Is Ripple The Answer For Bitcoin’s Doubters?

While Bitcoin may seem like a fairly new and radical concept in the payments space, innovative playmakers are already looking to take the concept of virtual currency further.

Enter OpenCoin, a complex company with a simple mission: it wants to let you can send money to anyone at no cost. But, how it plans to go about helping consumers through this transition is far more complex.

Chris Larsen, CEO and co-founder of OpenCoin, spoke with PYMNTS.com about Ripple, an open-source protocol that he calls the “second generation of the Bitcoin concept.” Like Bitcoin, Larsen explains, Ripple is a math-based currency – he prefers the term “math-based” to “virtual” – that represents something more: a new global payments system.

Even the relationship between OpenCoin and Ripple shows how the company is thinking differently, and some would say, disruptively. Larsen says that OpenCoin is a for-profit company that is building the code for the Ripple protocol so that the initiative can gain the support of the best and brightest full-time workers. They can in turn build the best distributed network to fuel the next generation of payments.

Unlike Bitcoin, Larsen says that Ripple is a multi-currency, meaning it’s an open network that can support everything from math-based currencies – like its 100 billion native ripples, or “XRP,” – to regular currencies and local currencies.

“Why that is important is that it enables a distributed currency exchange,” Larsen says. “Merchants can accept dollars, euro, yen whatever their preferred currencies are through the network.”

While this sounds complex, Larsen says other currencies have to come in through some form of a gateway, and he compares Ripple to the PayPal network. He also compared Ripple to the traditional credit card payment process, where users trigger a whole host of complex actions with a single click or swipe, except with some key advantages for consumers and merchants.

Merchants who equip themselves to set up the network, he says, won’t have to worry about interchange fees or chargebacks, while making their goods available to a global audience. Consumers, on the other hand, he says will be able to enjoy more efficient and affordable eCommerce transactions.

Larsen says the Ripple protocol could have a huge impact in parts of the world where people have access to smartphones, but not necessarily to bank accounts, by giving them access to tools that will allow them to contribute to the global economy.

However, his company’s goal of a payment system that supports merchants and the underbanked is still reliant on its ability to catch hold with today’s consumers.

So, how does Larsen see Ripple gaining traction in the current marketplace? For his thoughts on how his company can achieve on its aspirations, listen to the full PYMNTS.com podcast here.

   

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Chris Larsen
Co-Founder and CEO of OpenCoin

Chris Larsen is CEO and co-founder of OpenCoin, the organization that crafted the Ripple protocol, an open source payments system and a math-based virtual currency that together power the world’s first distributed currency exchange. Mr. Larsen is also a cofounder and former eight-year CEO of Prosper, a peer-to-peer lending marketplace, and a cofounder and former eight-year CEO of E-Loan, a publicly traded online lender. During his tenure at E-Loan, he pioneered the open access to credit scores movement by making E-Loan the first company to show consumers their FICO scores. Mr. Larsen also played a pivotal role in the passage of the strongest consumer financial privacy law in the nation and was hailed by Congresswoman Jackie Speier as being “critical to the success of the bill.”

Mr. Larsen serves at the Board and Advisory levels at numerous companies and organizations including: Progreso Financiero, Betable, CreditKarma, and Electronic Privacy Information Center (EPIC). He holds an M.B.A. degree from Stanford University and a B.S. degree from San Francisco State University, where he was named the 2004 Alumnus of the Year.