It would be highly unlikely for banks to deploy blockchain to process international payments due to low scalability and privacy issues. David Schwartz, Chief Cryptographer of Ripple
Banks have for long realized the potential of blockchain technology and have been working relentlessly to ensure that they reap the benefit of the technology. A recent report by Greenwich Associates, a Connecticut based management consulting firm, revealed that banks now spend an average $1.7 billion annually on blockchain development as they look to use the technology to solve other problems within the banking sector. The report stated;
Banks are spending an estimated $1.7 billion annually in blockchain as products continue to roll out.
These banks are looking to make use of the technology to bridge the gap between them and fintech companies with the latter slowly taking over the payment industry, especially the cross-border payment sector.
Ripple’s chief cryptographer has now claimed that it would be highly unlikely for banks to make use of blockchain technology for cross-border payments due to some issues it presents for them concerning scalability and privacy. He made this known during an interview with Reuters on June 13.
Schwartz claimed that even though banks are fully aware of the importance and potential of blockchain technology which could reduce transaction times and costs, the technology isn’t scalable yet and doesn’t have enough privacy to be implemented by banks and other financial institutions on a global scale.
This claim echoes some of the issues mentioned by De Nederlandsche Bank (DNB), Netherlands Central Bank, in its report a few days ago on its progress so far regarding the use of blockchain technology to support financial market structure. The DNB admitted that even though the technology has huge potentials, it isn’t ready to fully support financial market structure in its current state.
The bank realized that the technology is still lacking in terms of capacity, while it also has some negative sides like its high energy consumption and the insufficient certainty of transaction verification. However, DNB has concluded that it would continue its research as the technology continues to develop.
Ripple’s xCurrent is superior to existing payment networks
Having claimed that banks aren’t ready to make use of blockchain technology due to the above-mentioned issues, he stated that Ripple’s xCurrent, which has an immutable interledger protocol, doesn’t have such problems. It offers banks an instant settlement solution thus making it superior to the payment networks most of them are using at the moment.
Schwartz admitted that xCurrent is a distributed ledger, thus the network peers don’t have access to a shared ledger as in the case of blockchain. He added;
What we hear from many of our customers is that it’s imperative to keep their transactions private, process thousands every second, and accommodate every type of currency and asset imaginable.
Marcus Treacher, senior VP of Ripple’s customer success, recently confirmed that the company had just developed and launched a project that is designed to offer banks “classic” blockchain-powered payments. This initiative wasn’t welcomed by the banks, with some of them adding that the whole world cannot just rely on blockchain.
Several banks have already tested while other have Ripple’s xCurrent technology for cross-border payments which would ultimately lead to them being connected with distributed ledgers.
Last month, a number of financial institutions volunteered to be a part of Ripple’s xRapid pilot platform. The report from the pilot program showed that transaction savings were around 40-79% while a significant improvement was also noticed in transaction time, down to just two minutes from the previous 2-3 days recorded by other payment solutions.
Circle believes blockchain would revolutionize global finance
Even though Ripple doesn’t think blockchain would be used by banks for cross-border payments anytime soon, Goldman Sachs backed startup, Circle, doesn’t think that. The CEO of the payment solutions company, Jeremy Allaire, while talking at the ongoing crypto fintech conference MoneyConf, in Dublin, stated;
Once you have an open global immutable record-keeping system, [a] transaction-processing system and [a] secure computing environment, you can re-conceptualize on a global basis every aspect of finance… corporate and commercial law, the intermediation of contracts, [and] crucially all of the systems we use in [both corporate and civic] decision making.
According to Allaire, the blockchain technology and tokens have all it takes to change the way the global finance works. He added that the world is “at the beginning of a tokenization of everything,” calling this period an unprecedented crypto revolution.
Ripple leads interest of women in cryptos but price drops as market dips again
It was reported a few days back that the number of women interested in cryptocurrency investments has more than doubled, from 6% to 13% since the start of the year while women leading the interest in Ripple. Even though it has gained massive popularity, XRP price has been dropping with the market’s bear cycle. The price of Ripple has dropped by over 1% over the past 24 hours as the whole cryptocurrency market recorded losses during this timeframe. The market dipped after a research published by University of Texas professors claimed that Tether and Bitfinex were involved in market manipulation that saw the price of Bitcoin surge to the $20,000 zone late last year.
The market slipping has seen the price of Ripple’s XRP now drop to the $0.55.