Ripple's Partnership with Major Financial Institutions
Ripple (Ripple) officially announced on Twitter this past Thursday (January 4) that five of the world's top remittance companies plan to adopt Ripple Coin (XRP) as a payment method in 2018.
However, when asked which companies are currently using XRP, Ripple's spokesperson only mentioned Cuallix, a bank that began utilizing XRP in October 2017 for cross-border transactions between the U.S. and Mexico. No other institutions were named.
Ripple’s collaborations with large financial entities lend it legitimacy and practicality, setting it apart from many other cryptocurrencies.
Skepticism from Crypto Enthusiasts
Cryptocurrency advocates criticize Ripple’s centralized approach, arguing that it contradicts the decentralized ethos of blockchain technology.
Erik Voorhees, CEO of ShapeShift, remarked:
"The surge in XRP’s price is a bubble. Testing cryptocurrencies through banks is meaningless—their purpose is to eliminate the need for banks altogether."
He further dismissed Ripple’s bank partnerships as "neither innovative nor interesting" from a financial technology perspective.
Ripple vs. Ripple Coin
Ripple is a San Francisco-based startup focused on developing payment networks for financial institutions.
Ripple Coin (XRP) is its native cryptocurrency, designed to facilitate transactions within the Ripple network.
Adoption Progress
- Over 100 financial institutions, including Bank of Tokyo Mitsubishi UFJ and Credit Agricole, use Ripple’s system.
- American Express FX International Payments and Santander employ Ripple for U.S.-U.K. cross-border transactions.
- Japanese and South Korean banks are piloting Ripple for international payments, with potential full-scale XRP adoption.
(Key distinction: Ripple’s system is the infrastructure; XRP is its transactional currency.)
Market Performance
- 2017 Surge: XRP’s market cap soared by $35,000, peaking at $3.84 per coin on January 4.
- Current Status: It remains the second-largest cryptocurrency by market cap, though prices dipped to $3 after Coinbase denied rumors of listing XRP.
Advantages of Ripple Coin
- Speed: Processes transactions in 4 seconds (vs. Bitcoin’s 1 hour).
- Cost-Efficiency: Lower fees and liquidity-on-demand for institutional clients.
Despite skepticism, XRP’s technical edge over traditional banking (days-long settlements) keeps it relevant.
FAQ
Q: Will banks fully adopt XRP?
A: Unlikely in the near term, but its speed and cost benefits make it attractive for specific use cases.
Q: Is XRP decentralized?
A: No—its ties to Ripple Labs make it more centralized than cryptocurrencies like Bitcoin.
Q: Why did XRP’s price drop in January?
A: Speculation-driven peaks corrected after Coinbase clarified non-support.