Ripple: Cryptocurrency for Transfers
When it comes to cryptocurrency, everyone already knows about Bitcoin and some are familiar with Ethereum, but what about Ripple? As the 3rd largest crypto by market cap, Ripple has risen to fame with its promise of real-time, low cost global transfers - - but, how close is the company and its currency (XRP) to realizing this potential?
Ripple’s vision is to increase liquidity by freeing up capital in holding with speedier, cost-efficient processing of transfer requests. When it comes to present-day requests, transactions take days to complete, go through an intermediary network, subject to an unknown exchange rates, and charged high fees to the sender and receiver. With their software, cryptocurrency, and platform, Ripple will be able to perform this transfer in minutes at a nominal cost.
The debate with the true value of XRP and its ability to fulfill this model of efficiency is ongoing, despite current projects with big names (such as American Express), and VC investment from Santander and Accenture. Ripple decided to organize and run a pilot program recently, using XRP and one of its software applications to transfer money from one party to another, both in different countries. The test focused on exchange rates and transaction times, which were dramatically faster than SWIFT, the current network used by more than 10,000 institutions globally. Results showed reduced costs of 40% - 70% and transaction completion times of 2 minutes (instead of SWIFT’s 2-3 days). The actual transaction time within Ripple was 2-3 seconds, and its estimated that the platform can handle up to 1,500 transactions per second. However, this pales in comparison to Visa, which starts at 24,000 transactions / second.
Overall, Ripple celebrates its promising findings of efficiency with actual transactions, but knows it still has much work to do with increasing speed and adoption. The biggest victory is being able to acknowledge that the cryptocurrency does have utility beyond its status as currency.