Ripple The Business of Crypto CASE STUDY SOLUTION PDF

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Case study 4: Ripple: The Business of CryptoEXECUTIVE SUMMARYRipple’s CEO Brad Garlinghouse needs to present the company's next plan at the upcoming strategy meeting. However, there are some doubts inside the company that his original plan is too focused on a single area. Garlinghouse’s strategy is ...

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Case study 4: Ripple: The Business of Crypto EXECUTIVE SUMMARY Ripple’s CEO Brad Garlinghouse needs to present the company's next plan at the upcoming strategy meeting. However, there are some doubts inside the company that his original plan is too focused on a single area. Garlinghouse’s strategy is focusing on the improvement and innovation on the RippleNet system which is the technology behind the cryptocurrency rather than only the sales of the XRP. I believe that this is a correct development direction, since the current international blockchain industry is still in the early stage. The market will reach saturation soon, If everyone only focuses on the cryptocurrency itself. This result is no different from traditional international transfers. However he should definitely not put all resources on this part since the company still need liquidity to operating. BACKGROUND 1.Cryptocurrency & Blockchain Many people say that 2017 is the year of Bitcoin and cryptocurrency. But the real winner in the Bitcoin boom is blockchain technology. But by 2018, the price of Bitcoin began to fall below $4,000. Although the cryptocurrency community still believes in the potential of Bitcoin and other crypto assets, the authorities have indelible negative opinions about cryptocurrencies. During the rise and fall of cryptocurrencies from 2017 to 2018, the only constant is everyone's enthusiasm for blockchain, which is the technology behind cryptocurrencies. Although the prices of most cryptocurrencies have fallen, ICOs continue to bring funds to blockchain projects. Initially, the initial intention of investors may be to make quick money by investing in newly listed cryptocurrencies. Now, more investors want to invest in innovative projects, not just any cryptocurrency project. The blockchain industry has accelerated from a new technology to one of the most concerned technologies after the Internet and artificial intelligence. Most industries have a keen interest in blockchain and how it can help improve workflows.

The giants in the banking and financial industries that are considered competitors in the blockchain and crypto industries have also realized the potential of the blockchain. Healthcare, agriculture, online games, artificial intelligence, the Internet of Things, supply chain, real estate, and many other industries have also failed to get rid of the influence of the blockchain field. The innovation of blockchain is in full swing. The adoption of this technology continues to accelerate. According to recent reports, by 2025, the valuation of the blockchain industry will reach $28 billion. In 2017, this data was only $411 million. This fully shows that this technology is developing rapidly. I think that by 2025, blockchain technology will play an important role in international transactions. However, cryptocurrency will not quickly become the main currency in international transfers. 2. ISSUE Cryptocurrency is recognized by the public as a speculative asset because it is an emerging industry. Garlinghous originally wanted to fully develop the cryptocurrency and blockchain system, but others believed that they should not put all their eggs in one basket. So now Garlinghous is facing a strategic question: Should Ripple focus its operations on a single aspect or diversified aspects? ANALYSIS As a cryptocurrency, XRP has two main competitors: Bitcoin and Ether, and they have their own pros. 1. XRP: Rapid & Low-cost XRP allows small businesses to receive remittances from customers in a matter of seconds, no matter where the customer is on the planet. Today, Ripple can complete the transfer process from a consumer's credit card to the bank account of a small business in just 3 days. This feature of quick payment is very helpful for managing the company's daily cash flow.

Since Ripple's transfer fees are so low that it is negligible, Ripple will provide a lot of help to a small company with a large overseas business volume. It allows you to successfully transfer money abroad in only 5 days, and on average, you only need to pay a 7% handling fee each time. Ripple's transaction confirmation time is only 3 to 5 seconds, and the foreign exchange transaction fee is very small, or even zero. 2. Bitcoin: Decentralization, Anti-tampering & anti-counterfeiting Every transaction in Bitcoin is not processed by an organization or institution, but by all users distributed on the network. Under this strategy, it is useless for hackers to attack anyone. Bitcoin will issue some new coins about every 10 minutes, and the number of issued and out is completely transparent. So the benefits of decentralization are "security" and "transparency." In real life, counterfeit bills always exist, and some counterfeit bills can even deceive the money detector. In the Bitcoin system, all coins from the birth to your hands are recorded. 3. Ether: Concise & Modular, Non-discrimination The Ethereum protocol will be as simple as possible, which will ultimately help reduce the impact that any special individual or elite group may have on the protocol, and promote the application prospects of Ethereum as a protocol open to everyone. The different parts of Ethereum should be designed to be as modular as possible. Ethereum development should do these things to the greatest extent possible to benefit the entire cryptocurrency ecosystem, not just itself. The Ethereum protocol does not attempt to restrict or hinder specific categories or usage. All the regulatory mechanisms in the protocol are designed to directly supervise harm. One can even run an infinite loop script on top of Ethereum. To the international transfer aspect, Garlinghouse’s target is SWIFT. SWIFT was founded in 1973, which is 38 years earlier than Ripple. Today, more than 30 million financial telecommunications are processed daily, and the funds allocated are all calculated in

trillions of dollars. SWIFT is extremly strong in the field of cross-border payments therefore, it is impossible to surpass SWIFT in a short time. CONCLUSIONS In general, XRP is relatively competitive for the other two cryptocurrencies, but not for the international transfer giant SWIFT. As a result, for the survival of the company, I believe that Garlinghouse should Continue to invest in cross-border payments, but still should transfer part of resources to complementary financial products. The purpose of this is to put the eggs in different baskets, avoid blindly developing the software field which would ignore the truly profitable departments and leading to a break in cash flow. After all, the development of innovation requires great liquidity support....