XRP – Disruptor of Traditional Cross-Border Fund Transfer System
XRP is one of the leading cryptocurrencies in the world today. It is one of the three holy trinities of cryptocurrencies along with Bitcoin and Ethereum. XRP is a top-most contender in the race to be adopted by the traditional financial world, such as banks. XRP, also known as Ripple, is working with major financial institutions around the world.
The Ripple team is also engaging with the governments around the world to change their stance towards cryptocurrencies. In this article, we will talk about XRP and how it is positioned to succeed in the long run.
Why is XRP Different From its Peer Cryptocurrencies?
Many people think that Ripple is nothing but another Bitcoin-wanna-be cryptocurrency. That is far from the truth. Objectively speaking, XRP is different from other cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and other cryptocurrencies.
Let’s make something clear – Ripple is not a coin. Yes, we mean it! The native token of Ripple is known as XRP, and it is a part of the XRP ledger. Ripple is the payment network. It was published by Ryan Fugger, Jeb McCaleb, and Chris Larsen in 2012.
The initial purpose of the founders of RippleNet was never about launching their cryptocurrency. Instead, their focus was on creating a payment mechanism for financial institutions like banks.
For a healthy global economy, the transfer of funds between banks is vital. Customers around the world transfer funds with each other across different banks from various countries. SWIFT is the most commonly used system among banks to process the funds between them. The full-term of SWIFT is Society for Worldwide Interbank Financial Telecommunication. It has been in operations since 1973. But this system isn’t perfect, far from it! It is riddled with grave inefficiencies.
Ripple Will Replace SWIFT
When it comes to the speed of cross-border transfer of funds, Ripple is miles ahead of SWIFT. The reason behind this is that there are quite a few intermediaries involved in SWIFT.
A transaction takes between one to a couple of days to complete in SWIFT. The cost that a user will have to incur depends on the banks involved and their locations. But both the sender and the receiver incur fees in SWIFT. With Ripple Network, the fund transfer will happen in real-time within a universally compatible system.
The reason, third-party intermediaries, are involved in the cross-border transaction is that there is a lack of trust or less trust between the parties involved. There are significant drawbacks of this system are higher fees, manual process, and it also doesn’t happen in real-time.
What is Ripple Trying to do?
Ripple is aiming to make traditional financial institutions such as banks more transparent and efficient. They want to improve the inter-currency and cross-border payments between the banks. The banks and their customers will see many benefits of this system.
There are intermediaries on Ripple Ledger, but they are only involved electronically. It means that they don’t actually input any work. That’s why there are no middleman fees as banks don’t deduct any fees from the funds that they are processing. The end customers will benefit directly from this system as payments are cheaper with Ripple Network.
Automation also plays a crucial role in reducing the payment fees as it reduces the administrative overhead. It also improves transparency. A customer won’t have to search for correspondent banks for processing the funds correctly. Neither will they have to call the opposite party to check if they received the funds.
Major Ripple Partnerships
The Ripple team is one of the most active teams in the crypto space. They are actively looking out for partnerships with major financial institutions around the world. Many leading banks and other financial institutions have signed partnership agreements with Ripple.
One of the big breakthroughs of Ripple was the partnership between Ripple and Japan-based SBI Holding. It was a huge deal, and this partnership led to an increase in the daily trading volume of XRP.
The partnership with SBI Holdings was a big deal as it helped Ripple enter the Japanese market. Bitcoin is still the top-most cryptocurrency in Japan, but with its partnership with SBI Holdings, Ripple became a leading competitor in the Japanese market. The local population was also able to exchange XRP for the Japanese Yen with the partnership of SBI Holdings and Ripple.
Western Union tried out XRapid in 2018. At that time, the crypto market was still gaining traction. It wasn’t as big as it is today. A partnership between Western Union and Ripple is a match made in heaven. Western Union processes transactions worth $300 million every year. Their partnership wasn’t as smooth as expected, and there were only ten payments processed through XRapid in the initial test. But this may soon change in the future.
Other important partnerships that Ripple has inked are with American Express, Santander, Bank of America, MoneyGram, National Bank of Fujairah PJSC, Standard Chartered Bank, Royal Bank of Canada, and many more.
It is important to gauge the mood of the people holding on to XRP tokens to correctly predict the future of Ripple. Recently, a survey was conducted on Twitter by XRP_Cro. A total of 1000 members of the XRP community took part in the survey.
The survey found that a majority of XRP community members have a strong belief that XRP will touch a figure of $100. It was despite the overall average performance shown was XRP during the past two years. 72.4% of all survey respondents believed so. The interesting part here is that even if XRP touches $100, 43.2% of respondents will still hold on to their tokens. They won’t exit the market between 2021 to 2025.
The survey confirms that Ripple has a strong community that believes in XRP and the purpose of RippleNet. In November 2020, XRP has risen by 50%. The last two years were lackluster when it comes to the performance of XRP tokens. But it doesn’t mean much as two years is not much in the financial world. Since 2014, the price of XRP tokens has grown by 10,000%. On top of that, XRP has been in the top five for many years now.
With the increasing number of valuable partnerships between global financial institutions and Ripple, XRP tokens will appreciate further at prices. The time now is perfect for buying and holding on to XRP tokens if you haven’t got some already. The next few years are going to be very interesting for XRP token holders.