Ripple CTO Speaks On xRapid Volatility & XRP/Libra Rivalry

Ripple CTO Speaks On xRapid Volatility & XRP/Libra Rivalry

The Chief Technology Officer at Ripple, David Schwartz is offering a new look at the origins and strategy behind the firms XRP-based payment solution xRapid.

Speaking in an interview at the Future of Fintech conference in New York, Schwartz says that xRapid was created following Ripple ran into trouble convincing banks to adopt XRP for cross-border payments.

“I think we do have a struggle on our hands to convince particularly banks because banks are extremely conservative. They’re very slow moving. What we’ve discovered is non-bank financial institutions and payment companies are much, much more aggressive and they’re much more interested in things that can save them time and money and cost. And so we built the xRapid product as a way to kind of solve that problem.

And it was adapted to the real-life situation that we’re facing. We kind of had this idea that institutions would hold XRP or a digital asset. They’d make their payments with a digital asset, or regional hubs would settle with a digital asset, and for a variety of reasons the world wasn’t ready for that, including regulatory issues, lack of liquidity and an immature ecosystem around digital assets. So we couldn’t aim for sort of the end state that we wanted. We had to come up with a more practical plan.”

David says that the xRapid platform has been designed in order to remove the regulatory problems and concerns in regards to the volatility of digital assets, which has been a big worry for a while now. 

Schwartz says that xRapid is often less volatile than fiat currencies because of its speed. With xRapid, fiat is converted into XRP, sent overseas and transferred back into fiat in the corresponding nation. This is a process that can take just a few minutes to complete.

“xRapid is aimed at two things. One of them is sort of remittance-type international flows, where cost is very high and the volatility actually favors a digital asset, which is kind of bizarre. Usually, people say the problem with digital assets is they have such volatility. But here, if you think about trying to pre-fund Mexican pesos on a Thursday to make payments on a Monday, that’s a lot of volatility in Mexican pesos.

Whereas if you can use XRP, which can move across the planet in just a couple of seconds, the volatility is actually less. Even though XRP is inherently more volatile, you’re only holding it for the minute or two it takes to complete the transaction.”

The topic of conversation moved onto Facebook’s upcoming Libra coin. Both XRP and Libra have some unspoken competition but Schwartz said that he and Ripple want shared success all-around in order for the whole crypto and blockchain space to grow as an industry. 

“We need our competitors to succeed. We need the ecosystem to succeed. An analogy I sometimes make is your cell phone. Everybody in this room probably has a cell phone on them. And that would allow them to tweet about this talk right now. But they don’t own that cell phone to tweet about this talk. They hold that cell phone because there’s an entire ecosystem from Twitter’s competitors.”

Investment Disclaimer
Related Topics: