Fortune's 'Making Money Move' panel, Aspen, CO, July 17, 2018.
Commentary,  Innovators

Sparks fly at Fortune’s ‘Making Money Move’ panel in Aspen

Stripe and Ripple reps throw shade at IBM for buzzword bingo

By  / July 23, 2018 /

At Fortune’s Brainstorm Tech conference in Aspen last week, the state of women in tech was at the front of everybody’s minds. With 245 tweets or retweets mentioning women over the course of the conference, the topic comprised a full 10 percent of the Twitter conversation about the conference:

That dynamic set the stage for the conference’s premiere crypto panel. “Making Money Move” featured two female panelists and female moderator Jen Wieczner—a clear indication of the industry’s dedication to break away from its reputation of being yet another bro-dominated sliver of high tech.

IBM’s Bridget Van Kralingen, Stripe’s Claire Hughes Johnson, and Ripple’s Asheesh Birla discussed the state of cryptocurrency with respect to each of their companies and the industry at large—the challenges they have faced in embracing it, and the opportunities that it presents for the future of business and commerce.

The discussion began with an examination of Stripe’s bombshell decision earlier this year to remove bitcoin as an accepted form of payment through its service, which many argue helped trigger the devaluation of bitcoin and other cryptocurrencies. Stripe chief operating officer Claire Hughes Johnson explained the company’s decision as being driven by two key factors: lack of demand from their customers, and impractically long bitcoin processing times, which are made worse by bitcoin’s volatility.

“The merchants didn’t want it,” Hughes Johnson said in her trademark to-the-point delivery. She continued, “In July bitcoin took about 60 minutes for a transaction to go through, which isn’t great. Imagine ordering a cup of coffee and then standing there for 60 minutes waiting for your transaction to clear. But it’s been as long as three to five days. And that’s where the volatility hurt—the value was change so much while the transaction was waiting.”

Hughes Johnson expressed guarded optimism that a crypto would emerge that would better suit the needs of Stripe’s merchants. “We were the first to integrate bitcoin. We’re interested in the space. We invested in Stellar when it first came out, but the usage just wasn’t there.”

Asheesh Birla, Senior Vice President of Product Management at Ripple described the company’s customer experience-focused efforts to address some of these challenges presented by using cryptocurrency as a way of moving money, citing nearly instantaneous transactions, which guarantee the value holds steady while their transactions are settling. Birla, who was just named to Fortune’s “Ledger 40 Under 40″ list, also cited blockchain technology as a desirable option for emerging markets and upstart financial institutions, saying that he thinks that these markets will be the first to embrace mainstream adoption of the technology.

When Birla mentioned that Ripple has signed on over 120 financial service companies to use its remittance solutions, moderator Wieczner pointed out that not a single one of the big banks that are using the tech is actually settling its transactions in XRP, the cryptocurrency that is native to Ripple.

Birla responded that “Banks do not like to be first adopters of technology, they want to see it out there. But once the first one moves, it’s a herd mentality.” Referring to Ripple’s CEO, Brad Garlinghouse, Birla echoed a promise that Ripple has made on that score. “Brad ‘s right, we’re going to see adoption (by banks) later this year but the first users will be the upstarts, the new companies that want to expand into new countries.”

IBM’s Senior Vice President Bridget Van Kralingen noted that her company has been experimenting with stablecoins pegged to fiat currencies and backed by FDIC-Insured banks. In the initial days following this announcement, this move has boosted the value and prestige of Stellar, one of IBM’s first parlays into the world of blockchain technology, an uptick that has been felt throughout the cryptocurrency world. The long-term effect remains to be seen, as it’s possible that the Stronghold USD stablecoins that IBM is experimenting with, which “deploy Stellar’s blockchain protocol to issue and trade Stronghold USD,” could ultimately find themselves in competition with Stellar’s own cryptocurrency, Lumens.

The panel maintained a snoozy respectability until IBM’s Van Kralingen dropped the buzzword “blockchain” once too often. Stripe’s Claire Hughes Johnson challenged  Van Kralingen’s explanation of her company’s blockchain technology capabilities and the extent to which it is really decentralized, saying that “It’s just using the word ‘blockchain’ to describe better database management? Frankly, there IS a central actor who’s helping to manage – you guys!” Social media took note of this tense moment:

When asked by Fortune’s Adam Lashinsky whether she thought “the word blockchain is being used in a marketing sense rather than a real sense” Claire Hughes Johnson didn’t mince words: “Yes, I am saying that. I do think that we’ve reached that…’Jump the Shark’ moment, where you just say…’da da da blockchain’ and the SEC has to issue a warning that you can’t issue such statements because of the effect it has on the market. That’s a sign that you’ve jumped the shark.”

This is an important struggle in the industry because it gets at the very heart of one of the cryptocurrency world’s most urgent questions: how to build trust and credibility. Each panelist had different perspectives:

Claire Hughes Johnson, Stripe: “Blockchain is really about decentralization, and trustlessness, and frankly its biggest application is for people who don’t want government or regulated entity involvement or visibility…but I’m worried that we’re conflating some private blockchain activations which is kind of antithetical to what the blockchain is, with do we have some new networks here that are being used in the way that money moves today.”

Asheesh Birla, Ripple: “Back in 2013, if you have one digital asset exchange, and you have another digital asset exchange, if you want to send money between any of these digital asset exchanges, you either wire US dollars, that takes weeks, or you do it instantly using a digital asset. And that’s because these new institutions don’t trust each other, and now you have a digital asset, and now that’s instant, so now you can build on top of that which we’ve done at Ripple with our xRapid product where now I can transfer in and out of fiat into a local currency instantly.”

Bridget Van Kralingen, IBM: “Business needs to know where the money comes from, and who they’re doing business with…[the technology] can be permissioned, which means any contract or any payment that moves through the blockchain process cannot be changed, which leads to trust. So it allows networks to occur between parties who would not normally trust each other. Payments is one great use case, but again, you can think about supply chains, you can think about food, you can think about insurance contracts—all of these, we can speed up the trust.”

Ultimately, the one takeaway that all of the panelists agreed on is that the world of cryptocurrency has the most potential in relation to emerging markets, particularly in Asia.

As the panel wrapped up, the discussion moved back to Birla’s early argument about the value of blockchain technology and cryptocurrency in emerging markets in other parts of the world. Compared to emerging markets, particularly in Southeast Asia, Birla argues that we are “overbanked” with endless payment methods at our fingertips. Meanwhile, Birla notes, people and businesses in emerging markets have been left behind, but the decentralized and digital nature of blockchain technology and cryptocurrency ultimately creates opportunities for these places to more fully participate in the global marketplace.

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Candice Greaux is a strategic public affairs and communications specialist in Washington. Her writing has appeared in the New York Observer and elsewhere.