XRP, the cryptocurrency token from Ripple has taken the world by storm by showing a whopping 56,166.66% increase since the last year. The kind of growth is unheard off and considered crazy even by the current cryptocurrency market standards.
In the last couple of months, few things have contributed to the exponential price rise,
- That the major banks have liked the pilot done on RippleNet for real-time settlement using Ripple’s blockchain
- International Money Transfer services would start using the XRP token in 2018
- Coinbase launching XRP buy/sell soon
While the first two reasons seem like natural ones for the markets to respond and contribute to the price rise, the allure of making it more easier for the 10 million Coinbase users to buy and sell XRP also helped Ripple reached an ATH(All Time High) at around $3.5.
There was so much hype around XRP being listed on Coinbase, the leading exchange for investors in the United States that it forced the company to respond with a post saying, it doesn’t have any plans to list new currencies anytime soon.
The ardent followers of Ripple though dispute the theory that the price rise is linked to listing on new exchanges. They seem to be right considering the price of the XRP token price has been consolidating at around $2.75 in major exchanges like Binance and Bitfinex.
International Money Transfers
The major news which came out Ripple last week is that 3 of the 5 top money transfer services have agreed to use XRP tokens for transfers in 2018. If and when it becomes reality, the price of the current token will increase exponentially.
The current international transfers using FIAT(current currencies like Dollar, Euro) money takes a lot of time to process and involve multiple intermediaries clearing the transaction. Any delay in one intermediary will result in great loss of time. Also, the small and medium banks across the world who doesn’t own a lot of foreign reserves rely heavily on other big banks to process international transfers.
Imagine going to a small and medium bank in the United States and initiating a transfer to Japan. If the originating bank doesn’t hold any reserve currency in Yen(Japanese Currency), it will rely on a big bank as an intermediary paying them hefty fees to process this transaction. With Ripple XRP, everything changes. The banks can use XRP tokens to do a transfer to the destination which typically takes 3-4 seconds.
These savings in time and cost will result in massive usage of XRP as the default choice for money transfer services and it seems only logical that they agreed to use XRP in 2018.
Banks adopting XRP
This seems not plausible at the moment, since moving completely from the current currency system is apparently difficult and the road is filled with a lot of regulatory and compliance challenges.
But the fact that the banks liked the pilot in which they used XRP is definitely a great sign. Great technology takes time for market penetration and Ripple seems to be on the path to reaching the goal of banking adoption.
With anything in the technology industry, the price of a certain equity is mostly based on the speculation about the future potential and Ripple have proven to be having great technology with processing transfers in record 4 seconds, faster than almost any major cryptocurrency.
The global average currently is around $3.2 and with the money transfer services embracing Ripple, $5 XRP only seems to be about time. Also, none of the major US exchanges list Ripple and when they do, there will be more investors embracing the Ripple phenomenon initating the spike in the price. This though is only a cherry on top of the cake.