Ripple XRP

Euro Exim Bank will be the first bank to use Ripple’s cryptocurrency service xRapid. The London-based bank will actively use XRP to source liquidity and settle cross-border payments.

It’s a major development for Ripple. As reported by Block Explorer, a handful of Ripple’s partners in the finance world now use xRapid, but most are money-transfer services. None have a banking license. 

Euro Exim Bank is the first official bank to flip the switch to xRapid.

What is xRapid?

xRapid is Ripple’s flagship service that uses XRP as a bridge currency to speed up cross-border payments.

Tests have reported 70% savings and almost instantaneous settlements.

xRapid is a solution to the outdated foreign exchange system which takes days and incurs high fees.

Learn more: What is xRapid (Everything You Need To Know About Ripple’s Crypto Service)

While Ripple now has more than 200 banking partners, only a few are actively using xRapid. The companies include Mercury FX, Cuallix, Catalyst Corporate Credit Union, and Viamericas. 

“Dozens of banks” will be using xRapid by the end of 2019

Ripple CEO Brad Garlinghouse has previously boasted that “dozens of banks” will be using xRapid by the end of 2019. But XRP holders have been disappointed by the lack of fully-licensed banks switching over to the cryptocurrency service.

Alongside the Euro Exim announcement, Garlinghouse also revealed that four additional companies will tap into xRapid: JNFX, SendFriend, Transpaygo, and FTCS.

“We’re beginning to see more customers flip the switch and leverage XRP”

During the announcement Garlinghouse expanded on Ripple’s progress: 

“In 2018, nearly 100 financial institutions joined RippleNet, and we’re now signing two—sometimes three—new customers per week. We also saw a 350 percent increase last year in customers sending live payments, and we’re beginning to see more customers flip the switch and leverage XRP for on-demand liquidity. At the end of the day, our goal is to make sure our customers can provide excellent, efficient cross-border payments experiences for their customers, wherever they are in the world.”

Euro Exim Bank director, Kaushik Punjani, said: “We have designed, tested and are implementing both xCurrent and xRapid in record time, and we look forward to the benefits these will bring our customers.”

Further reading: What is Ripple XRP (Absolutely Everything You Need to Know)

Wall Street - Bitcoin hedge funds

Earlier this year, Ripple CEO Brad Garlinghouse promised that “dozens” of banks will use its cryptocurrency product xRapid to power international money exchange in 2019.

So far, however, only four companies are on board. They include money transfer services (Viamericas, Cuallix, and MercuryFX) and a financial firm (Catalyst Corporate Credit Union).

None could be described as a bank.

What Ripple enthusiasts are waiting for are the big names: Santander, American Express, SBI, each of which are using a version of Ripple’s services, but not the cryptocurrency XRP itself.

Banks and xRapid: “Regulatory Framework” is not clear

Ripple’s Global Head of Banking Marjan Delatinne offered an insight into why banks are reluctant to embrace XRP and xRapid: 

“No banking institution is using [xRapid]. Regulatory framework around the usage of digital assets is not very clear for banks but payment service providers or other finance institutions are less governed by these obligations.”

This goes some way to answering the question of why money transfer services are the first to sign up to xRapid. Without clear guidance from governments, central banks, and regulators, banks are unlikely to use XRP or any other digital currency. 

This process is likely to drag on as Ripple is still in court over its controversial links with the cryptocurrency XRP. Until the courts and, ultimately, the Securities and Exchange Commission (SEC), confirm whether or not XRP is a security, we are unlikely to see banks integrate the xRapid system.

xRapid Explained

xRapid is a service offered by Ripple that uses the XRP cryptocurrency to speed up cross-border money transfers. It uses XRP as a “bridge currency” when making international exchanges.

xRapid eliminates the need for nostro accounts, whereby banks pre-fund hundreds of international accounts all over the world in order to execute foreign exchanges. Instead, banks would exchange through XRP instantly and on-demand. 

In early pilot tests, banks reported 70% savings with transfers taking minutes, rather than days using the old system.

xRapid went live in October 2018, but only four financial companies have officially jumped on board. 

Further reading: Everything you need to know about xRapid (Ripple’s cryptocurrency service)

New xRapid Exchange Partner: BitStamp

Despite the holdups, Ripple has revealed one major step forward. CEO Brad Garlinghouse announced that BitStamp is now an official xRapid exchange partner. Ripple needs to partner with multiple crypto exchanges around the world as they will ultimately power transfers between XRP and the necessary fiat currency. 

BitStamp joins Bittrex, Bitso, and Coins.ph in Ripple’s exchange network. 

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Ripple Swell conference logo

This week played host to Ripple’s Swell conference in San Francisco. The event arrived just as ripple’s price shot up more than 100% and briefly overtook ethereum as the number two cryptocurrency. But what did we learn from the conference? Let’s take a look.

1. xRapid Is (Finally) Live

On the first day of the event, CEO Brad Garlinghouse revealed that three companies are now officially using xRapid to process payments.

The three companies involved are Catalyst Corporate Credit Union (a financial firm), MercuryFX, and Cuallix (money transfer services).

xRapid is Ripple’s flagship product for moving money instantly across borders. The crucial thing is that the software actively uses Ripple’s XRP token to make the transaction (learn more about xRapid here).

diagram of xRapid and RippleNet

Although xRapid has been “piloted” by various financial institutions, this is the first real deployment of the technology. Garlinghouse has previously said that “dozens” of banks will use xRapid (and the XRP token) by the end of 2019.

According to MercuryFX, the system helped slash transaction times between Mexico and the UK from days to just minutes.

2. Bill Clinton Can Talk for a Long Time Without Mentioning Blockchain

Bill Clinton was the big-name speaker at Ripple Swell, but he seemed to spend most of his time avoiding cryptocurrency.

According to CoinDesk, he touched on migration, weapons, and the conflict in Israel, but made only a handful of references to blockchain. When he did talk about the technology, he was vague:

“This whole blockchain deal has the potential it does only because it is applicable across national borders [and] income groups. The permutations and possibilities are staggeringly great.”

Clinton did, however, warn about the dangers of heavy-handed regulation which threatened to stifle creativity in the industry.

Ripple Swell Bill Clinton

3. Ripple Is “Very Clearly Decentralized,” According to Its CEO

Ever since it was created, Ripple has been plagued with accusations of centralization. Unlike bitcoin and ethereum, where tokens are mined by its users, XRP was simply created all at once and gifted to Ripple. Ripple holds most of the XRP in existence and slowly distributes it via an escrow system.

Fighting back against the critics, Ripple’s CEO Brad Garlinghouse said:

“It is very clearly decentralized. I, as CEO of the company, can’t control the XRP ledger. I can’t change a transaction… Anybody can participate in the XRP ecosystem, and if Ripple does something that is not in the best interest of the ecosystem, the rest of the ecosystem can ignore us.”

It echoes previous comments by Ripple’s CTO who said XRP is more decentralized than bitcoin and ethereum. He argued that bitcoin and ethereum are dominated by just three-four mining pools, making it more centralized than XRP.

4. The Price of Xrp Dropped 13% During the Event

Coming off the back of 100% weekly rally, the price of XRP stalled despite the xRapid announcement.

It’s a clear case of “buy the rumor, sell the news” – an old stock market saying. The 100% surge took place as Ripple teased the adoption of xRapid in the preceding weeks. When it was finally announced at the conference, the price dipped.

Is this an indication of disappointment among XRP traders? Perhaps. Maybe they expected a higher profile partnership. However, it’s more likely a natural correction after a 100% rise.

5. Ripple Still Has a Long Way to Go

Although three companies are now using xRapid, Ripple has a mountain to climb. One of the panels at the conference was aptly named the “800-pound gorilla,” referring to the difficulty of convincing banks to adopt cryptocurrency.

Risk-management teams at banks are still reluctant to open their arms to XRP and other crypto assets. They’ll first need to see stronger regulations. The good news is that Ripple says that talks with regulators have been encouraging.

So, what did we learn from the Ripple Swell conference? Ripple is making baby-steps with xRapid, but there’s a way to go before the bigger banks come on board.

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a highway at night with speeding cars

Updated on January 9th, 2019 to include new xRapid developments.

What is xRapid?

xRapid is a service offered by Ripple that uses the XRP cryptocurrency to speed up cross-border money transfers. Banks using xRapid have reported up to 70% savings using the system, with transfers taking place in minutes rather than days using the traditional system.

As many as nine companies are now using Ripple’s xRapid commercially, while others are still testing the product.

Ripple and xRapid Background

Ripple’s astonishing price rise was driven by its partnerships with banks like Santander, American Express, and Western Union. However, most people misunderstood one thing:

The banks weren’t actually using the cryptocurrency XRP yet.

That’s set to change with the introduction of xRapid. Ripple has now on boarded nine financial services, including one bank, to the xRapid platform to settle international payments.

xrapid - how it works

One of those services, MercuryFX, says xRapid improved transfer speeds from the UK to Mexico from days to just two minutes.

Other banks have reported 40%-70% savings when piloting the xRapid service.

But what is xRapid and how does it use cryptocurrency? First, let’s clear up a few terms.

The Difference Between Ripple and XRP

Ripple is a company that aims to speed up cross-border payments. Ripple has partnered with over 100 banks and boasts a range of money transfer services using blockchain and cryptocurrency.

XRP is the cryptocurrency created by Ripple. It is not currently used by most banks, but it’s a big part of their future plans and the xRapid service.

The Current State of Ripple’s Bank Partnerships

Most of Ripple’s 200 bank partners are using a Ripple service called xCurrent. It uses blockchain technology to help banks make faster payments and communicate better.

A list of Ripple bank partnerships and logos

But it does not use XRP to settle transactions.

Ripple intends to use xCurrent as a way to onboard its banking partners before convincing them to upgrade to xRapid.

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What Is xRapid?

xRapid aims to make those transactions even faster and cheaper. Most importantly, it does use XRP to settle the money transfer.

XPR is used as a “bridge currency” in the process.

Here’s how it works…

Let’s say Bob lives in the UK and wants to send £1,000 to Alice in India.

Using xRapid, Bob’s bank instantly transfers the £1,000 into XRP, via a cryptocurrency exchange.

The XRP is then instantly converted into Indian rupees via a partner exchange in India.

The fees are almost zero and the whole process takes a matter of seconds.

Had Bob used the traditional bank system, it would take days and cost him a large fee.

diagram of xRapid and RippleNet

xRapid: An End to Nostro Accounts

The description above is a very quick outline of how xRapid works, but there’s a reason why it’s so powerful:

Banks need liquidity (i.e. lots of available money) to make a foreign exchange. And the current way they source liquidity is wildly inefficient.

Let’s go back to Bob and Alice. To send money to India using the traditional system, Bob’s UK bank needs a “nostro account” in India. The nostro account is pre-funded with millions in local currency. (This is the liquidity).

Banks have pre-funded nostro accounts like this in every country with a different currency to facilitate cross-border transfers. It’s expensive and incredibly inefficient.

By switching the local nostro accounts for a digital cryptocurrency, there’s no need for bank accounts full of foreign currency all over the world. It’s faster, cheaper and more efficient.

Got It. But Are Banks Using xRapid?

As many as nine financial companies are currently using xRapid on a commercial scale. They include one bank, Euro Exim Bank, and a handful of money-transfer services such as Viamericas, Cuallix, and MercuryFX (money transfer services).

Others include Catalyst Corporate Credit Union, JNFX, SendFriend, Transpaygo, and FTCS.

The vast majority of Ripple’s other bank partners, like Santander, are using xCurrent, but Ripple is trying to nudge them towards xRapid. Some banks have begun testing the xRapid product and reported 40-70% savings.

Ripple CEO Brad Garlinghouse said that “dozens of banks” will be using xRapid by the end of 2019.

But it’s a big task. As Ripple’s Sagar Sarbhai explained, “a couple of years ago the narrative was: blockchain good, crypto bad.” Banks were open to blockchain technology, but wary of using cryptocurrency to settle payments.

Sarbhai says that’s beginning to change.

“I think that narrative thankfully is now changing because policymakers, regulators are seeing that there is a strong benefit that digital assets, cryptocurrencies bring in.”

xRapid Now Commercially Available

This is the moment that most XRP holders have been waiting for. xRapid is considered Ripple’s silver bullet because it actively uses the XRP token to settle payments.

If more banks adopt xRapid, the volume (and price) of XRP is expected to increase dramatically.

Why? Because banks and (especially) cryptocurrency exchanges will have to hold large sums of XRP in order to make the transfer. The transfer itself will only require XRP for a matter of seconds, but the services still need a pool of cryptocurrency to execute the trade, thus driving up demand.

Let’s look at this way. If xRapid replaced just 1% of the current international bank transfers through SWIFT, the daily volume of XRP would increase 250x.

Ripple is Quietly Building Exchange Partners

To make these instant XRP trades, Ripple is busy partnering with as many crypto exchanges as possible.

For example, the company has partnered with Bittrex to facilitate transfers between US dollars. They’ve partnered with Bitso for exchanges in Mexican pesos and Coins.ph for Philippine pesos. Bitstamp was recently added as an exchange partner too.

So don’t be surprised if the banking partners are slow to adopt xRapid. The exchange partners must come first.

Update: Ripple Merges xRapid into One Service, RippleNet

Since we first published this article, Ripple appears to have removed any mention of xRapid and xCurrent on its website.

Instead, it is now just one product: RippleNet.

It looks like Ripple is bundling its services together in one simple package. This will make it much easier to convince banks to ultimately shift to XRP transfers.

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moneygram

MoneyGram, the world’s second-largest money transfer service, has announced that it will adopt Ripple’s XRP token in an open-ended pilot program designed to increase the efficiency of international payments.

The Dallas-based firm, second in size only to Western Union, announced on Thursday that it will pilot the use of XRP in its internal payment flows.

The partnership will see MoneyGram adopt xRapid, Ripple’s on-demand liquidity product, which uses XRP to settle cross-border payments in real time at a much lower cost than using legacy payment systems.

“The payments problem doesn’t just affect banks, it also affects companies like MoneyGram, which help people get money to the ones they care about,” said Brad Garlinghouse, CEO of Ripple. “By using a digital asset like XRP that settles in three seconds or less, our clients can move money as quickly as information.”

“Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid,” said Alex Holmes, chief executive officer of MoneyGram, in a press release. “We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers.”

Although a number of banks and financial institutions — including household names like American Express — have conducted blockchain trials using RippleNet, the company’s enterprise blockchain, they have shied away from integrating XRP.

Consequently, many critics had stated that the ripple price’s recent rally — which saw the value of XRP soar nearly 30,000 percent in 2017 — was unwarranted relative to actual XRP adoption.

Though perhaps not complete vindication of XRP, MoneyGram’s announcement should make at least a minor dent in that narrative, a dent that could deepen if Ripple’s recent claim that at least three major money transfer firms will adopt XRP in 2018 is borne out.

“And to be clear,” Garlinghouse added today in a tweet, the “MoneyGram announcement is one step in a marathon ahead to truly make XRP the global liquidity solution for payment providers and banks.”

Though Ripple has not confirmed it publicly, this announcement could be the first fruit from the $300 million RippleNet Accelerator Program, which the company launched last quarter to spur XRP adoption among financial institutions. Through the program, institutions can receive rebates and incentives to integrate XRP into their payment systems, making pilot program’s such as MoneyGram’s much more attractive.

The ripple price traded up on the news, briefly rising as high as $2.25 before pulling back to a present level of $2.08

Featured Image from Flickr/Mike Mozart