Ripple recently passed Ethereum to become the world’s 2nd most valuable cryptocurrency by market cap after California based cross-border payments company enjoyed an end-of-year jump in its market price.
When the surging price of bitcoin has attracted most attention this year, smaller rival Ripple’s XRP currency has started to close the gap in recent weeks of December 2017 after signing up several big financial institutions to use its technology.
Announcement that three of Japan’s big credit card companies have signed up to use Ripple’s technology triggered another bounce in the price of XRP, which is up 6-x in the past month and almost 300-x in a year.
XRP market capitalisation climbed to $76 bn on Friday 29 Dec 2017, above Ethereum’s $73bn market value, but well behind bitcoin’s $246bn overall value, according to coinmarketcap.com.
Ripple’s cross-border payments system uses blockchain technology — an electronic record-keeping system — to move money almost instantaneously and at low cost between countries and currencies. Blockchain is a core component of cryptocurrencies such as bitcoin and Ripple’s own XRP.
“Ripple has done a good job of convincing big institutions to use their currency,” said Eddy Travia, chief executive of Coinsilium, which advises and invests in companies that use blockchain. “The worry is that when the price goes up so much it moves the focus from the technology to just the speculation.”
Ripple’s technology allows cross-border payments to be completed within 10 to 15 seconds, compared with about three days for inter-bank transactions using the Swift network, which was created 44 years ago by a consortium of the world’s biggest lenders.
The recent rally in the price of XRP started after a group of Japanese and South Korean banks last week announced the launch of a pilot scheme to use Ripple’s technology for sending money between the two countries.
Ripple has much more XRP in reserve than is publicly traded, giving it a war chest worth about $115bn, which it plans to use to encourage banks and other large financial institutions to use its technology.
The US company signed up more than 100 financial institutions to use it's blockchain technology to move large sums of money across countries.
Ripple offers various types of cross-border payments. First system allows customers to buy and sell XRP to move money almost instantaneously between countries and currencies. Another uses a blockchain ledger to record and co-ordinate transfers between banks’ own accounts.
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