Bernanke Backs 'Ripple' At Blockchain Conference: "The Tech Is Promising"

Two months ago we noted former Fed chief Ben Bernanke's apparent flip-flop since leaving office as he agreed to be the keynote speaker at a blockchain conference.

Having warned in 2015 of "serious problems" with bitcoin due to its "instability" and "anonymity"...

[Bitcoin]'s interesting from a technological point of view. We’re in a world where the payments system is evolving quickly and new approaches to managing payments are proliferating, and some of the ideas around bitcoin will no doubt be useful in doing that.

 

But I think bitcoin itself has some serious problems. The first is that it hasn’t shown to be a stable source of value. Its price has been highly volatile and it hasn’t yet established itself as a widely accepted transactions medium.

 

But the real serious problem that it has is it’s anonymity, which is a feature, and is also a bug, in that it has become in some cases a vehicle for illicit transactions, drug selling or terrorist financing or whatever. And you know, governments are not happy to let that activity happen, so I suspect that there will be oversight of transactions done in bitcoin or similar currencies and that will reduce the appeal.

But Bernanke told an audience at Ripple's Swell event in Toronto today that:

"...new technology like blockchain or electronic currencies can be used to improve" global payments, and added that Ripple's technology is "promising" as they work with regulators.

As a reminder, Ripple is considerably different from Bitcoin. That’s because Ripple is essentially a global settlement network for other currencies such as USD, Bitcoin, EUR, GBP, or any other units of value (i.e. frequent flier miles, commodities).

To make any such a settlement, however, a tiny fee must be paid in XRP (Ripple’s native tokens) – and these are what trade on cryptocurrency markets.

In other words, Ripple runs on many of the same principles of Bitcoin, but for a different purpose: to serve as the middleman for all global FX transactions. If it can successfully capture that market, the potential is high.

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Mor details on what Bernanke said to come, but for now Ripple prices are rising...

 

Perhaps even bigger news for Ripple today (as CoinDesk.com reports), The Bill and Melinda Gates Foundation has released new open-source software for the unbanked that utilizes technology developed by distributed ledger startup Ripple.

Announced today, Mojaloop is aimed at providing an interoperability layer between financial institutions, payment providers and other firms that offer such services to the poor and unbanked. Ripple's Interledger protocol, which is used to transact between different financial networks, is being used to help accomplish that goal.

In addition to Ripple, three other financial technology firms participated in the development of the software. The app came out of the group's Level One Project, an umbrella initiative for its work with the unbanked poor that has seen it explore technologies like blockchain.

The Gates Foundation has been weighing applications of the tech since as early as 2015, including its use as a way to bridge disconnected financial systems.

"Interoperability of digital payments has been the toughest hurdle for the financial services industry to overcome. With Mojaloop, our technology partners have finally achieved a solution that can apply to any service, and we invite banks and the payments industry to explore and test this tool,” Kosta Peric, the foundation's deputy director of financial Services for the poor, said in a statement.