HISTORY of RIPPLE

 In 2011, Jed McCaleb visioned of creating a asset like Bitcoin which didn’t need miners.
 Recruited two open source developers David Schwartz and Arthur Britto and partnered with Ryan
Fugger (founder of Ripple pay).
 XRP Ledger was founded in between 2011 & 2012 with digital token EXP.
 Consensus Algorithm settle transactions in <4 seconds and Cost @$0.0001/transaction

 Overtime could handle 1,500 transactions /seconds and scalable to 50,000 (level of VISA)
 100 billion coins created and 80 billion allocated to a yet to be created company
 Open Coin was established in late 2012
 Focus

 Open Coin raised $1.5 million in 2013 and was renamed as Ripple Labs. It also open sourced XRP
 XRP Ledger worked as a distributed multi-currency exchange trading in fiat or cryptocurrencies
 By 2014 started partnering with Banks
 EXP Ledger’s average trading volume was $2 million and uptime of 99%
 In 2014, McCaleb left Ripple and launched Stellar (cryptocurrency), Larsen continued as CEO
 In 2015, Garlinghouse as COO, Ripple Labs shortened name to Ripple
 Continues growth through interbank integrations
 Striving to identifying use cases for its distributed ledger technology
 Garlinghouse narrowed focus to cross border payments
 Global Payments revenues topped $1.5 trillion and was forecasted to $2.9 trillion by 2022
 Aim at enabling financial institutions to move money using XRP and that would also improve its
liquidity, trust and velocity.
 By end of 2016, Larsen moved to Executive Chairman and named Garinghouse his successor
 36,000%

 With the rise in mainstream attention, prices of cryptocurrencies kept increasing

 Prices of XRP reached $0.36 by May 2017, which had remained below $0.05 since inception
 Market capitalization increased from $200 million to $13 billion in matter of months
 To Ensure market stability & establish trust Ripple deposited 55 billion in an escrow with 1 billion to
be unlocked on 1st of every month. Also traded 0.18%-0.25% of XRPs daily traded on quarterly basis
 In Jan 2018, prices skyrocketed from $0.20 to $3.60
 XRP was the highest performing cryptocurrency in 2017.
 However, prices were correlated with BTC and when BTC dropped so did XRP.
 Prices fell by 80% in 2018
 Bitcoin & Blockchain
 BTC first introducted in 2008 via a white paper published by Satoshi Nakamoto
 Following year, Nakamoto launched open source bitcoin network with a group of online cryptography
developers
 Primary purpose store value in a public, decentralized and self-sustained system through Blockchain
Network Nodes
 Users installed Bitcoin open source software on a computer
Transactions
 User had 34 character Public key (bitcoin address) & 64 character private key (password)
Proof of Work
 Incentivizing nodes on the network to validate the transactions
Forks
Exchanges
Security, software bugs, 51% Attack & Illegal Activity
CRYPTOCURRENCY MARKET
CAPITALIZATION
 RISE AND FALL OF CRYPTO

 In 2017, the price of BTC rose from $800 to $18,000.

 Coinbase, a cryptocurrency exchange and wallet, grew its users from 400,000 in 2017 to over
11 million in 2018.
 Venture capital investment in blockchain companies also increased from about $500 million
in 2015 to almost $4 billion in 2018.
 In 2018, the price of BTC fell below $4,000, along with the price of most altcoins.
 In Jan 2018, prices skyrocketed from $0.20 to $3.60
 By 2019, over 200 digital tokens were inactive and over 500 had trading volumes of less than
$100 a day.
 The total market capitalization of all cryptocurrencies dropped from a peak of $800 billion in
2018 to $120 billion in 2019
 Regulation
 RIPPLE IN 2019

 With the Internet of Value, a value transaction such as a foreign currency payment, can
happen instantly, just as how people have been sharing words, images, and videos online for
decades. And it’s not just money. The Internet of Value will enable the exchange of any asset
that is of value to someone, including stocks, votes, frequent flyer points, securities,
intellectual property, music, scientific discoveries, and more.

 Ripple’s alternative solution to SWIFT was RippleNet, a payments network that enabled banks
to instantly and reliably transfer funds across borders.

 The main advantages were speed, accuracy and end-to-end traceability. When financial
institutions employed its on-demand liquidity product, they could lower their liquidity costs
for cross-border transfers by leveraging XRP.
Network Access
• Access to RippleNet allowed
payment providers and banks to
send and receive real-time
payments with.

• Payment tracking.
• Pre-transaction validation of
fees.
• Include invoices and other rich
payment data.
• Network participants could
confirm payment details before
initiating transactions to ensure
settlement certainty.
On-Demand Liquidity.
RippleNet allowed payment providers
and financial institutions to reduce
liquidity costs by leveraging XRP to fund
liquidity in real time

• Ripple partnered with

MoneyGram to focus on On-
demand liquidity.
• MoneyGram, like every major
money transmitter, struggled with
maintaining capital in foreign
accounts to power its global
payments service.
Business Model Finance
• RippleNet had a software as a • Company metrics depended on
service (SaaS) model. Network growth such as New
customer, Deployments and volume.
• Subscription fee.
• Pricing based on the number of • Budgeting and Forecasting was a
issue due to extreme volatility of XRP
transactions per year.
• Sales
• Commission system around strategic
• Ripple’s main revenue source point value for sales teams,
was XRP sales
• Sales teams faced issue in selling the
solution due to government and
regulators.
• The solution involved cross border
money transfer.
Marketing
• Educate the market about the constructive and practical applications
of blockchain and cryptocurrencies in finance.
• Identify the right customer segments.
• Geography
Technology
• Developing the software was not a difficult task and didn't take long
but educating the regulators about the software was.
 Competitive Landscape
• SWIFT:
 Founded in 1973, SWIFT was a consortium of over 200 banks that came together to create a messaging
platform and standard for cross border payments.
 By 2019, over 11,000 financial institutions from 200 countries were on the platform.
 Traditional SWIFT transfers took three to five days and charged $35 to $50.
 Due to mounting pressure, the Organization launched SWIFT Global Payments Innovation (SWIFT.gpi) that
enabled same-day transfers, end-to-end tracking, and fee transparency.
 In 2017, SWIFT’s annual revenue reached €780 million.
 SWIFT did not transfer actual funds and only handled the communication aspect of money transfers.

• Liquidity Providers:
 Garlinghouse wanted to beat Citibank, the number one liquidity provider on the planet. He said that “If you
use RippleNet with On-Demand liquidity, you no longer need SIFT and Citi”
 Citi had 13% market share of SWIFT messages and profits of $8 billion a year from its cross border transactions
business.
 Global payments revenue was forecasted to reach $2.9 trillion by 2022, with liquidity costs representing nearly
half of that number.
 Competitive Landscape
• Fintech:
 Ant Financials was on Ripple’s radar as a potential threat. It was valued at over $150 billion and had over 1
billion consumers on their mobile wallets.
 Asia pacific was forecast to account for 64% of global payments revenue growth from 2017 to 2022.

• Social networks:
 Ripple also monitored social networks that could potentially enter the cross-border payments space.
 Whatsapp was processing 10 million payments per month in India and over 1.5 billion users worldwide. What
if they decided to become a cross border payment app?
 PayPal could be another threat if it started using the same model as crypto.. PayPal had over 250 million active
accounts and an annual payment volume of $578 billion.

• Bank Coins:
 In 2019, the largest bank in the world, JP Morgan Chase announced the creation of its own fiat-backed didgital
asset called JPM coin. The prototype was built on Quorum, the company’s proprietary blockchain.
 UBS, Deutsche Bank, Santander and BNY Mellon announced a partnership to launch a coin for clearing and
settling trades.
 Goldman Sachs was also reportedly working on its own coin, SETLcoin.
 Competitive Landscape
• Altcoins:
 One of the original creators of Ripple, Jed McCaleb, founded the Stellar Development Foundation (SDF), a non
profit that created a blockchain for low-cost payments.
 Its mission was to promote global financial access, literacy and inclusion.
 SDF’s native cryptocurrency was Stellar Lumens (XLM), which enabled transactions under 5 second and had a
throughput of 1,000 transactions per second.
 XLM had a market cap of around $2 billion.
 In 2018, SDF partnered with IBM to launch cross-border payments solution using the Stellar blockchain.
 IBM announced Blockchain Worldwire, a global payments network with partnerships in 72 countries, 47
currencies and 44 banking endpoints.
 Looking Forward
Path 1:
Stay the Course and remain focused on cross-border payments.

Path 2:
Diversify the portfolio with complementary financial products
like microloans in emerging markets.

Path 3:
Become a more aggressive investor in XRP and spend more on
developing the market for XRP.
 Recommendation - Path 1
• Fastest settlement system with around 150 validators.
• One of the cheapest across all platforms.
• Complementary product for financial institutions (will not be
viewed as competition leading to wider adoption).
• As prefunding of destination accounts is not required.
Financial Institutions can use the money to reinvest in the
business.