Galactik Views, ‘Crypto Race – The Future Winners’, is a dedicated series where GV will cover the upcoming winners of the Private Digital Currencies. In the second edition of the series, we discuss, why Ripple will be one of the biggest winners of future wealth creation, as it is set to disrupt the Cross Border Payment Ecosystem, dominated by SWIFT.
Everyday millions of cross border financial transactions are executed and settled between millions of counterparties. These transactions are connected by thousands of banks, located in more than 200 countries, which are spread over various continents. Every transaction is different, counterparties are unique, branches of origination and settlements are broadly unique. The common element that links these transactions is the messaging network of SWIFT (Society for Worldwide Interbank Financial Telecommunication). Banks communicate with each other using the SWIFT network, which enables them to carry the payment instruction from the issuing bank of the payer to the remitting bank of the receiver. Every year SWIFT carries over five billion financial messages a year and is the backbone of Cross Border Financial Transaction. SWIFT is guided by the G-10 central banks. Financial sanctions on Nations are applied by restricting the Country from usage of SWIFT Network. Existing wire system is getting questioned for efficacy and is increasingly being labelled as antiquated, as it takes 3-5 days to process the transaction using the FTP servers and the bank is required to have money locked into the Nostro account, for processing the settlement.
Ripple is successfully rising as an innovative promise to the antiquated system, helping money to move at the pace of information. Ripple is building a high performing and inclusive global payment platform where customers and corporations can conduct cross border transaction in a faster, secure and reliable manner. Ripple solution addresses the issues of speed and transparency, which has plagued the process of cross border money flow. RippleNet is a decentralized network consisting of banks and payment providers, which are connected using Ripple’s technology, enabling real-time, low-cost and trackable payments cross border payment. It not only provides for high-speed atomic settlement but lowers the usage of maintain balances in Nostro Accounts, which enhances liquidity. XRP has emerges as the most scalable digital asset to serve the institutional cross-border payments.
Hundreds of financial institutions in more than 50 countries are part of ripple network. American Express, Santender, Bank of America, SBI Holdings (Japan) etc are major global institution partnering with Ripple. In India many large banks are using block chain enabled platform for remittance and invoice financing.
In the future, SWIFT will exist but its monopoly will be challenged. At least three to four bigger players will emerge in the space of Global Payment Infrastructure. Chinese are working on cross border transaction platform; Bank of International Settlement is also working on project Nexus. Ripple has the first mover advantage and has already arrived. Further, it is becoming clear, that in near future, Central Bank Digital Currency (CBDC) will be an important part of the monetary ecosystem. Cross Border transactions will require bridges and interoperability of the networks. Ripple’s XRP will be one of the key winner.
At the time of writing, XRP is trading at $1.27, with a market cap of approx.$59 Billion (Coin supply: Approx. 46.5 Billion coin). Market cap on fully diluted basis will be $127 Billion (Coin supply on fully diluted basis: 100 Billion coin)
(Source: Coinmarketcap.com)
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Author: Anunay Kumar
Anunay is a well-rounded digital professional with 17 years of experience. His most recent stint has been with Creative Galileo (A fun n learn Ed tech startup) as Co-Founder and Head of Products. Anunay is passionate about latest technology which can bring change and add value to human lives.
He is reachable at anunay.kumar@onmail.com
Disclaimer: Views, thoughts, and opinions expressed in the text are personal, and not necessarily to the author’s employer, organization, committee or other group or individual.