Bloomberg Businessweek USA - January 25, 2018

29

ILLUSTRATION BY THOMAS COLLIGAN

January 29, 2018

Edited by

Pat Regnier

Businessweek.com

LOOK AHEAD ○ The U.S. Internal Revenue Service

begins accepting 2017 tax returns

on Jan. 29

○ Buffalo Wild Wings shareholders

vote on whether to be acquired by

private equity-owned Arby’s

○ Switzerland’s Dufry is expected

to sell shares of Hudson, the airport

store chain it owns, in an IPO

AllEyesonRipple.

But What Is It?

○ Its plan to create a global

payments system for banks got

swept up in the crypto craze

Every day, companies and consumers around

the world send more than $76 billion in pay-

ments through a vast network of banks. Without

the flow of money, container ships stay in port,

workers don’t get paid, and supply chains break

down. For the past seven years, Ripple, a tech

company in San Francisco, has vowed to use the

blockchain wizardry behind Bitcoin to rewire this

global circulatory system with what it calls an

“internet of value.”

That in itself would be a fairly interesting busi-

ness story. But then Ripple became a part of the

great cryptocurrency melt-up of late 2017. The

company owns a lot of a digital token called XRP.

From late September to early January, XRP saw

an astonishing 1,300 percent increase in value,

blowing away the gains of rival virtual currencies

Bitcoin and Ether and turning its executives into

paper billionaires. One rationale for buying XRP

is that unlike Bitcoin, the token has one narrowly

defined but clearly useful purpose: to help banks

move cash from point A to point B faster and more

cheaply, especially across borders.

The problem is that banks say they have no

interest in using XRP. Current and former exec-

utives at seven global banks—some of whom have

partnered with Ripple—say there was scant chance

they would ever entrust their corporate clients’

payments to a cryptocurrency. The executives

requested anonymity.

“It’s bewildering,” says Joseph Lubin, the

founder of ConsenSys, a startup that develops

applications based on the Ethereum blockchain,

the technology used for Ether. “Effectively it’s a

totally useless token except that it is being used

by that company to make a lot of money to fund

some of their activities.” There are 100 billion of the

tokens and, according to Ripple’s website, the com-

pany holds about 61 billion—with a value of $1.33

each on Jan. 24, or $81.4 billion total. Most are

F I N A N C E