Distributed ledger startup Ripple announced the results of the first pilot tests using the XRP cryptocurrency. The main idea of Ripple’s on-demand liquidity solution called xRapid is to use XRP for ensuring more efficient and less time-consuming cross-border transactions between financial institutions transferring fiat payments.
Today due to the peculiarities of existing banking infrastructure, it usually takes 2-3 days for conducting international transactions. Moreover, the fees that are taking for these payments are also rather high. According to Ripple team, the situation should be definitely improved. And they are actively working on this issue.
xRapid helps to avoid delays in global payments, what is more, it also helps to reduce costs drastically. Thanks to using XRP that is the third-most-valuable cryptocurrency with a market cap of $27 billion and that is traded at $0.68 according to CoinMarketCap, xRapid can make cross-border payments really instant.
According to the results of the trials, financial institutions have an opportunity to save anywhere from 40-70 percent in transaction fees if they turn to the xRapid network instead of using traditional methods.
On average, an xRapid transaction from the United States to Mexico took only a few minutes. And it is really an incredible result compared to the time that today is needed for cross-border payments.
For actual cross-border transfer of XRP it is needed just a few seconds. Nevertheless, it takes a bit longer to transfer XRP for fiat. It was also proved during the trials.
A usual payment procedure with xRapid looks the following way. A bank has a direct connection with some digital asset exchanges. These exchanges are located in both countries: of origination and of destination. The originating currency needs to be exchanged into XRP.
After that, just in seconds XRP is exchanged into the destination currency, this operation takes place in the second digital asset exchange. As soon as this transaction is finished, the funds are sent out for payout.
During the trials, the US bank sent USD to an exchange where it was converted into XRP. And then, XRP was transferred to Mexico, where it was converted into Pesos.
The part of the transfer relied on the XRP Ledger takes 2–3 seconds, the additional time is needed for processing the funds at the intermediary digital asset exchanges and local payment rails.
Currently, the company plans to proceed from pilot programs to full-scale launches with a view to bring significant changes to the today’s economic system.
But it was not the only news from Rippled that has wowed the world. Ripple’s xCurrent blockchain network is said to power South Korean cryptocurrency exchange Coinone’s international remittance service. The service will be launched in the nearest future and it will be targeted at retail customers in the country. It is interesting to mention that xCurrent solution does not use XRP unlike the above-mentioned xRapid.