With the harsh competition that banks are facing from Bitcoin and the other cryptocurrencies, a financial innovation seems logical and most importantl
With the harsh competition that banks are facing from Bitcoin and the other cryptocurrencies, a financial innovation seems logical and most importantly, appears to be on the rise. The banking system is already making its first steps towards adopting the blockchain technology as a base for international transactions and Ripple is an absolute proof of that trend. Both customers and banks can take advantage of this new settlement system which makes international payments faster, cheaper and easier.
The company Ripple which was firstly named Opencoin was founded in 2012 by Chris Larsen and Jed McCaleb and is based in San Francisco, California. The firm developed the Ripple payment protocol that is an open-source distributed payment network which facilitates cross-border transactions. Payments via this technology are not controlled by any intermediary which eliminates a lot of the cumbersome processes involved in regular bank transactions. Furthermore, direct payments are real-time, fully traceable and less risky. Banks also have the benefit of diminishing their operational costs and consequently improving their profit margin. With the many advantages that Ripple offers, it is no wonder why it now has offices not only in San Francisco but also in New York, London, Luxembourg and Sydney.
But what does actually Ripple do? It simply connects banks or other financial networks that have agreed to work with the company. Currently, 15 of the top 50 banks use Ripple in 9 different countries. Some of the financial institutions that have implemented this payment network are as UniCredit, Standard Chartered, ATB Financial, SBI Bank and many more. Any transaction between them reduces delivery time to around 5 to 10 seconds and is also substantially more secure. Customers’ information is completely encrypted and any possible risk of transaction failure is eliminated by the neutral Interledger Protocol. Moreover, Ripple supports both fiat currency and cryptocurrency, and automatically makes the conversion between them. In fact, Ripple is the third-largest cryptocurrency in terms of market capitalization, after bitcoin and ethereum.
Today’s market demand for frequent, inexpensive, low-value transactions happening in real time needs to be fulfilled and even maybe saturated. That is why Ripple helps banks to differentiate their services by modernising their settlement network and improving their efficiency. Thus, new individual and corporate customers are attracted and the usage of Ripple increases. If the popularity of Ripple continues to grow and its acceptance becomes worldwide, that might drastically change the outlook of the global financial payments.