Ripple has been at the forefront of the minds of most cryptocurrency enthusiasts for quite a while, especially given its meteoric rise last year. As a result, when it was finally time for Dilip Rao to join the podium of the conference, most of the attendees were excited to learn more about Ripple and its XRP cryptocurrency.
Ripples stands out in the cryptocurrency and blockchain space thanks to its unique capacity to remove friction for banks undertaking cross border transactions. The XRP ledger offers solutions to banks such that it enables interoperability through blockchain’s protocol. Rao mentioned that blockchain’s ledger technology is a perfect fit for solving the cumbersome nature of how banks conduct cross border payments. Basically the existing system is “fraught with errors, can take two to three day and still fail” with about “6 to 12 percent of failure probability”.
By eliminating the use of correspondent banks that currently act as middlemen between banks in different countries, Ripple is giving traditional financial institutions the advantages of interoperability, speed and scalability. According to Rao,
Ripple is offering a service that confirms receipt of money and not particularly sending of money.
Through the use of XRP instead of holding different fiat assets, banks are able to exchange and settle instantly without dealing with any form of volatility.
XRP and Ripple: The Distinction
Even though the market is currently in a dip, Ripple’s XRP cryptocurrency has been on the up-trend, with its price appreciating by over 30,000 percent over 2017.
One of the most interesting questions that Dilip Rao was able to answer was the distinction between Ripple (the company) and XRP (the cryptocurrency). He explained that there is a clear distinction between Ripple and XRP, in that XRP is positioned as a digital asset for “use by financial institutions on a wholesale basis”. At the moment, XRP is a ledger of liabilities that it can be issued out for items such as gold or fiat currencies. He further mentioned that XRP was initially designed for wholesale purposes by banks, as opposed to a peer-to-peer cryptocurrency among individual spenders.
Future of Ripple
Rao indicated that Ripple currently has over 100 banks signed up for its Ripple network. However, there is yet to be any practical utility. Nevertheless, the company has been trying to get banks to implement its technology. Even though the banks are hesitant at the moment, Rao stated that it would take time to realize any significant change, since Ripple is still in its infancy.
What do you think about Ripple? Do you think that it could be the future of cross border banking in the future? Share your thoughts in the comments section bellow.