Ripple Beating The Banks, But Centralization Concerns Remain
Anyone that has made an international bank transfer will feel the frustration of waiting for at least a day and paying far more than should be necessary for something that can be done with a click of a button. Ripple is bridging that gap with RippleNet which offers SMEs a competitive edge for global payments.
The San Francisco based blockchain firm has taken to its blog to proclaim that “the world’s payments infrastructure hasn’t changed since the heady days of disco, nearly four decades ago.” Business operations are unnecessarily hindered by today’s archaic banking system built upon decades old infrastructure.
Businesses today need to plan for days of delays while banks and payment providers self-fund multi-currency accounts and pass the costs and over inflated foreign exchange rates and transaction fees onto their customers. A significant percentage can be lost sending money from one country to another going through a number of different currencies, the only ones profiting are the banks.
According to the company RippleNet speeds up transactions, reduces costs, and introduces a level of certainty to global payments;
“Using RippleNet, banks and payment providers can reimagine a payment from invoice to confirmed settlement for their clients. Just one small change, like the ability to drag-and-drop invoices as part of a RippleNet powered transaction, can have many benefits: it saves time with pre-populated fields, automatically confirms recipients for accuracy, and obtains real-time quotes.”
Smaller transactions in emerging markets such as Brazil, India, and China will benefit more from an international cross-border payments platform that doesn’t take days or cost a hefty slice of the remittance. According to the World Bank global remittance payments will grow by 3.4% or roughly $466 billion this year.
Ripple is currently at the forefront of the industry and has partnered with over a hundred banks and payments providers across the globe. It claims that it “connects all parties in a global transaction through a single seamless, frictionless experience. Built for the Internet age, Ripple delivers access, speed, certainty and savings.”
While this may be a service long overdue, crypto aficionados and cypherpunks claim that Ripple is as centralized as a bank and will still profit from these transactions. The company, however, argues the opposite claiming that the XRP Ledger ‘is based on an inherently decentralized, democratic, consensus mechanism’.
The key thing to note here is that Ripple is the company with products such as RippleNet, xRapid and xCurrent while XRP is the ledger working on blockchain principles used by other cryptocurrencies. The bigger thing to note here is that the company, or its executives, holds a massive proportion of these tokens which can enter or leave the market as and when they see fit and consequently have a huge influence on price.