Disclaimer: The information in this blog represents the opinions of its author and is for educational purposes only. It is not intended as investment advice. Cryptocurrency markets are extremely risky so you should only invest money you are willing to lose.
HUUUUUUUUGE and SLOWWWWWW......
The Market is HUUUUUUUUGE - $207 Trillion, and SLOWWWWWWWW - a typical trans-Atlantic bank transaction through SWIFT takes 2 Days, and ACH can take twice as long.
Ripple wants to solve that problem, and it's trying to do so one bank at a time.
The Amex-Ripple deal announced Nov. 16th has nothing to do with the cryptocurrency (XRP), but it is another step in Ripple's strategic ambition to snag a significant fraction of the cross-border B2B transaction market.
A "Pure" Blockchain Tunnel
The news on Nov. 16th that Amex had opened a trans-Atlantic blockchain payment tunnel for B2B transactions based on Ripple's cryptography adds to the company's growing network of more than 100 banks and financial service businesses connected in a blockchain network.
The Amex project, in partnership with the Spanish bank Santander, is similar to another venture between Ripple and Swedish bank SEB, in that they are both "pure" blockchain - which means the value transfer is through a direct connection between the institutions without the need for a cryptocurrency to mediate the transaction.
Way Faster And Much Safer
So now inter-bank transfers using Ripple's network between New York and Stockholm, and between New York and London, take a few seconds instead of a few days, and they are much much safer.
Blockchain technology exploits the asymmetry of cryptographic math to create a chain of transactions that is easy to verify but nearly impossible to hack alter, replace, counterfeit, or corrupt, so it's a no-brainer as a disruptive solution to the massive cross-border B2B market, which is not only huge but also slow and hackable.
Cool Feat Of Reverse Engineering
Although most of Ripple's clients are still pure blockchain, the company revealed in October that the financial services firm Cuallix will be its first partner to utilize Ripple's native cryptocurrency, XRP, in cross-border transactions.
In this way, Ripple is trying to pull off a pretty cool feat of strategic reverse-engineering in the cryptocurrency space.
Most cryptocurrencies will issue a coin and then strive for adoption by a network. Ripple is building its own network first.
Big Bang Convergence
The big-bang convergence for the company, the one investors should watch for, is when Ripple's partners become comfortable enough with the blockchain technology that they start seeking more liquidity and broader access to other network partners. When that happens, they are likely to turn to XRP first - and Kaboom! - all that remains to be determined is what percentage of that $207 Trillion XRP can snag.