LAS VEGAS — Here’s your problem: You have a pocketful of virtual currency Bitcoin, or maybe it’s British pounds, and you need to pay a taxi driver who accepts only Euros or maybe it’s yen.
Ready to give up? Don’t.
Meet Ripple, the first distributed payments protocol that is currency agnostic, transfers instantly, it’s essentially free, and there can be no chargebacks, according to Chris Larsen, CEO of Ripple Labs Inc. in San Francisco.
The occasion was the first Ripple developers conference, held in Las Vegas as a footnote to the Money2020 payments confab this week.
Where Money2020 drew around 4,000, the Ripple meeting attracted maybe 100, but they filled the room that had been allotted and they came with questions about how to make this innovative approach to currency work.
Ripple is to money as SMTP (Simple Mail Transfer Protocol) is to email, said Larsen., and what SMTP does is let email servers communicate with pretty much all other email servers over the Internet.
The Ripple tagline explains the mission: Send money to anyone, anywhere, in any currency.
Ripple is like Bitcoin, sort of. Part of the Ripple ecosystem is a virtual currency – called XRP – that, like Bitcoin, is mathematically defined and operates independently of nation states. A key difference: the Ripple platform is built to allow exchanges from one currency into another, with minimal friction and costs. That includes nation state currencies such as dollars.
“We see remittances as a place where Ripple can make a big difference,” said Evan Schwartz, the company’s software engineer. “Right now it is extraordinarily expensive (to send a remittance from, say, the U.S. to Mexico or India). With Ripple this would be much lower cost. It’s an exciting possibility,” said Schwartz.
He added that for just about any merchant Ripple offers an advantage: “You can get paid in any currency, but receive it in your preferred currency,” said Schwartz.
The Ripple secret sauce is a platform that effects continuing exchanges among currency holders called “market makers.”
Put Canadian dollars into the system and it looks for a market maker seeking them – and an exchange is made. Exchanges keep occurring until, ultimately, those Canadian dollars morph into the desired destination currency – say, U.S. dollars or Indian rupees or whatever.
The Internet, said Larsen, created an easy way to exchange information across borders – and what Ripple is intended to do is create an exchange that allows value to be easily exchanged cross border.
The Ripple exchange, he said, is peer to peer and it runs on trust and a process called consensus that facilitates the currency-to-currency movement.
Know, too, that Ripple has backing from numerous venture capital funds including Google Ventures.
Buzz in at least some circles is that Ripple is the new darling of the techno currency set and is winning support from onetime Bitcoin fans who have been deterred by recent bad publicity.