If you’re new to crypto and understand how big Bitcoin (BTC) now is, and more importantly how expensive it is to buy just 1 Bitcoin (of course we’re all in it for the technology, hmm), then you are sure to of heard of XRP and Ripple.
I’m just going to pause here really quickly to explain why I keep using 2 different names for the same coin.
XRP = The coin/token name.
Ripple = The company who created the coin.
The marketing from Ripple to promote XRP is massive and it’s no lie that there is actually an army of followers/traders/HODL’rs who are very vocal in their belief of XRP.
XRP was developed on the blockchain to solve a problem.
I guess the problem is a very real one, but the big questions are; is it totally necessary and more importantly is blockchain respected, or trusted enough, to solve the problem?
The overall idea behind XRP is that it is to be used by the biggest banks of the world.
XRP would be bought and used around the world to speed up, and make cheaper, the transfer of money internationally.
A quick, and very basic, example of this would be:
A bank needs to send £1,000 from the UK to another in Australia.
The bank in the UK would buy XRP to the value of £1,000 off the blockchain.
The bank in Australia would then be able to convert the XRP into Australian dollars immediately with very little charges.
A transfer of money using XRP can take as little as 7 seconds and millions of fiat (cash) can be sent for only a few cents in charges.
This would be the primary use for XRP hence the term ‘Bankers Coin’.
Ripple has 2 different products that they promote to the banks.
The first one is XCURRENT, now this is technically nothing to do with XRP token/coin.
XCURRENT is the “system” that runs the whole Ripple network.
It is this, and not XRP, that Ripple are currently partnering with when a new bank signs up to work with Ripple.
XCURRENT does help to implement blockchain technology for the banks, and is the first step in getting banks ready to use XRAPID.
The problem that XCURRENT solves is by removing the delay in bank transfers.
Using the traditional method provided, which at the moment is provided by SWIFT, takes days and can work out expensive for the banks.
Using XCURRENT messaging systems enables instant communication between banks, in real time, therefore saving them money.
XCURRENT = The instant messaging system.
XRAPID = The instant blockchain solution using XRP coin for money transfers.
The real challenge is getting banks to start using XRAPID and the XRP token, which require blockchain to run.
As of yet, I believe there have only been a few trials using this technology by Western Union.
These trials have had mixed reviews to the benefits of using blockchain, although the technology worked flawlessly.
So, what is SWIFT?
This is a very old ‘messaging system’ used by banks to transfer money between banks.
This is what the banks of the world use today, but however is slow and expensive.
SWIFT is the reason why money transfers take between 1-3 days to show in your account.
Plus, if you transfer money from one country to another the charges can also be so expensive.
SWIFT normally requires human interaction in all transfers and isn’t instant, or exempt, from human error.
XCURRENT is automated and deals with these issues instantly.
XRAPID settles instantly and the whole process is stored/processed on the blockchain.
Another plus is that it is cheap, very cheap, to send millions of £$’s, or other currencies, around the world.
There is consumer pressure for banks to reduce customer charges, is this it? Who knows? But it certainly does sound like a way forward…
Everything at the moment with blockchain is speculative and extemely high risk to invest in.
XCURRENT, XRAPID and XRP also removes the need for banks to hold large amounts of other currencies in Nostro / Vostro accounts.
This simply means, at present each bank holds a lot of foreign currencies that are used to convert money into local currency every time money is sent around the world, which is expensive for them to store.
XRP coin would replace all of these currencies and can be bought and sold back to the blockchain instantly removing the need to store any other physical currency.
So, lets wrap this up… Still with me?
Why did I buy lots of XRP back in January 2018 because I want to be millionaire of course.
What was my biggest mistake?
Well, 2 actually, number 1 buying at $1.52 – XRP is today trading at $0.27 – OUCH!
Number 2 was not looking at the main reason why Bitcoin (BTC) has gone up in value, limited supply.
Bitcoin will only ever have 21 million coins with the last ever coin estimated to be mined in 2140.
XRP has right now a 41 billion supply with an estimated maximum of 100 billion.
Getting rich from holding XRP might take a VERY long time.
In the words of a very British saying “One day, Rodders we’ll be millionaires!