EXCLUSIVE: Ripple Singapore co-founder on the ‘Value Revolution,’ gold bullion and future of commerce

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Ripple Singapore is one of the purest and most interesting uses of the ripple protocol to date. The service acts as a gateway for gold, silver and cryptocurrencies. That gives users the ability to transmit gold and silver ounces online.

Thanks to Ripple Singapore’s gateway, users can now buy and sell the following on ripple:

  • 1 XAU: The right to redeem 1 Troy Ounce of .9999 Pure investment grade gold.
  • 1 XAG: The right to redeem 1 Troy Ounce of .9999 Pure investment grade silver.
  • 1 XPT: The right to redeem 1 Troy Ounce of .9999 Pure investment grade platinum.

Ripple Singapore co-founder James Cox agreed to answer some questions from Crypt-la about the inspiration, goals and ideas behind his service. Here’s what he had to say:

Q: How did you get into/learn about cryptos?

A: I have been interested in economics, monetary science and investing for a long time. I have traditionally been involved in gold and silver. Then came Bitcoin, and I thought it was a fascinating currency. I wrote “Bitcoin and Digital Currencies,” which was published by Laissez Faire Books. In 2013, I was introduced to ripple and understood that this was a real game changer for trade. I decided to start writing another book, “Ripple: The Return of Trust” and set about opening a Ripple Gateway.

Q: What gave you the idea for Ripple Singapore?

Ripple is probably the most versatile of all Fintech solutions, and we were of course keen to innovate in this space. We wanted to give users a way to hold their wealth in gold bullion, use ripple to buy the items they want and pay the merchant in the currency he requires – in 5 seconds.

I teamed up with a gentleman who has a very strong grasp of how the world works named Marco Faasse. He had the idea of placing gold and silver on the ripple network. The software for a gateway is of course essential and requires both experience and innovation. This was handled by fellow co-founders Erwin and Herco van der Waal. They set up a successful software company in the 1990’s called TTT. Their talented development team has consulted with Ripple Labs to make an attractive and functional site that integrates straight to your Ripple Wallet.

The advantage here is that we do not hold any customer funds on our servers. Cash deposits are held at OCBC (Singapore’s oldest and one the world’s best capitalized banks), 100% reserved physical gold, silver and platinum are bought through Silver Bullion Pte Ltd., which is an excellent dealership. They do the testing of premium quality bullion from the world’s most respected mints. The bullion is stored in a private vault outside of the banking system. The rights to redeem are only held by the user in their ripple wallet. Naturally, our customers are able to redeem their cash or bullion on demand or liquidate their holdings on the distributed ripple exchange immediately.

Q: What’s the trade volume been like for XAU, XAG and XPT? Has it met or exceeded your expectations so far?

Our user base is expanding rapidly and our customers have bought gold, silver and platinum. The volume is still quite small – one of the main problems is that supply is not meeting demand for bullion. Our physical gold, silver and platinum trade at a premium to Comex. However, the real price of gold varies a great deal from country to country – it is much more expensive in China and India for example. In terms of volume, this means the price keeps going up due to excess demand, and then there is not enough liquidity. A quick glance at the order book (on March 27, 2014) will show that the bids for XAU/XRP for example, outweigh the asks by 5:1. This will take a long time for the demand to be satisfied.

Q: Why does the world need Ripple Singapore?

The world needs ripple because it is the most powerful combined exchange and payment system. Gold and silver are timeless assets that have been stores of value for thousands of years. Singapore is the ideal place for a precious metals ripple gateway.

Singapore is a safe and trustworthy jurisdiction and the financial and innovation hub of South East Asia. There is already a massive demand for physical gold and silver in Asia – the word for ‘money’ is the same as ‘silver’ in many languages around the region. Singapore is renowned for its rule of law and free trade policy that has made it so successful. Whilst each user must do their own due diligence on their own country, there is 0% sales tax in Singapore on investment-grade gold, silver and platinum, 0% capital gains tax and Ripple Singapore charges 0% vault fee. Given that we only charge 0.2% transaction fee we feel this is a great service for our users.

Q: Are you anticipating inflation in the short- to medium-term? Why or why not?

This is a difficult question. I like to use Jim Rickard’s analogy of two strong men in a tug of war. Whilst the contest may seem stable, there are huge pressures building that lead to sudden movements. I think we shall continue with a series of increasingly volatile bouts of deflation followed by inflation. Eventually inflation will win.

Q: Is there any way governments (particularly the U.S. and E.U.) can de-leverage their existing debt without turmoil and inflation?

They are of course not able to lower their outstanding debts. However, they are able to decrease the debt-to-GDP ratio with inflation. I would recommend Ben Davies’ analysis of the UK fiscal situation, Grant Williams’ of France and Kyle Bass’ of Japan. I think these countries will be of greater interest over the next few years.

Q: Do you have long-term price targets for gold, silver and platinum?

The prices of gold, silver and platinum are all going much higher in next few years.

Q: What excites you about Ripple?

Its versatility, efficiency and easy user experience.

Look at all of the great inventions – they are incredibly hard to describe, but once you have seen them they are unbelievably simple to understand: paper, the automobile, the TV – great technology that is super easy to use and that everyone benefits from. Once you have used ripple your next question is – “so why has this only just been invented?”

Q: Where do you think Ripple will be in one, five and/or 10 years?

I think in 5–10 years time, having a ripple address will be as normal as an email address. This will include many of the 2 billion people currently outside of the banking system. There will be a far greater range of goods and services bought and sold on ripple in the future. We are hoping that Ripple Singapore’s gold and silver demonstrate that it is not just currencies that can be traded on the network. I think we are at the foothills of a much broader ‘Value Revolution.’

Q: Is XRP in and of itself a good investment? Or will it always be a cheap enabler for other financial transactions?

Many people misunderstand XRP; its foremost role is to defend the Ripple network. Imagine each Ripple transaction was an envelope. That envelope needs a stamp that cannot be re-used. A tiny amount of XRP is used in each transaction to defend the Ripple Network. The second important role is that XRP, as the only asset on Ripple without counter-party risk, enables traders on Ripple to minimize their exchange paths to two steps with more concentrated liquidity (eg. KRW/XRP → XRP/XAU).

That being said, the network is currency agnostic. If people choose to use XRP as a currency then demand for it will increase and this could increase its price.

Q: Why do bitcoiners dislike ripple?

I do not think that is entirely true. I would suggest that many Ripple users are also bitcoin fans. Bitcoin is a fantastic math-based currency and ripple is a fantastic math-based marketplace. Bitcoin is understandably one of the most popular currencies on ripple.

The value (not the price) of any currency, including bitcoin, is determined by the number of goods and services it can be exchanged for – divided by the number of units of that currency.

Therefore, I would encourage bitcoiners to consider the merchants, goods and services. Presumably, you would like to receive ownership of the goods you have bought with maximum speed and cost efficiency. This is also what the merchant wants – and under these conditions he is more likely to sell his goods. You would both also like some assurances – proof of ownership and sale recorded on a blockchain and the chance to see the liabilities and trust lines of the merchant.

We are all aware that although there are many new merchants who accept bitcoin, the vast majority of them do not. This is because many merchants don’t understand bitcoin, can’t risk its volatility and are unsure of future regulations. Therefore, they almost certainly require their own local currency.

Ripple provides the solution. You can keep the currency you like, receive ownership of the goods you want and the merchant receives the currency he needs.

There is some criticism in the bitcoin community of XRP being pre-mined, and I do understand this concern. However, I would invite people to consider the fact that XRP defends the Ripple Network – for $5-$10 worth of XRP you will never have to pay transaction fees ever again for a potentially massive range of items of value. I am also aware of the criticism that the founders have kept a large proportion of XRP for themselves. However, if you believe in free markets, you allow for the fact that people make great products in the hope that in offering people what they want, they can also benefit themselves. That is how capitalism works.

Q: What do you think the future holds for ripple and Ripple Singapore?

The more things change the more they stay the same. People want to improve their lives and this is best done by discovery, innovation, hard work and offering goods and services other people want. People all over the world want to do this as efficiently as possible and be able save their profits in a steady store of value until they decide to spend or invest.

I believe that ripple is a game-changing technology in the history of the marketplace. It is growing exponentially both in its number of users and items of value. But look a little deeper, and you will find that for all the marvelous technology, the marketplace has not changed one bit in thousands of years. In the marketplace, trust networks come first, and when these are established, goods soon follow. Demand and supply determine the value of those goods, and in the long term, financial value is best measured in gold and silver.

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