Morgan Stanley veteran Zoe Cruz says XRP is a clear leader in the cross-border payments space.
Cruz, a strategic advisor to Ripple, tells the UNC Kenan Institute that XRP as a digital asset comes with pluses and minuses.
“XRP, the alley it has chosen – and it is the leader in that class – is basically the cross-border payments system. The reason this is an important distinction is the cross-border payment system currently practiced in correspondent banks works fine through the SWIFT system. It’s a messaging system. It works fine if you’re Morgan Stanley sending $1 billion to Goldman Sachs or to Citigroup.
If you’re a small basket weaver in Nigeria, not so good. So the cross-border payments system where XRP was designed for, literally instantaneous, nanosecond transaction time, for very high-volume, low-value business, where you can send $200 to the woman in Nigeria – that’s an idiosyncratic plus. Its minus is it has a lot of concentrated holdings in Ripple, the place I advise, where 50% of all the coins minted are on the balance sheet.”
Ripple owns more than half of all XRP in existence and created an escrow program in late 2017 to manage its holdings. The company unlocks one billion XRP from escrow each month, sells a portion and returns the rest back into escrow.
Cruz says savvy investors should apportion 1% to 10% of their portfolios across the top five to ten cryptocurrencies. The former Morgan Stanley executive views crypto investments as “moonshot” opportunities – they could go to zero, or they could earn 100x, she explains.
She also decries Bitcoin maximalism, comparing that as an investment strategy to only investing in one internet stock in the early 2000s.
“I mean Netscape was the browser of choice with 75% market share. Google is the leader now, and Netscape doesn’t exist. To me, it’s the equivalent thing. There will be winners and losers, but I wouldn’t want to have Bitcoin end up being the Netscape of your investment opportunity.”
The former executive also views Ethereum as a venture capital investment.
“Ethereum is a very successful currency. Its alley is smart contracts. There are a lot of very smart people actually coding and building beautiful things on smart contracts on Ethereum. So I would look at these currencies as a surrogate for a venture capital investment, without the fees and without the intermediaries. And as you know with VC investments, you’re very, very good if you have two moonshots and eight of them go to nothing. So that’s how I view that world.”
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