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Talk for Story "Are US demands on SWIFT about Iran or digital supremacy?"

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  1. Rewrite

    Dear Christian, Chuck and Jonathan,

    In answer to your comments:

    * SWIFT is indeed only a messaging system. But the system of corresponding banks for the flow of money with the messaging of SWIFT makes it a complete international payment system. The SWIFT messages arrive in minutes. It is the underlying correspondence banks that slow down the payments.
    The system of SWIFT and Ripple are entirely different, but their markets are same: The international payment market between financial institutions. (Ripple aims first of all at financial institutions, but others can also use its system.)

    * Ripple is posing itself as an alternative for SWIFT and they are signing up every week one new bank. So the comparison does make sense.

    * Jonathan is right to say that dominant parties will scream is the USA curtails SWIFT. But with the current president of the USA, any action that serves American interests is possible.

    * The Bloomberg Tradebook is indeed a lot like SWIFT. But SWIFT handles money and Bloomberg other financial transactions.

    * Jonathan is right about the security of Ripple. SWIFT is maybe dull and slow, but it is very safe.

    * Christian is wrong. The fact that Ripple is American makes that the USA government has access to the data of Ripple. You can find this for example in the words of Senator Wyden in the USA Senate Select Committee on Intelligence report, link:

    https://www.gpo.gov/fdsys/pkg/CRPT-115srpt182/html/CRPT-115srpt182.htm

    * There have been two proven hacks of the American NSA in SWIFT computers. So this is proof they are very much interested in the international payment data of SWIFT. For this reason, it is not that far-fetched if the USA tries to channel all global payment information to an American organisation that complies with Californian laws.

  2. Rewrite

    “But with a key to decrypt, in combination with data outside the ledger collected by Ripple, a complete data set of all international payments can be made.”

    The above sentence makes it look like Ripple the company holds some secret master key. They do not, so the sentence is basically unjustified FUD.

    1. Rewrite

      Yes Christian,
      The safety of date in the US is unclear. A legal article of Thomas Reuters describes a panoply of federal privacy-related laws that regulate the collection and use of personal data. on 7th November 2017 Senator Wyden remarks ‘Under current law, the CIA, NSA and FBI can conduct these searches for no other reason than that they reasonably believe the searches will turn up foreign intelligence information.
      & It’s clear that there is the back door through Ripple to us Government.

      If a Payment is between two countries like India & France by using Swift it coordinate only between india and France.
      But if Ripple replace Swift then through ripple back door US government gets all financial details worldwide & it’s total disaster.

  3. Rewrite

    Chuck,

    No question that the US has been playing bully politics since gunboat diplomacy, but I’m not quite sure how we get from there to “But is the Trump administration’s demand really about Iran? Or is it an attempt by the United States government to conquer the international payment market and its data?”

    Suddenly the hysteria inducing word “conquer” appears, implicitly justified by the unsupported notion that Ripple and its ilk need the US government to topple the old financial order. The article implies that our intelligence activities towards SWIFT and the others which began at least under the Obama administration and likely well before are motivated by a desire to enhance the prominence of the US based Ripples of life. Well in part that’s true in some Hamiltonian context. More likely though these agency activities have taken on a life of their own and the Hamiltonian subtext is a distant concern compared to the great game itself.

    I certainly believe that Mr. Trump will do anything he can get away with to gain control over the US military apparatus no less the digital domain, a frightening enough notion. But it’s too soon to say that the Congress will let him do that. Much will be told by the mid-term elections and if it’s close who knows what will happen.

    There’s a story in here somewhere but it’s probably more about the fall of the old balkanized financial world order to a unified digital domain, a notion I start to flesh out and support below. The NYT's article is a mish-mash of non-sequitur information. Who cares what this guy is worth, it’s irrelevant. A pertinent discussion would be about Ripple’s integrated exchange and clearance business and the CME group as a prominent investor.

    Blockchain is topical and great PR but a sideshow. In the mid-sixties it was technologically interesting to watch the street computerize human trade confirmation comparison but a sideshow to the emergence of competitive block trading (which had been around since the twenties) and bond positioning, both of which had firms employing their own typically partnership capital to facilitate transactions rather than matching up buyers and sellers as agent.

    There’s a bunch to talk about here. Let me know if you think I can be helpful.

    Edited: 2018-06-15 06:34:19 By Jonathan Miller.. (talk | contribs) .. + 34 Characters .. + 1% change.‎‎ (Note | Diff)

    Edited: 2018-06-15 06:38:02 By Jonathan Miller.. (talk | contribs) .. + 2 Characters .. + 0% change.‎‎ (Note | Diff)

    Edited: 2018-06-15 06:39:35 By Jonathan Miller.. (talk | contribs) .. + 5 Characters .. + 0% change.‎‎ (Note | Diff)

    Edited: 2018-06-15 12:38:52 By Jonathan Miller.. (talk | contribs) .. + 1 Characters .. + 0% change.‎‎ (Note | Diff)

  4. Rewrite

    Hey Chuck some gremlins on the platform currently affecting this Talk thread or at least my posts. Nick and Simon are investigating. Will post after their findings.

  5. Rewrite

    HI Chuck,

    Unfortunately this is a complex problem and making sense of it in hundreds of words is implicitly reductionist. And making comparison between Ripple and SWIFT doesn’t make a great deal of sense at this point in history.

    SWIFT claims to be a messaging system only. That would mean they don’t act as principal or agent in transactions and they don’t settle transactions. Ostensibly they only allow members to report transactions which can be particularly complicated when there are many parties to a trades or series of trades.That doesn’t mean they can’t act as a bulletin board for broker-dealers and banks wherein those broker-dealers and banks can deal with each other and settle in traditional fashion. They would then only be facilitating transactions. How they’re paid for that is unclear and would to some extent speaks to their role. I don’t think they own any banking or broker dealer licenses. I called their Brussels office at 6:30 AM my time this morning (no one was around at their NYC, Miami or London offices) to find out but was referred to their press office and doubt I’ll ever hear back.

    SWIFT reminds me more of parts of Bloomberg which has an extraordinary messaging system built around their analytics and news operations. I for example receive trade confirmations via Bloomberg not from the firm that did the trade. That’s very SWIFT like. But Bloomberg does have Tradebook which they call an agency broker. They are not acting as principal (they don’t own or make markets in the underlying assets their clients trade; I assume though they take a commission) and would believe that they have to have SEC license to do so. I looked briefly at the SEC broker-dealer list but didn’t really have time to investigate.

    Could Ripple experience some meteoric rise? I suppose so but not in the immediate future. I won’t spend a bunch of time enumerating Ripple imponderables but will only say that as things stand today and in the immediate future their near-term rise seems unlikely. Could change.

    As to the article’s thesis that the US government can hurt SWIFT and help Ripple. Well, I imagine they can hurt SWIFT badly by curtailing US bank participation. And in this environment that hits the reasonable conjecture target. But helping Ripple directly or indirectly, that’s a stretch. First, competitor banks and the Bloombergs of life would scream bloody murder and to the extent we still have a functioning congress, they would probably get a hearing. Second, why Ripple? Are either Ivanka or Jared on the Ripple board? Don’t think so though you never know. Unless Ripple gets some humungous government contract– which again would be met with howls of pain–I don’t see evidence.

    Anyhow just some thoughts.

    Edited: 2018-06-13 23:14:09 By Jonathan Miller.. (talk | contribs) .. + 33 Characters .. + 1% change.‎‎ (Note | Diff)

    Edited: 2018-06-13 23:49:15 By Jonathan Miller.. (talk | contribs) .. + 16 Characters .. + 0% change.‎‎ (Note | Diff)

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    Edited: 2018-06-14 03:42:01 By Jonathan Miller.. (talk | contribs) .. 0 Characters .. 0% change.‎‎ (Note | Diff)

    1. Rewrite

      Above all, I agree that this is a complex issue, enough in it for an entire cottage industry of books to be launched. Who among us should write the first proposal? I also agree that Ripple doesn’t seem likely to unseat SWIFT anytime soon—the company is referred to only as a “potential” competitor in this piece. However, the original piece made its case credibly and with solid information, so it seemed fitting to retain it. As for evidence of the possibility of a meteoric rise of Ripple (or any other similar service), this New York Times piece from January reviews the incredible burst of speculation that briefly thrust a Ripple co-founder into Zuckerbergian heights of net worth: https://www.nytimes.com/2018/01/04/technology/bitcoin-ripple.html

      1. Rewrite

        So, let’s do a deeper dive into Ripple versus Swift to check some facts and the article’s framing. Like it or not the devil’s in the details.

        First of all, Ripple and SWIFT are in totally different businesses. So Ripple’s platform operates as an exchange and a clearing house like the Chicago Mercantile Exchange and it’s clearing house. Settlements are T+0. that is instantaneous. These is very traditional financial functionality. The disruptive technology is real enough and great PR, but extraneous to the banking reality. Ripple’s power arises from 1) its unified and presumably secure exchange and settlement operations and 2) its elimination of middle folk.

        According to Aunt Wiki
        “Any user on Ripple can act as a market maker by offering an arbitrage service such as providing market liquidity, intra-gateway currency conversion, rippling, etc. Market makers can also be hedge funds or currency trading desks. According to the Ripple website, “by holding balances in multiple currencies and connecting to multiple gateways, market makers facilitate payments between users where no direct trust exists, enabling exchanges across gateways.”

        No doubt this is a game changer not only with respect to market friction but more particularly with respect to price discovery. Here you have the potential of a zillion folks doing peer to peer in everything from pig iron to pork belies. Not quite clear where or how all those prices are posted. At some point if there’s no discovery nobody will know what anything is worth.

        BTW, XRP is a money commodity and one way I suspect for Ripple’s owners and investor’s to monetize their holdings. But without seeing a balance sheet it’s hard to say for sure. Holding dollar value of XRP on their balance sheet would add extraordinary volatility potential to net worth. Presumably they are more than aware of this.

        OK, I’m celebrating my 26,491th day on the planet, I’m tired, will have another sip of scotch, and finish this in the morning.

        Meantime, here’s where I’m going with this:

        Back to SWIFT and why they’re vulnerable and how Ripple threatens them. Swift’s vulnerability as a cog.

        Does Ripple need government help to revolutionize the financial system? A brief history of the US government as activist and s__t-disturber starring Hamilton, Madison and Jefferson.

        Just as it threatens the status quo, Ripple faces a variety of existential threats from the usual suspects—thieves, regulators, politicians.

        Compare Ripple’s board and investors roster with Swift’s.

        My problems with the article and how it might be improved.

      2. Rewrite

        So, let’s do a deeper dive into Ripple versus Swift to check some facts and the article’s framing. Like it or not the devil’s in the details.

        First of all, Ripple and SWIFT are in totally different businesses. So Ripple’s platform operates as an exchange and a clearing house like the Chicago Mercantile Exchange and it’s clearing house. Settlements are T+0. that is instantaneous. This is very traditional financial functionality. The disruptive technology is real enough and great PR, but extraneous to the banking reality. Ripple’s power arises from 1) its unified and presumably secure exchange and settlement operations and 2) its elimination of middle folk.

        According to Aunt Wiki
        “Any user on Ripple can act as a market maker by offering an arbitrage service such as providing market liquidity, intra-gateway currency conversion, rippling, etc. Market makers can also be hedge funds or currency trading desks. According to the Ripple website, “by holding balances in multiple currencies and connecting to multiple gateways, market makers facilitate payments between users where no direct trust exists, enabling exchanges across gateways.”

        No doubt this is a game changer not only with respect to market friction but more particularly with respect to price discovery. Here you have the potential of a zillion folks doing peer to peer in everything from pig iron to pork belies. Not quite clear where or how all those prices are posted. At some point if there’s no discovery very few people will know what anything is worth, hmmmm.

        BTW, XRP is a money commodity and one way I suspect for Ripple’s owners and investor’s to monetize their holdings. But without seeing a balance sheet it’s hard to say for sure. Holding dollar value of XRP on their balance sheet would add extraordinary volatility potential to net worth. Presumably they are more than aware of this.

        OK, I’m celebrating my 26,491th day on the planet, I’m tired, will have another sip of scotch, and finish this in the morning.

        Meantime, here’s where I’m going with this:

        Back to SWIFT and why they’re vulnerable and how Ripple threatens them. Swift’s vulnerability as a cog.

        Does Ripple need government help to revolutionize the financial system? A brief history of the US government as activist and s__t-disturber starring Hamilton, Madison and Jefferson.

        Just as it threatens the status quo, Ripple faces a variety of existential threats from the usual suspects—thieves, regulators, politicians.

        Compare Ripple’s board and investors roster with Swift’s.

        My problems with the article and how it might be improved.

      3. Rewrite

        I can’t edit or delete the first version of this comment so please use only the second version and ignore the the first. I've addressed tech about this. Thanks

        Edited: 2018-06-14 06:22:18 By Jonathan Miller.. (talk | contribs) .. + 6 Characters .. + 4% change.‎‎ (Note | Diff)

        Edited: 2018-06-14 06:27:01 By Jonathan Miller.. (talk | contribs) .. + 38 Characters .. + 29% change.‎‎ (Note | Diff)

    2. Rewrite

      Dear Christian, Chuck and Jonathan,

      In answer to your comments:

      * SWIFT is indeed only a messaging system. But the system of corresponding banks for the flow of money with the messaging of SWIFT makes it a complete international payment system. The SWIFT messages arrive in minutes. It is the underlying correspondence banks that slow down the payments.
      The system of SWIFT and Ripple are entirely different, but their markets are same: The international payment market between financial institutions. (Ripple aims first of all at financial institutions, but others can also use its system.)

      * Ripple is posing itself as an alternative for SWIFT and they are signing up every week one new bank. So the comparison does make sense.

      * Jonathan is right to say that dominant parties will scream is the USA curtails SWIFT. But with the current president of the USA, any action that serves American interests is possible.

      * The Bloomberg Tradebook is indeed a lot like SWIFT. But SWIFT handles money and Bloomberg other financial transactions.

      * Jonathan is right about the security of Ripple. SWIFT is maybe dull and slow, but it is very safe.

      * Christian is wrong. The fact that Ripple is American makes that the USA government has access to the data of Ripple. You can find this for example in the words of Senator Wyden in the USA Senate Select Committee on Intelligence report, link:

      https://www.gpo.gov/fdsys/pkg/CRPT-115srpt182/html/CRPT-115srpt182.htm

      * There have been two proven hacks of the American NSA in SWIFT computers. So this is proof they are very much interested in the international payment data of SWIFT. For this reason, it is not that far-fetched if the USA tries to channel all global payment information to an American organisation that complies with Californian laws.

      1. Rewrite

        > “The fact that Ripple is American makes that the USA government has access to the data of Ripple.”

        Again, do not confuse the technology from the company.

        The distributed ledger is open. Anyone can always access the information on that ledger. There is no need for any special access, it is already open.

        And anyone can interact with that ledger using open APIs and open source software. There is no need to go via Ripple the company to interact with the ledger.

        This also means that a bank can use Ripple the technology without involving Ripple the company.

        1. Rewrite

          Hi Christian,
          The fact that Ripple is American makes that the USA government has access to the data of Ripple. You can find this for example in the words of Senator Wyden in the USA Senate Select Committee on Intelligence report,

          link:
          https://www.gpo.gov/fdsys/pkg/CRPT-115srpt182/html/CRPT-115srpt182.htm

          1. Rewrite

            You seem to be missing the point. Here’s another link:

            https://xrpcharts.ripple.com/#/transactions/63C99CD33ED3AD291893A7B4605C8FE32ACB4A7EF03123D6E040693D3E13AFB6

            It shows us:

            That account rfexLLNpC6dqyLagjV439EyvfqdYNHsWSH sent 13,981.9 XRP to account rsG1sNifXJxGS2nDQ9zHyoe1S5APrtwpjV.

            It is highly unlikely that Ripple the company knows who owns these two accounts. It is also highly unlikely that Ripple the company was directly involved in facilitating this transaction.

            So then, to your point: How does it help the US government to take control of Ripple the company? Will they gain access to any further information about the above transaction? No. Will they gain access to manipulate the distributed ledger? Not likely when you have multiple validators (https://xrpcharts.ripple.com/#/validators) running elsewhere by others.

            The article we are discussing here states that the US torpedoed the Iran deal so that it would punish SWIFT in order to put in place Ripple. That in itself is an argument which isn’t properly referenced.

            But then if having potential control of Ripple, the company, it still gives the US government very little valuable added insight. And with this the whole basis for the article completely disintegrates.

  6. Flagged as bias

    This almost reads as a conspiracy theory.

    Ripple represents a distributed ledger technology, and even if Ripple itself is a US based company does not need implying that they have control over that ledger.

    Let’s not confuse the technology with the company. It’s a bit like saying the US controls the internet because TCP/IP was created in the US.

    1. Rewrite

      Yes, it’s correct that Ripple does not need implying control over the ledger. As in Distributed Ledger Technology (DLT) there is no central administrator or centralized data storage & it’s not about region or where is the company originated from.
      It’s stated with SWIFT must cease financial transactions with Iran or face frozen assets and other punishments, it’s like they are punishing SWIFT behalf of Iran. It might be their strategy to counter the country by making some company boycott.

    2. Rewrite

      Agree that it is inaccurate to instinctively conflate the interests of U.S. federal or state governments with those of private enterprise. The two are often at odds, as any review of pending cases in federal and state courts confirm.

  7. I would suggest either a Headline change, or to focus more on the trump remarks themselves. The opening remarks are strong, but it quickly becomes more about crypto, swift, and the future of payments than Trump specific attacks on Iran.

    1. Rewrite

      Thanks for this note about the hed. I changed the hed, slightly. I did remove the reference to Trump as you suggested, though I’ve also retained the writer’s original idea of setting up the story as a question of the motive behind the US government’s position on financial transactions involving SWIFT and Iran. How do you feel about this change?

      1. Thanks for the improvement with the Heading & it’s totally correct not to question US government’s position on financial transactions involving SWIFT and Iran. Thanks for the edit. It will keep me to improve my articles.
        I’ll try to upgrade the quality of my articles with few more stories.
        Thanks!

    2. Thanks for your suggestion & we have update the story with updated content & remove the Trump remark from story & try to get to the root cause of the issue as natural.
      Thanks for the suggestion, It will really help me to publish new stories & highlight the issues briefly.

  8. What this article has ignored is the fact that both Russia and China now have their own payment systems. The reasons for this is that continuing sanctions from the US and the imminent collapse of the dollar as the reserve currency has necessitated the need for options other than relying on the US financial stability and growth. Many non-Western countries are now looking to the East for their future in trade and finance. The US is rapidly loosing credibility on the world stage with its insatiable war-mongering ways and thoroughly corrupt financial markets and institutions.

    1. Rewrite

      It’s definitely worth pointing out alternatives to established currencies. Regarding this particular story, I’d just mention that SWIFT “transfers” (SWIFT doesn’t actually transfer money, it merely sends messages about money transfers) are not tied to U.S. dollars or directly dependent on U.S. financial institutions. With SWIFT, for example, it’s possible to transfer money from a German bank account based in euros to a bank account based on, say, Mexican pesos.

      1. Thanks Chuck Thompson, for giving you views on my story & briefing the content, it will really help to make it through with this story.

    2. Yes, Terry your point is perfectly says about the US position to regain their position, but it’s true that many non-Western countries are now looking to the East for their future in trade and finance, India might be the one, whats your views on this.

      1. Rewrite

        Yes , Ranjit. India is becoming a big player in the new emerging world economy – BRICS- Brazil , Russia, India, China, South Africa. Also the AIIB – Asia Infrustructure Investment Bank, are two big new economic cooperation groups forming. There is also the Eurasian project that is well underway. America has been invited to join these new economic groups but has so far declined as they do not accept dollars as currency.

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