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Ripple’s Pure Blockchain Tunnels – Will They Converge On XRP?

By November 19, 2017 No Comments
Playing it cool? Instead of trying to become THE global borderless currency for all transactions, ripple is slowly building a network of banks and financial service businesses using blockchain technology - will it eventually be perfectly positioned to become the de facto B2B cross-border cryptocurrency for value transfer?

Playing it cool? Instead of trying to become THE global borderless currency for all transactions, ripple is slowly amassing a network of banks and financial service businesses and connecting them with blockchain technology - will it eventually be perfectly positioned to become the de facto B2B cross-border cryptocurrency for value transfer?

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.

Ripple is opening pure blockchain tunnels between its partners for the safe, rapid processing of B2B transactions.  If these tunnels eventually converge on XRP as the intermediary cryptocurrency of choice - KABOOM! - it's value could explode

Ripple is opening pure blockchain tunnels between its partners for the safe, rapid processing of B2B transactions. If these tunnels eventually converge on XRP as the intermediary cryptocurrency of choice - KABOOM! - its value could explode

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.

If ripple could grab even a tiny fraction of the $207 Trillion annual B2B cross-border transaction market, its valuation could soar to bitcoin-like levels.

If ripple's native cryptocurrency, xrp, could snag even a tiny fraction of the $207 Trillion annual B2B cross-border transaction market, it could make a quantum leap to a dominant position.  the current market cap of all cryptocurrencies combined is only $200 billion

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.

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