Ripple Labs, a San Francisco-based bitcoin-oriented startup, has unveiled a newly-developed payment technology bearing the name of Interledger. With this invention banks get a possibility to transact with the same speed and profitability as Ripple technology. Increased privacy and scalability act as additional advantages. Interledger will enable financial institutions to pay straight to each other avoiding correspondent banks. Moreover they do not need to use XRP (digital currency native for the Ripple network) anymore. Interledger can allow to pay transaction fees in local currency.
Chris Larsen, Ripple CEO and co-founder, explains the existing problem in banking sphere: “Outmoded payment infrastructure forces banks and their corporate customers to prefund foreign accounts for international payments, but then provides few assurances that cross-border transactions will actually settle.”
Ripple admits that they used to hear two main goals from their bank partners. First of all, increased level of scalability was needed after the appearance of the U.K.’s Faster Payments System which caused considerable burst of transactions number. Secondly, banks strive to offer the highest possible level of privacy during transactions. Thus they don’t want customer personal information to be stored on Ripple’s public ledger.
It took Ripple team a year to thoroughly consider these two issues and finally to come up with Interledger – a new protocol that “is designed to connect the world’s many ledgers”. It can either work combined with the Ripple network or without it. Comparing to Ripple’s ledger or Bitcoin’s blockchain it is not a distributed database. Thereafter it doesn’t need an anti-spam program.
Apparently Ripple’s solutions seemed quite promising to Santander Group as it decided to invest several million dollars in its development. Santander is a Spanish banking group. It is the largest bank in the Eurozone by market value and one of the largest banks in the world in terms of market capitalization. Interesting that there is no official source that can state the exact amount of funding. Thanks to calculation it has been determined that a venture capital funding made up around $32 million. In May Ripple informed about total $28 million. Taking into account that Santander is the only new investor announced since that time, we can assume that recent funding round was $4 million.
Mariano Belinky, managing partner of Santander Inno Ventures, believes that Ripple’s technology can revolutionize the banking infrastructure. “Ripple possesses the talent, technology and momentum to address many of the scenarios and we are actively exploring where and how best to apply Ripple technology inside the bank”, – he says.