A terrible chill in the sector, Ripple which is also known as the XPR is the electronic currency that had seen the biggest growth in the previous year. Its growth is amounting to + 36.018%. It owes its success mainly to its low value (previously between two and three dollars) but also to its project.
The Ripple company has the ambition to replace the good old SWIFT system, a heavy, expensive and slow protocol that banks have been using to exchange currencies with each other. If you have already experienced transfers abroad, you will understand this phenomena immediately.
The funds take three to six days to transit from one bank to another, and this movement generates significant costs, mainly due to the delay caused. Ripple promises to make such transactions almost instantaneous and less expensive.
XRP (XRP) Price Today – XRP / USD
Price 24H (%) -2.8%
Slow and steady could win the race
The idea is to use its XPR cryptocurrency as the pivot of the system: when a French bank wants to send funds to an American institution, it converts its euros into XPR and transfers them to the latter which then converts them into dollars. All via a secure blockchain network.
In the end, only virtual money crosses borders. A bright future would await Ripple on paper, hence the craze for cryptocurrency XRP that neo-investors are eager to buy. Except that they omit basic information: banks do not necessarily need to use XPR to transfer their currency on the Ripple network.
There is, therefore, a significant risk that the XRP will break the figure even if the company manages to impose its protocol. For the moment, only MoneyGram International Money Transfer Service has announced a test of this cryptocurrency. Ripple claims, however, to have signed partnerships with a hundred renowned institutions by now, including American Express and Banco Santander.
Banks are encouraged to use cryptocurrency
Several managers of cryptocurrency hedge funds have endorsed the project, but none has been in favor of the XRP. Ari Paul (BlockTower Capital) regularly underlines on Twitter the risk of confusion among some unsophisticated investors about Ripple. According to him, the company has a lot of potentials, but the XRP is disconnected.
The other singularity of the Ripple is that unlike other cryptocurrencies it is totally centralized. The company owns more than 50% of the XRP, and its system is designed as such so that new units are regularly dumped by a wave in the circuit to contain price inflation. Indeed, if the company wants to encourage banks to use its cryptocurrency house, it is in the interest of maintaining a stable course.
A respected blogger in the crypto environment highlighted, “XRP is more like a Paypal account than a transaction system without trusted third parties like Bitcoin. It is not easy to find a rational reason for the existence of the XRP within the Ripple protocol if it is not a way for Ripple to make money. A lot of money.”