Brad Garlinghouse Says Ripple and XRP Are Solving a $20-Trillion Problem: ‘Banks Don’t Like Swift’

Ripple CEO Brad Garlinghouse is pushing back against legacy leader Swift, the international payments network with over 11,000 banks and financial institutions, and highlighting XRP as an improvement over Bitcoin.

While Swift is making efforts to improve settlement times and accessibility to its global messaging system, which facilitates banking transactions and cross-border payments, Garlinghouse says banks don’t like it.

Speaking on Tuesday in Manhattan at The Economic Club of New York, Garlinghouse says Ripple, which is growing its network of 200 banks and financial institutions, is solving a real problem at scale.

“You have north of $20 trillion going cross border each year. It is fraught with error rates and it’s slow and it’s expensive. For me, it’s the classic Silicon Valley going up against the big behemoth, Goliath. But it’s so broken. When I go talk to banks, it’s a beautiful thing for me because banks don’t like Swift. They’re frustrated with Swift. Their customers don’t like Swift. That’s a great place to be when you’re selling into that…

We have been so fortunate through a little bit of luck and a little bit of skill that we find ourselves with a lot of momentum in, I think, really solving a problem using these technologies at scale.”

For an audience of newbies, Garlinghouse also breaks down the essence of XRP when asked: What is it?

“The original engineers who developed the XRP Ledger were early Bitcoin engineers who saw that there was going to be a Bitcoin scalability problem over time…

With XRP, the idea was when you’re doing this mining it slows down transactions. It makes transactions expensive. There’s a better way to do that. And they developed something – I won’t technically go into it – called the consensus algorithm. But basically the idea is you don’t have to have mining to verify a transaction.

This group of engineers developed the XRP technology. It’s an open-source technology. Ripple owns a lot of XRP. We own about 55% of all XRP. So clearly we’re very interested in the health and success of that ecosystem, but it is an open-source technology that Ripple uses in its technical stack.”

As for the crypto market at large, it’s all speculation, according to Garlinghouse, and that presents challenges for the space.

“I think 99.9% of all crypto trading today is just speculation. It’s actually some amazing stats. About $40-50 billion a day is trading in crypto. That is a very liquid market.”

But the value of these cryptocurrencies, he says, is dependent upon utility in the real world.

“Ripple is using XRP to solve – I know we’re going to talk about this later – a correspondent banking problem. I make the joke that if you and I decided to have a race to see who could get $10,000 to London the fastest, I would win if I just drove to JFK and flew it there. That’s the fastest way to move money, which in 2019, in the world of the internet, is a pretty surprising stat.

We are using XRP to help banks, to help regulated financial institutions facilitate cross-border transactions. There’s other companies out in the XRP world doing other things ranging from micro-payments to identity management, other things using that open-source technology. But Ripple’s very focused on using it for payments.”

In an episode of Fortune’s Balancing the Ledger on Tuesday, Garlinghouse, who says he’s not betting on the launch of Libra anytime soon, describes XRP as an efficient fit for the banking and payments industries, and highlights the differences between XRP and popular stablecoins.

“A stablecoin like USDC, for example, that Coinbase and Circle have done, I think that is interesting in mitigating volatility.

But you still have to go from dollar to peso. At some point somebody has to bridge that. And in effect, what Ripple is doing is ‘Let’s make XRP the most efficient, the most liquid and the easiest to bridge by selling the connectors on both ends, selling APIs that allow people to connect to both ends of that. If we have hundreds of banks to use XRP for that, I think that bodes well for the liquidity of XRP.”