On Monday (22 October 2018), at this year's Money 20/20 USA conference (held 21–24 October 2018 in Las Vegas, Nevada), David Schwartz , the Chief Technology Officer (CTO) at Ripple , took part in an "Oxford-style debate" with Ester Pigg , SVP of Product Strategy (FIS Payments), at FinTech solution provider FIS , where he argued "in favor of blockchain’s merits, citing the design of distributed ledger technology as superior to legacy architectures," and she defended "the industry’s current approach, noting its scale, security, broad adoption and efficiency."

These were the main elements of David's argument:

  • "New corporates like Amazon, Uber, Facebook... they have hundreds of people who work for them just integrating their payment systems. How are small companies going to compete? How are we going to have this explosion of global commerce?"
  • "You need three things for global commerce to work. You need to move goods. Check! ... We have a great international shipping and transport system. You need to move data. Check! We have the internet. But if you can't move money, you are missing a very very critical piece, and what we have is a fragmented system."
  • "We are currently in the transition phase now, where we are putting bandages on top of a system that dates back to the dial-up era, and predates public key encryption, predates the internet."
  • "Banks have web interfaces, mobile interfaces, we have technology like ApplePay, we have GPI from Swift, we have companies like Transferwise that sort of paper over the problems with the underlying payment systems, but those problems are still there, and they are not going to be fixed unless we replace those systems."
  • "Band-Aids are not going to work in emerging markets. Band-Aids don't work for small businesses. And Band-Aids don't work for banks and payment companies that want the business of new corporates, and who doesn't?"
  • "If you look in your email right now, I’m sure 99 percent of what you see would never have been a postal mail. They’re too low value, they can’t tolerate time delay. We have payments that can’t tolerate time delay and they just don’t happen [...] What will happen is [that] the companies that can provide those high-speed low-cost payments will get the business, and those that don’t will have to adapt or die, just like in any technological revolution."
  • "I have three key reasons why blockchain is the right technology for building new payment systems."
  • "One of them is security. Blockchains are secure because every participant on the blockchain can enforce all system rules. When you ask your bank for your balance, your bank tells you what your balance is, and you have to trust them, and if they screw up, you have to go to the bank to get them to fix it. Blockchain systems don't work that way. Blockchain systems allow every participant to verify personally every system rule."
  • "They are very very reliable... People will you 'Centralized databases are a solved problem, [and that] we can get ''five 9s' [i.e. 99.999%] of reliability'. Anyone here run a centralized database? Anyone here get five 9s of reliability? I sure don't! We don't. It's not like we don't know what we are doing, it's not because we are not smart, it's not because we don't have enough money. It's because these systems are complicated, and they have complicated failure modes. Blockchains are fundamentally very very simple, and they have simple failure modes... The last Bitcoin system outage was in 2013. It was due to a bug. Fixed the bug. Haven't had an outage in something like five years. The XRP ledger, the Ethereum ledger, these systems have never had outages. They are fundamentally reliable, and that's extremely important if you don't have a single centralized party who can untangle a mess."
  • "And the last one is governance... Blockchains are governed simply by having every participant enforce all the rules. So, if you get a bunch of people together or a bunch of companies together, they can start a blockchain just by agreeing on a set of rules. And anyone who also agrees with those rules could use that blockchain. And those rules can include how you transfer funds, whatever the requirements of the system are, and all that has to happen is 'if you don't follow the rules, my system will ignore you because my system enforces the rules. They don't require centralized operators. They don't require any kind of consortium except to set the rules in the first place or to change rules, but they don't have to run the system or run the rules as the system is running."
  • "So, what will the transition look like? It will look like what email did to postal mail. It will look like what digital music did to CDs. It's not about how much of the current market you can capture. It's about micro-payments... it's about new internet business models... the developing world is going to skip these old-fashioned centralized business systems."
  • "What we need is a light interoperability protocol. We have that for the internet; it's IP. We have that for blockchains and payments; it's ILP. Blockchains are going to replace the world's payment systems."

Featured Image Courtesy of Ripple