fit in the sort of the ledger layer right so you have a counterparty they settle with you on a certain schedule how do you make sure they actually settle with you so there are a myriad of things to think about I think that it's kind of illusory for us to come up with all the solutions I think we're trying to be a thoughtful in terms of like getting it to a point where we can start experimenting with it and kind of get more experience with it but that's going to require sort of a commercialization of the technology to really think about you know all of those use cases and I would also highlight that you know ripple has a commercial you know stack and a commercial feature set and that is very much like Chris said like kind of writing within the existing regulatory framework and then we have the open protocols which are maybe a little bit more forward-looking and I think some of those questions are more difficult there so what you saw us present today is the more forward-looking stuff so I think some of those questions are still open there thank you very much thank you so since the tech is currency agnostic why what would be the incentive to choose XRP over fiat or any other cryptocurrency so this is where it almost left to like ask my colleague up on stage because you know we have our team who's actually trying to integrate with these different digital assets and you know different payment systems and it's just a like many orders of magnitude of difference between a sir P and let's say Bitcoin instill several orders of magnitude between X or P and something like litecoin which is known as a more efficient so asset and like it's just a pleasure to work with and part of it is it's been designed for that right like it's been designed to be used as the settlement acident into ledger and so has a lot of functionality like payment channels it's built in a certain way that are incredibly efficient for this particular use case and so I think the big answer the main answer is right now it's just the best thing to use like we talked to people hey let's set up a connector well what do we peel with well we could use litecoin but what we could use X or P but XP will just be cheaper so let's use X RP and so I think as much to the extent it like these connectors are gonna be competing with each other and they're trying to think about their margins XP so it's gonna look like a very good option for them yeah in this world you'll just you'll need some digital asset that is super fast super cheap endlessly scalable that will serve the world very well right better than let's say using a dollar or using a euro right something that is a neutral to any network so we're absolutely confident that some digital asset will be a key part of this internet of value but we think that sort of fast you know cost and scalability are gonna be those key things and that's what's gonna drive the liquidity that's gonna make these things really useful yeah and like extra fee is not static either it's like we're constantly thinking about how to help improve it there's a community out there it's thinking about how to improve it so you can expect that it will get better as well as you know time goes on final question hi so I was listening in the very beginning of your presentation about how you think except rates better over a Bitcoin in a sense that bitcoins that a lot slower a lot more expensive but um but is there for a reason right because it requires like at least six confirmation across the network in one first transaction to happen and and that is their emotional address the double spending problem so I was just curious like in your own words how does that XRP address the double spend problem if it's just a confirmation between the two notes yeah so if you're not technical you know do something else for a little bit because there's no way to answer that question without getting into some of the technologies so Bitcoin uses a consensus process which is essentially based around the assumption that a majority of hashing power will never be held by you know a coordinated malicious attacker and so if you're watching what the majority of hashing power is doing you'll tend to be on a state of the network that is reasonable and doesn't contain you know reverted transactions and so on however the protocol as such does allow rollbacks right so you can if somebody else presents you with a chain that's longer has more hashing power behind it you will roll back your transactions and switch to that and I know that because I was one of the first person to implement a full node Bitcoin reimplementation from scratch so I wrote that code and it's very complex annoying code to write so I will remember that forever on the ripple side such code does not exist there's no way to rollback the network now how is that possible well the way that ripple works is as I mentioned before the users select these validators and then we essentially use that input as a as an input to sort of an algorithm where we look at the graph of what people selected and then we run a consensus on validators that are central to that graph or like that are highly trusted within that graph and so it's sort of this two-step process and what that means is that when the first step is completing your giant you have identified which validators you're looking for you don't have to worry about B there being like more hashing power just over the horizon like once you hear from the validators that you've identified as being the the ones that or validating or like the ones that you're listening to then you don't have to worry about some other other validator coming in later saying like no actually we decided this you just didn't hear about it yet and so there's no need to rollback or to to rewrite history once Valladares have committed to a decision they can't change their minds essentially and so that has a couple of impacts or like a couple of ways that the protocol is different because of that number one you only have to wait for one confirmation you wouldn't wait for multiple confirmations because validators can't change their mind you can't roll back so there's no probabilistic aspect to it number two is we can process or we can create blocks on the cadence so we can create blocks unlike a fixed interval as opposed to a random interval like Bitcoin where you know blocks can come out very close together they could there could be no block for a long time because we know which Valladares are supposed to generate blocks they can generate them on that cadence and then finally I think the cover of thing yeah yeah whatever there's a really good talk on why shouldn't call it really good but there's a talk by myself on consensus that you can find out from the consensus 2017 conference where I go a little bit more detail and I'm also happy to like talk to you afterwards but that's kind of the high level quick description cool guys thank you so much for coming do you have any final statements or do you want to tell people how they can get involved in the ripple community at all yeah so for IntelliJ there's info Joerg which at the time of recording is horribly out-of-date but hopefully by next week should be you know showing all the latest great stuff there's a community group at the w3c called the intelligent community group that's open to anyone so you just register we have a mailing list where we discuss you know how these protocols work together all the code for you know the demos and everything you can find that on slash into ledger and slash in Taleggio Jas and then for ripple over comm if you're a bank you know let us know reach out if your payment provider maybe should work for Google payments or anything like that let us know and then for there's another project which we didn't really mention today but that's also was also used in a demo in the background which is called cotija so that's basically the hosting system that's paid with into ledger and we uploaded the website to it there's a lot of cool use cases around hosting if you think about serverless hosting etc so if you into that there's Kodi Astorga swell Co di you ask that work awesome kristef on thank you so much for coming really appreciate it give it up [Applause] you

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