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Ripple Solves Business Problems: Bitcoin Bubble and the First Mover Advantage Problem

FX Empire
Updated
In the early 2000’s, I was a young presenter on Bloomberg TV with my own trading online show when the original internet bubble burst. Before Facebook, it was MySpace, before Spotify there was Napster, before Google it was Yahoo. The first mover advantage is not necessarily the best place to be – Bitcoin beware.

Could Ripple be a better choice than Bitcoin?

If I had to bet on one crypto coin, then the case for Ripple is far stronger. Most people do not dig into the technicalities. Ripple has a strong advantage when it comes to technology.

Whereas Bitcoin was principally established for peer to peer money transfer between individuals, Ripple was established to handle interbank transfer at the larger size. That means more volume and therefore more value of the coin.

Of course, it has the basics of any decent Cryptocurrency; first, connectivity across payments networks, second, the speed of instant on-demand settlement, third, real-time traceability of funds and finally, low operational and liquidity costs.

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But what caught my attention is the global network of customers. Ripple has customers such as Santander, Standard Chartered, Credit Agricole, UBS, American Express, India’s Axis Bank, BBVA among others. That’s impressive and Ripple’s investors know that with a solid costumers portfolio, Ripple’s future is bright.

FYI, Ripple is not the original name of the coin, XRP is the name of the coin. Ripple is a private company, different than other cryptocurrencies, meaning, XRP is a centralized coin.

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Who Solves the Bigger Problem?

Ripple was created to solve an important problem, the transaction’s delays between banks. Currently when my business wires fund abroad through my bank, if any information is incorrect, the payment is returned and delays accrue. The chances of error are huge. If you’ve never sought an MT103 trace from your bank, you will not truly appreciate the problems of international corporate money transfer and the ensuing stress.

Ripple ensures both banks validate critical information such as customer ID, fees, rates, time of delivery before funds are transferred. This allows the bank to know beforehand if the transaction will pass or not and so remove the failed transaction problem. By removing the correspondent bank, we remove risk management issues too.

But unlike Bitcoin, which can take over an hour to settle, (still better than traditional systems taking 3-5 days, if you get to your bank before 1530!), Ripple settles in 4 seconds. By the way, Ethereum takes over two minutes.

Ripple handles about 1,500 transactions per second, 24×7. They do claim they can do match Visa scale of 50,000 per second.

Who is behind Ripple?

As mentioned above, Ripple is a private company and that XRP is a private cryptocurrency. As an asset manager running a private equity fund, I like to know who is investing a backing a company. Ripple’s shareholders include Andreessen Horowitz. Not heard of them? They backed PayPal as an original founding investor. How about Google Ventures, Santander InnoVentures, Standard Chartered and Accenture – all investors as shareholders in Ripple.

Traction

A traction of any technology is not just if the public is interested, but the big entities. In the case of Ripple, it does not get bigger than the Bank of England. The Bank of England Accelerator has published a report on how they may be able to use Ripple for real-time settlements.

This article was written by Alpesh Patel, a hedge fund manager and author of Trading Online (Financial Times). Patel is a partner to 24option, offering CFD trading on Cryptocurrencies.

The content of this article constitutes Marketing Communication and does not qualify as Investment Advice or Investment Research. 24option accepts no liability for the content of this article, or for the consequences of any actions taken on the basis of the information provided.

This article was originally posted on FX Empire

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