ZoneBitcoin EditorialI don't know if you know this but Ripple (XRP) is a cryptocurrency that is very attractive to banks and financial institutions. Of all the cryptocurrencies on the market, only Ripple has had as much effect with banks.
We must then ask ourselves the question, what makes Ripple special and why such enthusiasm for institutions which have been skeptical and reluctant with bitcoin?
It is time to gently address this crucial question and to better understand the major role that Ripple will play in the adoption of cryptocurrencies by banks.
1/ The challenge posed by international bank transfers.
Even today, making bank-to-bank transfers takes between 3 and 5 working days. To someone who uses cryptocurrencies, that seems like an eternity.
Yes, I remind you that with cryptocurrencies, we send and receive money instantly or almost.
Thus, bank-to-bank monetary transfershave the means to modernize the global financial infrastructure with the possibility of almost instant international transfers.
However, it seems that to achieve this, only blockchain can achieve it.
Ripple as the “first commercially available payment service” is powered by its own blockchain, the Ripple Consensus Ledger (RCL). It is a centralized network managed by a group of banks, the Global Payments Steering Group (GPSG).
What is interesting about Ripple is that many international groups and banks have accepted it.
This is not a coincidence and it is already more explicit if you go to the official Ripple website. You will find the outlets, the "case studies" as they say for different financial sectors and notably banks.
Here is a screenshot on the site which explains the advantage of using Ripple for banks: reducing transfer costs!
Bingo! You understand better why Ripple is so popular with banks.
There, in the screenshot, you see a calculator of how much a bank will save if it chooses Ripple.
Even more, we see here how – from its presentation – Ripple addresses banks.
Likewise, it immediately appears that Ripple appears to be an ideal substitute. An ideal technology for a financial system that is still very failing and expensive.
Because in the end, it is always the individual who wants to transfer money who suffers the most.
Banks can then offer bank transfers at lower costs thanks to Ripple. This represents enough savings for Ripple to be a very interesting cryptocurrency.
Among the world's largest banking groups, we find:
Bank of America Merrill Lynch, Santander, UniCredit, Standard Chartered, Westpac Banking Corporation and even the Royal Bank of Canada. This is by no means an exhaustive list.
And as time goes by, more and more banks are part of the network.
Will Ripple revolutionize banking?
Ripple is responsible for creating and managing blockchain rules, such as payment transaction rules, formalized standards for activity using Ripple, and other actions promoting the implementation of payment functionality.
As you see, it is especially in the payment of a party to a party that Ripple takes on its full meaning.
Backed by strict rules, standards and process support, it offers banks a less risky way to start using cryptocurrencies, as bitcoin could have been for example.
While this may seem to go against everything blockchain was designed to do (quite clearly to no longer be tied to state or central institutions of any kind) Ripple excels where bitcoin couldn't even. make a place.
Indeed, I am making a short digression here to remind you that bitcoin, although it is revolutionary in itself, being the first cryptocurrency, does not have as much comfort and ease as the other cryptos that preceded it.
Ripple defines standards and protocols that are important for maintaining the integrity and security of the network across borders, even more than bitcoin. Let's not forget that it is aimed at customers all over the world.
The GPSG is working to define the standards and processes that can bring the industry to a common nominator and scale in the face of growing demand.
It's not easy work, but for the world's leading interbank payments group based on distributed financial technology, the process is already underway.
With Ripple, banks will be able to enable new types of high-volume, low-value global transactions, while reducing settlement times and costs.
But...but, is it only in theory or is Ripple already used by banks...?
Are banks using Ripple right now?
It started with a few tries, of course. The first test was carried out with a bank transfer between Spain and Mexico. It didn't work very well the first time. In these tests, there are several transactions to be generated at the same time, which makes the pkus operation difficult.
The second attempt was to make between Canada and Germany. It took 20 seconds per transfer. It was good, but not enough. In any case, it's always faster than 3 working days in traditional finance.
Over time, Ripple has improved its system, reaching a duration of a few seconds per transfer. That’s when Thailand, Siam Commercial Bank, and Japan’s SBI Remit decided to adopt a new payments service based on Ripple’s blockchain.
These banks currently use a trading chain between the two banks, transferring Japanese yen to Thai baht, reducing the standard 2 business day time required for a transfer to just 2 seconds.
These real-time payments are world-changing for customers who depend on the availability of these funds for their essential needs. Currently, around $250 million has been transferred each year.
Siam Commercial Bank plans to expand blockchain, powered by Ripple, to transfers between North America, Europe and Asia Pacific. That is currently being developed.
Is Ripple on its way to China?
Alibaba along with Jack Ma has been rumored to have shown interest in Ripple. This will perhaps be the gateway to the Chinese market.
And, judging by its size and connectivity power, it can immediately shatter the established competition. Global trade between China and the rest of the world is growing exponentially, making faster and cheaper cross-border payments a critical necessity.
Ripple already has support from sellers, but its service does not concern payments, but transfers between banks. So, Ripple doesn't need to convince the market, it needs to convince the Chinese banks. It's more difficult because "conservative" behavior and politics come into play when it comes to a relationship with an American company.
Chinese e-commerce companies, like Alibaba, have global ambition and this is where blockchain technology becomes interesting. The question we can therefore ask ourselves is this: will Chinese online companies which will have a definite interest in using Ripple be able to convince banks to adopt Ripple, which remains a startup based in San Francisco.
Conclusion on Ripple and its breakthrough into the traditional financial world
We hope to see more favorable exchange opportunities as Ripple's network expands. Once we gain momentum, we may see real momentum in cross-border transactions.
Also, we see that the question of the expansion of Ripple touches on more political questions. It is the Chinese who remind us of this. After all, the purpose and great advantage of cryptocurrencies is that they operate without borders, right?
However, Ripple wants to be more of a banking and especially American cryptocurrency.
Will Ripple expand outside of finance as well? Will crypto users use it regularly? I don't know yet, but we're monitoring it closely.
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Please note: : Please note that I am not advocating for Ripple. I simply wanted to show with this article that Ripple is one of the first cryptocurrencies that has been "accepted" by the traditional world.
We can hope that this opens the way to other cryptocurrencies and ultimately to the massive adoption of cryptocurrencies.
Then, this also shows that it is a high-value cryptocurrency. It is certainly a cryptocurrency that interests investors, as evidenced by the people richest in crypto, many of whom own a significant amount of Ripple.
There is a project linked to Ripple which may also interest investors, namely the Songbird project (SGB token).
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To invest in XRP, Coinbase ou Binance are great platforms. (I had already written a short article to show you how to earn Ripple (XRP).
Note: There is no financial advice in this or any other article on this site. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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Honestly great article, I vaguely knew about ripple… It’s crazy
Hi! very interested in the article