Ripple the Business of Crypto Case Study from HBR Narrate the journey of a fairly popular startup and its founder’s idea to disrupt the existing payment systems. The case can be analyzed from the standpoint of new business strategy, disruptive technology, global expansion, and adoption of new technology to disrupt an existing business model. Ripple the Business of Crypto case presents the readers with an overview of blockchain technology and its various elements
Ripple the Business of Crypto: Executive Summary
Ripple’s Chief Executive Officer, Brad Garlinghouse, will be expected to present the next plan for the company at the upcoming strategy meeting. On the other hand, a number of employees have expressed worries that the initial strategy he developed is too narrowly focused. Garlinghouse’s strategy is not to solely concentrate on the sale of XRP; rather, he intends to develop and improve the RippleNet system, which is the foundation of the cryptocurrency.
In light of the fact that the blockchain industry on a global scale is, at best, in its infancy, I believe that this is the best way for it to progress. If Bitcoin is the only thing anyone is interested in, the market will become oversaturated very quickly. This result is identical to what would occur if regular payments were made across international borders. But he shouldn’t spend all of his money on that either, because in order for the business to function, there needs to be a steady flow of cash.
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Ripple the Business of Crypto: Background
Cryptocurrency & Blockchain
It is widely anticipated that Bitcoin and other cryptocurrencies will experience significant growth in 2017. Blockchain technology, on the other hand, is the real winner of the recent Bitcoin boom. However, by the year 2018, the price of a bitcoin had dropped below $4,000. While proponents of cryptocurrencies like Bitcoin and other cryptocurrencies have a positive outlook on the industry as a whole, regulators tend to have a pessimistic view of it. The widespread excitement about blockchain technology, which forms the basis of cryptocurrencies, will continue unabated throughout 2018, regardless of the extent to which the price of cryptocurrencies may rise or fall.
Initial coin offerings (ICOs) have continued to be a reliable source of funding for blockchain initiatives, despite the general trend toward falling cryptocurrency prices. An investor’s primary goal in buying a cryptocurrency that has just been listed on the market may be to make a profit as quickly as possible. Rather than gambling on just any cryptocurrency venture, an increasing number of investors are looking for cutting-edge initiatives to put their money into. The blockchain industry has quickly risen to become one of the most talked-about new technologies, following in the footsteps of the internet and artificial intelligence.
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Nearly every industry is starting to pay attention to blockchain technology as a result of the potential improvements it could bring to business processes. The banking and financial behemoths that are traditionally seen as competitors to the blockchain and cryptocurrency industries have not been ignorant of the potential offered by blockchain technology. The blockchain industry has persisted in many different industries, including healthcare, agriculture, online gaming, artificial intelligence, the internet of things, supply chain, and real estate, among others.
The blockchain industry has recently witnessed a flourishing of innovative ideas. The rate at which people are adopting this technology is picking up steam at an alarmingly quick pace. According to recently developed forecasts, the total value of the blockchain industry will reach $28 billion by the year 2025. In 2017, there was only a total of $411 million recorded. This provides undeniable evidence that significant leaps forward are being made in the state of the art of this technology. In international commerce, I anticipate that blockchain technology will see widespread adoption by the year 2025. However, cryptocurrency will not quickly replace fiat currencies in the foreseeable future.
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Ripple the Business of Crypto: Issue
Because cryptocurrency is a relatively new field, it has recently gained acceptance from the general public as a possible investment. Others urged Garlinghous not to focus all of his energy and time initially on the development of the cryptocurrency and the blockchain system, but he was adamant about doing so anyway. Garlinghous is now faced with a strategic dilemma as a result of this situation: should Ripple specialize in one area or branch out into many?
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Ripple the Business of Crypto: Analysis
Here is a detailed analysis of Ripple the business of crypto case study
As a cryptocurrency, XRP has two main competitors: Bitcoin and Ether, and they have their own pros.
1. XRP: Rapid & Low-cost
Businesses of any size can receive instant payments from customers located anywhere in the world when they accept XRP as a form of payment. Ripple has the capability to transfer funds from a customer’s credit card to a company’s bank account in as little as three days. The capacity of any company to receive payments in a timely manner is of tremendous benefit to that company’s capacity to monitor its day-to-day cash flow.
Due to the insignificance of the transfer fees that Ripple charges, the platform can be of great assistance to a small business that does a high volume of business in international markets. You can send money overseas in as little as five days, and the fees are typically only about 7% of the total amount. The amount of time it takes for Ripple to confirm a transaction is only three to five seconds, and the fee it charges for carrying out an international currency exchange is either negligible or nonexistent.
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2. Bitcoin: Decentralization, Anti-tampering & anti-counterfeiting
When it comes to Bitcoin, there is no centralized authority that processes trades; rather, the entirety of the user network is responsible for doing so. If hackers carried out their plan as described, their attacks would be completely fruitless. Bitcoin will release a new batch of coins every ten minutes, and the exact number of coins that are currently in circulation can always be viewed. As a result, “security” and “transparency” are two of the advantages that come along with decentralization. In the real world, counterfeit bills are always present, and some of them can even fool a money detector. From the moment it is mined until the moment it is in your possession, every Bitcoin transaction can be traced.
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3. Ether: Concise & Modular, Non-discrimination
Keeping the Ethereum protocol as simple as possible allows us to maximize its potential as a system that is universally applicable while simultaneously reducing the influence of any one person or small group that might try to exert control over it. The architecture of Ethereum must have as much potential for modularization as is at all possible. For the sake of the entire cryptocurrency industry, it would be in everyone’s best interest if these were incorporated into the development of Ethereum to the greatest extent possible.
The Ethereum protocol does not impose any restrictions or prohibitions on the types of transactions or applications that can be conducted. The purpose of each of the precautions that were built into the protocol was to eliminate or reduce the risk of potential injuries. On Ethereum, it is possible to run a script that contains an infinite loop.
Garlinghouse is aiming for SWIFT with regard to the international money transfer portion of their business. SWIFT was established in 1973, whereas Ripple didn’t get its start until 2015. Every day, more than 30 million different financial transactions are processed, resulting in total daily allocations that can be measured in the trillions of dollars range. Due to the fact that SWIFT is so dominant in the field of international money transfers, there is no way that it can be surpassed in a short period of time.
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Ripple the Business of Crypto: Conclusion
XRP is competitive in comparison to the other two cryptocurrencies; however, it is not competitive in comparison to the industry giant SWIFT when it comes to international money transfers. Therefore, in order to ensure the long-term viability of the company, I believe that Garlinghouse should keep its focus on international payments while shifting some of its resources toward related financial services. This would allow the company to better serve its customers.
The objective is to mitigate risk and make certain that there will be no disruptions to cash flow as a result of putting too much emphasis on a single domain, such as software development. After all, a significant amount of financial backing is necessary for the development of innovative ideas.
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Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page