NEW YORK (MainStreet) You missed the Bitcoin train, admit it. By the time that virtual currency hit the front pages, it already was as out as Linden Dollars -- and you don't even remember what those are. Which is why there now is one word for you: Ripple.
Call Ripple the next act for virtual currencies - machine determined value that operates without nation state backing - and know that various venture capital plungers have taken flyers on Ripple, including Google Ventures and Andreessen Horowitz, both Class A heavyweights in Silicon Valley funding.
The reason: Virtual currency pioneer Bitcoin has become mired in bad publicity. U.S. government seizures, alleged links to money laundering and drug deals, persistent rumors that mainline banks are shutting customer accounts that have links to Bitcoin are triggering anxiety.
Into that discordant din comes fresh faced Ripple which currently claims around 27,000 accounts, according to spokeswoman Monica Long, who added that there have been about 2 million transactions on the Ripple network.
There probably are $2 million dollar currency transactions in the time it takes you to read this sentence.
But exactly that newness is key to the Ripple attraction.
Tune into what was said at the first Ripple Developers Conference, held in mid October in Las Vegas. Ripple Labs CEO Chris Larsen explained that there has been "an erosion of trust in political currencies" and this has paved the path for a math derived currency that echoes the Internet.
Larsen explained: "The word is connected through an information web, the Internet. That doesn't apply to payments. This is what Ripple focuses on. Ripple is a payments platform without the need for a central bank. This lets us trade value the way we send information."
Larsen added that Ripple is money's equivalent to SMTP, the universal protocol that lets pretty much any email server communicate with any other over the Internet. Understand that unlike Bitcon, Ripple is both a virtual currency - called XRP - and a currency exchange platform that lets a user convert just about any currency into any other currency. "We're currency agnostic," Larsen said.
Ripple also is open source -- anyone can develop tools for it -- and it gets better: anybody can create a Ripple wallet, at no cost. That could be you.
And exactly what would you do with XRPs? Buy stuff. Ripple spokeswoman Monica Long said, "Ripple users can patronize any store that accepts Bitcoin via our Bitcoin bridge." That means XRP can be used to tip strippers in Las Vegas, buy guitars in New Hampshire, even rent vacation cabins in Whistler, Canada. Bitcoin-accepting merchants aren't plentiful but they are out there, letting the currency - and also XRP - get put to use.
Its currency exchange platform also gives Ripple an immediate business model, per Evan Schwartz, Ripple's software engineer, who said at the developers' conference that an early Ripple focus will be on so-called remittance payments where a worker in, say, the U.S. regularly sends home to Mexico or India a chunk of his pay but the current transmission services are "extraordinarily expensive," said Schwartz.
With Ripple, those fees could come down to very near zero, and exchanges could happen instantly.
Ripple, Schwartz said, is about "accepting payments from anyone, anywhere, with confidence."
What are the drawbacks?
Ripple has had significant volatility. In the span of one recent week, for instance, it moved from $.002 to $.0045 per XRP, and that is the kind of velocity that gives any trader acid reflux.
"XRP has had huge swings," said Jaron Lukasiewicz, CEO of Coinsetter,a Bitcoin exchange. However, Lukasiewicz acknowledged, Bitcoin has "about the same volatility" as XRP, so on that score, call the virtual currencies in a draw.
Another issue: while Bitcoin is inherently decentralized, XRP is quite the opposite, noted Justin O'Connell, author of Bitcoinomics. That's true: Ripple Labs, which does most of the computer magic behind Ripple, was created as a for-profit, and it started life with some 80 billion XRP, much of which it has said it will distribute to users of the network, in order to spur broader adoption. But Ripple Labs calls those shots.
"They are incentivized to increase the value of XRP," said Lukasiewicz - and therein may be the magic of this new currency. The people pulling the strings win only if the XRP value goes up.
Can Ripple make it? Larsen shrugs: "There will be multiple virtual currencies" and his intent, of course, is to put XRP in that winner's circle.
Skeptical? Justifiably. But know this: the buzz about Ripple is getting louder. Some come to bury it, others to praise but for sure: Ripple is on more lips, and that means it's winning notice.
--Written by Robert McGarvey for MainStreet