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The digital money known as XRP finished 2018 as the second most valuable cryptocurrency after Bitcoin, and its boosters believe it will be a key part of the world's banking system. But there's a catch: It's still not clear what XRP is for.
On Tuesday, the company Ripple – which is the biggest holder of XRP – announced a series of partnerships to make the case that they are starting to use the cryptocurrency as part of their operations.
One of the new partners is the Exim Bank, which has offices in London and St Lucia, and which includes providing letters of credit to far-flung places. Starting this year, the institution says it will start using XRP, as part of its international money transfer operations.
This is consistent with Ripple's vision of XRP as a fast and inexpensive source of liquidity for cross-border transactions. XRP into local currencies.
According to Graham Bright, the head of Operations at Euro Exim Bank, the process of being more transparent thanks to Ripple's blockchain technology, which creates an immutable ledger of all transactions.
It will not be holding XRP itself at the outset, but will instead rely on the BitPay payment provider to handle the cryptocurrency operations. The Exim Bank will be executing an exchange service that will hold XRP; he declined, however, to say it would buy its supply of XRP on the open market or receive it from Ripple.
More broadly, the new series of banking partnerships-which also includes XRP-related deals with four other institutions (JNFX, SendFriend, Transpaygo, FTCS) -amount to Ripple's effort to promote the practical adoption of XRP.
If the company succeeded in persuading big banks to adopt its blockchain-based messaging product, XCurrent, those banks have spurned. Last year declared that XRP did not make its payment process any cheaper.
Ripple CEO Brad Garlinghouse is optimistic, however, that 2019 will see XRP take off for real.
"This is the year the wheat will be separated from the chaff," he said in an interview with Fortune. "Not many months ago, the mean was saying no one will use XRP, which made for good skeptical headlines. Today, you can not start XRapid because it's better, faster and cheaper. "
Garlinghouse also noted that Ripple's network of customers now includes over 200 financial customers, and they are predicted to be incorporated into their operations. He also rejected the notion that he is attempting to slip into XRP into conventional financial transactions, saying the cryptocurrency is a natural source of liquidity whose daily trading volume exceeds that of major U.S. equities.
The XRP question is a pivotal one for Ripple since it holds a vast treasury of the cryptocurrency, amounting to over half of total supply. Skeptics argue Ripple has too much sway over the currency. (Garlinghouse counters that the XRP network has more decentralized than Bitcoin, which has a large concentration of Chinese miners).
Meanwhile, on social media, debates over XRP can reflect a passion bordering on derangement as cryptocurrency partisans rage about its merits versus Bitcoin and other types of digital money.
Garlinghouse treats such as a distraction, and will be focused on the growing network of financial institutions, believing many of them will soon find a way to use XRP. For now, it seems the verdict is still out.
