Do you know David Schwartz? In case you do not recognize by his name, maybe you will know about him by the name of his company: Ripple. Does that ring a bell? If you follow the crypto market, it surely does. Recently, Schwartz gave a recent interview to the media in which he was called the “trillion dollar man”. Why? Because he wants to take on a trillion dollar market.
According to the interview, David Schwartz was obsessed with doorknobs and locks when he was a kid. It was not a weird obsession, mind you, he just wanted to know how they worked. He used a screwdriver to dismantle the objects and remove them from the doors of his house.
His family thought everything was just fun and they took photos of the gaping holes where the knobs of the doors once stood. According to Schwartz, the function of a doorknob was to control the movement between two spaces, therefore, it acted like a control barrier between these two spaces and, if you remove it, you understand it.
What does that have to do with the success of the man, though? Schwartz always wanted to understand how things worked and now he wants to dismantle another gate, the one connecting all the banks in the world. As the current CTO and co-founder of Ripple, Schwartz’s main mission is to disrupt SWIFT.
The SWIFT, in case you are familiar with the term, stands for Society for Worldwide Interbank Financial Telecommunication and it a Belgian cooperative that was founded in 1973. This institution can be considered the ultimate middlemen of the international remittance system because all the international transactions pass via SWIFT.
It has more than 10,000 members which are financial institutions from almost all the countries in the world. If you want to transfer any amount of money internationally, you have to user SWIFT. They make all the compliance parts and check for protection. It is said that the SWIFT handles about 25 million messages daily and that they make $6.74 trillion USD in transferences all over the world.
However, as you might have already guessed, the SWIFT is not exactly very efficient. Transactions may take days to be settled and the fees are high sometimes. Schwartz mission is to understand SWIFT and remove it.
He will not do only that, though, as it would make no sense to replace the whole with something. The something will be Ripple. In fact, he has already been making several tests with banks to work out the best way to make international remittance of money.
There are many bumps on this road, though, as a lot of people does not believe that Ripple is as decentralized as it claims to be, which can cause some problems for the company. The company is also facing competition from many other startups like Stellar, too, which basically was created with the same intent of Ripple.
The main objective of Schwartz is to make money move as swiftly as invisibly as information does today using an open decentralized network and the blockchain technology.
Schartz’s story is like the one from many of the people who work in technology today. He was a bright kid who lived in a Long Island suburb and began to learn how to program with his father. He was somewhat of a stereotypical nerd: didn’t like sports very much, but was good at chess.
He received his degree in electrical engineering from the University of Houston in 1990 and was awarded a patent for a distributed computer network 20 years before Satoshi Nakamoto invented the blockchain. During the 90s, he got interested in cryptography and started a company with his dad, but that did not work out as intended.
In 2001, he helped a company called WebMaster to design an early cloud-based storage system. He was also a consultant for the National Security Agency (NSA) and gained knowledge of high-level cryptography. In early 2011, he was interested in Bitcoin and, although he was not a libertarian, he was concerned by the centralized control of money.
His main problem was that the regulators of money were not elected and they were shadowy and unaccountable. That made him interested in Bitcoin. At this time, he met Jed McCaleb, founder of the Mt Gox exchange and eDonkey 2000, a Napster competitor. The two decided to build something similar to Bitcoin but that would use a lot less energy and could reduce transaction times.
With the help of Arthur Britto, Schwartz finished the XRP code in 2012. In 2014, McCaleb disagreed with the company and went to found Stellar, which rivals Ripple until today.
The Potential Of Ripple
After McCaleb left the company, Schwartz developed two financial tools that would be Ripple’s core products: xCurrent, an enterprise software for banks to settle transactions and Xvia, a payment interface for users to send payments globally with a high level of transparency.
The company has also launched a third product more recently: xRapid, which can be used to make it easier for banks to use XRP, as it frees up the capital and lowers costs by substituting local fiat currencies with XRP and then trading them for fiat again at the end of the transaction.
However, the adoption of the token has been modest so far. While many companies made partnerships with Ripple, as Santander, for instance, has started to use Ripple’s services but also used the services of other blockchain companies like Hyperledger Fabric and Ion.
Some other companies are more positive, though. The CEO of Mercury, Alastair Constance, has affirmed that SWIFT has had the monopoly for too long and that it is lazy and inefficiency and the company has started to use xRapid instead.
Members from SWIFT are not too happy about Ripple’s success, obviously. Some of them have wondered if the solution is actually cost-effective for banks or if this is another overhyped blockchain buzz.
With the high buzz around cryptocurrencies, the prices of Ripple went from $0.006 USD in 2016 to $3.65 USD in January 2018, but have fallen a lot since then.
Oddly, Schwartz is not listed as a co-founder of Ripple despite being the number two of the company and the chief architect of the structure.
A Long Mission To Overcome SWIFT
It is definitely not going to be easy for Ripple to replace SWIFT as the network has 10,000 banks associated with it and there are competitors like Stellar. Not only that, but the company is, ironically, being accused of being too centralized, which also gets in the way.
We still do not know whether Ripple will have success in its mission to overcome SWIFT or if the company will simply be a convenient option. There is even the chance that Ripple will fail. Because of this, the only way is to wait and see what happens as Schartz makes a herculean effort to prove to the world that Ripple is worthy of being the new SWIFT.