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Corporate cryptocurrency firm Ripple has announced $ 200 million in investment financing, which brings the blockchain tech firm’s total value to $ 10 billion, according to reports.
The seven-year-old San Francisco-based firm created XRP cryptocurrency, Ripple payment protocol, and RippleNet exchange network in order to disintermediate cross-border financial transactions for financial services businesses.
The technology enables the representation of digital currency (a “stable currency”) backed by traditional fiat money, or the creation of cryptocurrencies (a new asset class), enabling new sources of liquidity. These digital assets are transmitted through a decentralized network where transactions are recorded on an immutable blockchain ledger.
Anyone with a cryptographic key and an internet connection can receive, hold and send XRP to anyone else on Ripple’s blockchain network.
“As others in the blockchain space have slowed their growth or even closed, we have accelerated our momentum and industry leadership throughout 2019,” Ripple CEO Brad Garlinghouse said in a statement.
In June, Ripple signed an agreement for a 10% stake in remittance company MoneyGram, which adopted RippleNet’s xRapid liquidity-on-demand system. The system eliminates the need for banks to hold funds in accounts for settlement purposes; Ripple claims to reduce settlement times from a maximum of two days to three seconds.
Unlike other cryptocurrencies, such as Ethereum’s ETH, XRP tokens are pre-mined, which means that all the coins that will exist have been created. Ripple has created 100 billion XRP coins, but the main company and Ripple Labs, the subsidiary that created the payment protocol and exchange network, owns 60% of the tokens.
Ripple has been successful on many other cryptocurrencies for cross-border payments for several reasons, according to Avivah Litan, vice president of research for Gartner.
For one, Ripple has been around longer than others. Indeed, it is the oldest and as such has the advantage of the “first mover”. It is also well funded, allowing the company to innovate and expand.
“Ripple supports the only fully functional distributed ledger platform that enables all types of cross-border payments using cryptocurrencies and stablecoins,” Litan said.
SWIFT is Ripple’s main competitor, but many other giants including Facebook, JP Morgan, MasterCard, Visa, and national sovereign banks such as the People’s Bank of China, the Bank of France and various central banks of Europe cooperating and working together will soon challenge. Ripple dominance in this area. According to Litan, financial services tech companies like Square will also challenge Ripple.
“These competitors have different business and technology models than Ripple, but the question is, who will own the customer interface with the cryptocurrency distributed ledgers that support distributed ledger payments?” Litan said. “Over time, and likely by 2022, Ripple’s first-mover advantage will diminish as these competitive efforts hit the market.”
This year, in particular, cryptocurrencies took the spotlight after companies like Facebook and JP Morgan threw their hats on the blockchain ring, announcing efforts to launch their own cash-backed cryptocurrencies.
JP Morgan launched JPM Coin for internal use in cross-border financial settlement.
Facebook announced that it would create Libra, allowing users to make PayPal-like purchases of advertised products and authenticate people posting to the site, effectively creating an audit trail and confirming that they are not bots.
Although the details are few, reports based on anonymous sources claim that Facebook’s cryptocurrency would allow users of its WhatsApp messaging platform to send money to contacts, similar to how Venmo and PayPal allow cross-border payments; the difference is that there would be no intermediary (i.e. a central bank or clearing house).
In October, Ripple announced that RippleNet’s number of users had surpassed 300 financial services companies, including players like American Express, PNC and Santander.
“As the global economy becomes more and more digital, the need for real-time payments globally is paramount,” said Chris Ward, executive vice president of PNC Treasury Management, in a statement. “Our goal is to provide our customers with features that allow them to make secure digital payments in an instant, whether they are sent across the street or across the globe.”
Copyright © 2019 IDG Communications, Inc.
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