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Steve Harmon - Digital Rollercoaster Rides

what a ride so far with Ripple (XRP) but here's what I think is happening

Steve Harmon

January 16 · Issue #16 · View online
Beyond the hype, inside the world of venture capital, tech, stocks and trends, from Silicon Valley to Shanghai, from veteran investor and entrepreneur Steve Harmon - followed by many leaders in finance and tech, see more:

what a ride so far with Ripple (XRP) but here’s what I think is happening

Digital currency settlement leader Ripple (XRP) has had quite the rollercoaster ride since my November pick at 25 cents per coin. A month later XRP had rocketed up past $3…which I thought was getting ahead of the narrative for the company.
Now XRP is back down to $1.25 or so.
What happened? Too many non believers joined the party. Sort of like having a pool party and suddenly about 1,000 people are there who weren’t invited but are drinking the beer and relieving themselves behind the palm tree.
They’re gone now.
The key thesis here is APPLICATION. Of the more than 1,300 crypto currencies out there most are not worth the time. A handful are actually making new businesses by solving problems and inventing better ways of business.
Ripple is one. If you have any idea how hard it is to get your technology to be used by banks you would know that Ripple – which has more than 100 bank chains signed up – has done something I believe remarkable. It’s why I bought XRP and own it.
Of all the cryptos I think it has the most potential. Another one called Ethereum (ETH) which does ‘smart contracts’ also shows potential. Many of the others I don’t yet see real world applications of in a way that looks strong to me. 
Digital & Fiat Currencies
There are about 1,300 crypto currencies now. More or less. The top 10 account for most of the trading value. Right now the total trading value (price x coins) is about $510 billion.
In a general tally let’s say the world supply of money issued by nation states – so-called ‘fiat’ currency totals about $40 trillion. That includes 'near money’ such as stocks, money market securities and savings, among other things.
Now right there we see a disparity. A massive gap. All these pieces of cloth/paper and metal being moved around are about 75x more than the digital currency universe today. I know not all are physically moved but you get the point.
What casual observers miss: the world is digital. Everything you do for work, play. It involves digital. Now into this digital world is being introduced currency that behaves properly in a digital environment.
Let me explain.
PayPal exists because it separated money from paper, married it to email.  Which everyone thought was crazy in 1998. Because trucks filled with bags of cloth/paper with a person’s face on it meant something to hundreds of millions of people. That paper/cloth thing is how analog value is stored and traded. And it works fine.
But, in digital space, the paper/cloth thing doesn’t. It’s clunky. Digital space allows for value to have more dimensions than just face value…so with something like crypto currencies the value can be monetary, contractual, promissory, future tense, and have rules attached to it.
Basically, crypto currencies turn money into applications with digital traits. Those traits are – speed, low fees, frictionless, borderless, timeless, boundless. The limitations imposed on digital currencies are only external, limited by the application and understanding (or lack of) by people.
Understanding Digital Space
In 2000 I spoke to a conference in Hong Kong. I showed them the past 100 years of wealth creation were based on oil. Even plastic is oil based. I also said the next 100 years would be based on digital assets.
Digital asset 101 lesson: Microsoft. Long before the Internet, Microsoft figured out digital asset creation. In part. One copy of Windows was all it took. Then duplicate it over and over. Ask Bill Gates.
With the intro of the Web and broadband in the 1990s and 2000s digital asset creation accelerated. Google. Facebook. Alibaba. Tencent. Netflix, Amazon. Pure digital. Ask Mark Zuckerberg.
With crypto currencies these are the purest form of digital yet. Their application is digital. Instant. Global. At least the best ones are. Ask yourself.
Bottom line: The fact that digital currencies total only $510 billion shows that people don’t understand the world they live in. I believe younger people do…and I think they could very well get paid and spend digital currencies as their primary way to store and exchange value. 
Remember in the 1980s when very few people had debit cards? Most people used cash then. Or wrote paper checks. Today most people use debit cards…in 20 or 30 years I think most will use crypto for payments, agreements, paychecks, buying/selling, investing. 
Maybe sooner. So with the rollercoaster ride of crypto prices I look back and wonder how many people actually understand digital? There’s always a rollercoaster ride involved in the beginning of any new growth.

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