Ripple Labs is a company which develops several blockchain-based technologies aimed at eliminating the friction in international payments among banks, remittances, and other financial institutions. There is a cryptocurrency involved in the project, called XRP, which is already the world’s second largest by market capitalization.
This company and its coin have not always been exceedingly popular among crypto aficionados. The reason is that, when the mysterious, legendary, and still unknown Satoshi Nakamoto, brought online the Bitcoin network (thus starting the whole cryptocurrency movement), he declared in no uncertain terms that the whole point in Bitcoin is to emancipate the world from fiat currencies, banks, and the world’s traditional financial system. Ripple, on the other hand, is using Satoshi’s very technology to help the traditional financial system work better. That didn’t sit well with many crypto purists. It still doesn’t.
But the company has kept going and securing lots of very relevant strategic partnerships (more than 200 hundred so far) with banks and remittance services that are adopting Ripple’s technology so that international transfers can be settled quickly (almost in real-time), safely, and very cheaply.
But there’s a catch. All those partners are actually testing Ripple’s software so they can figure out if it suits them to use it for real. So far, only Banco Santander has chosen to deploy a real-world application that its customers can use directly, and that runs over Ripple’s network and technology. Well, that changed four days ago.
Last Monday, Ripple announced that three out of those 200 partners are going to move Ripple’s tech to the forefront: they will start using xRapid at the production stage in their daily business. xRipple has the added advantage (for Ripple) that it uses XRP as the liquidity bridge to settle payments across borders.
So who are the companies in question? Mexico’s Cuallix, London-based MercuryFX (both are remittance services) and Catalyst Corporate Federal Credit Union, which services 1400 credit unions. They are all deploying xRapid as a real-life commercial application.
The blockchain company issued a press release in which it praises this as the first time in human history in which a cryptocurrency is being used commercially as means of payment by traditional financial institutions.
Ripple’s software catalog is comprised, mainly, by two products called xRapid and xCurrent.
xCurrent provides real-time secure messaging between two parties so that they can settle a financial scenario. It competes directly with the traditional system, which is called SWIFT and dates from 1975 so is very outdated but still remains the international standard for most of the world’s banks. SWIFT needs days (from three to seven) to settle a transfer because of the time it takes for messages to bounce back between banks.
Then, there’s xRapid. It can also provide quick and safe messaging for clients but it goes a step further — a very important step further. xRapid obviates the need to keep a lot of cash sleeping uselessly in banks all over the world waiting to become useful when it’s needed to settle an international operation. Let’s illustrate: if a bank from Boston needs to transfer money to a bank in Mexico, then dollars must be exchanged into pesos, and that takes time (days, usually).
But if the Boston bank uses xRapid, the platform sells the dollars for XRP, sends the XRP currency over Ripple’s network, and then, on the other end, the Mexican bank sells XRP for pesos. And that takes seconds instead of days. If you’re interested to understand both pieces of software in more detail, we have published several articles in this site addressing the subject.
xCurrent is proving more popular among Ripple’s partners. More than a hundred of them have adopted it already, at least for testing. xCurrent doesn’t use cryptocurrency at all, just messaging, for the most part. xRapid has been adopted by eight customers so far (one of them is Western Union). And now Catalyst, MercuryFX, and Cuallix are moving on from the testing stage and launching it commercially in full.
“This is a big step for Ripple,” declared Brad Garlinghouse, Ripple’s CEO, to Yahoo Finance,
“A year ago we were talking about this product as an idea, and now it’s in production and we can talk about real customers. This is also big for the XRP ecosystem because it helps drive liquidity. But I also think it’s a big deal for the entire crypto industry.”
“The vast majority of crypto trading is just speculative. And for crypto to reach its potential it needs to ensure that digital assets are solving real problems for real customers. Right now, we are unique in that we can point to real production, and I think XRP is uniquely positioned to solve this payment problem.”
xCurrent may have more users at the moment, but it seems that Ripple will make xRapid its flag or killer app if we go by Asheesh Birla’s, Ripple’s SVP of product, words “Both products are growth engines, but in terms of the transformative effects of reducing friction, xRapid has the opportunity for a bigger impact.”
xRapid is way faster and cheaper, but it runs on the XRP cryptocurrency and cryptocurrencies are still not seen with very friendly eyes in the traditional financial system, so it’s a bit of a harder sell than xCurrent which is very much like the traditional SWIFT system, only better (much better).
XRP was the most profitable coin in 2017 –the year of the profitable coins. It went up by 32,000%. No other digital asset did better during that year. Of course, in 2018 it dropped down dramatically (by 75% more or less) as did the whole market. but it still managed to grow a bit and to displace Ethereum as the second largest digital asset by market capitalization.
Most of the coins (60%) are still owned by Ripple Labs. That’s been controversial as well. So lately, the company has been trying to differentiate clearly between the company and the cryptocurrency even if the only obvious use case for the token is Ripple’s software, and even if the company itself used to call its tokens “ripples” in the past.
XRP has developed a fan-base, nevertheless, which is not only royal but nearly religious according to Ripple’s chief strategist, Cory Johnson.
MercuryFX’s CEO, Alastair Constance, explained that his company is riding the Ripple train because it’s made a lot of progress in two crucial ways: “There’s never been a dispute about speed or trust in an economic case,” he says. “But it’s become a lot more user-friendly, and also its geography has expanded. I’m getting the feeling that many others are primed to jump on the XRP ledger now. The bottom line is I can make a payment that takes me two days and costs me $50, or make it in a few seconds for 5 cents. It’s no-brainer. I think this will quietly replace the SWIFT network.”
[Image courtesy of Pixabay.com]
Disclaimer: All information provided through this article should not be regarded as investment advice, nor should be taken for granted for crypto trading purposes. Before making any investment or trading plans, make sure to inquire about the information diligently by carrying out your very own research. Thank you.