As an investor, any day that you lose money is a bad day.  For the cryptocurrency Ripple the month of January had lots of bad days.  Between January 6th and February 5, the price fell 80% to about $0.69. It has since staged a partial recovery to around the $1 level.  So what has been going on? At the peak of last years crypto market, there were days when Ripple was the second most valuable crypto eaking out ether.

Well for one thing Ripple is not the easiest thing to buy.  XRP is not traded everywhere. In fact just the rumor that Coinbase was preparing to trade XRP sent the price shooting up over 10% the other day.  Some day, the rumor may prove out but it isn’t happening at the moment.

In many ways Ripple is the overlooked cryptocurrency.  Bitcoin, bitcoin cash, Ethereum, and Litecoin get much of the headlines, but the Ripple Network is slowly building members and is a powerful force working with banks and payment providers to bring much needed modernization to global finance.  Ripple has is huge future and understanding how they plan to get there is helpful.

The Problem Of Financial Monopolies

Several years ago I came up with the seemingly impossible task of taking on the world of electronic payments.  This included the plastic monopoly of Visa, Mastercard and Amex. Keeping my goals set on global dominance, I decided to include on the SWIFT network of international monetary exchange as well.

My idea was born out of the awareness that $60 trillion in U.S. plastic transactions were processed by an antiquated thing called the Automated Clearing House or ACH.  Global payments were the domain of the SWIFT network comprised of 11,000+ banks.

What I came to discover was that there was little automated at ACH and nothing swift about the SWIFT network.  Transactions in the ACH system are touched by multiple hands each extracting a fee.

SWIFT doesn’t actually transfer funds. Instead it sends payment messages which must be settled through correspondent accounts with each financial institution. That is both slow and expensive.

From the start of my research it was apparent there had been precious little innovation in these systems. Monopolies tend to harbor this kind of behavior.  But disrupting a monopoly(s) takes loads of dough and lots of time. That is when I came across Ripple for the first time.

Ripple: What Makes Them Different

Bitcoin has loads of fans beyond those investors who participated in the 7000%+ appreciation in their bitcoin prices in 2017.  Beyond this are the features like privacy, separation from the fiscal and monetary policies of government, not to mention the theoretical fast and low cost fungibility of bitcoin.  For these reasons, bitcoin is the joy of many and the bane to the existence of regulators.

This is what makes Ripple different.  The Ripple Network is disruptive to the current status quo in the global payments industry but fits within the framework of conventional financial regulation.  

Another point of difference with the Ripple Network is that transactions are verified by consensus among members of the network rather than the mining process used by bitcoin.

This saves a ton of energy in processing transactions and that is good for costs.

Ripple is designed for applications in banking and payments. xCurrent is the enterprise software that allows banks to instantly settle cross-border payments. xVia gives banks, merchant service providers and other payment services seamless access to global counter-parties. xRapid provides on demand liquidity to emerging markets and that means real time payments.

The Ripple Network presently consists of about 40 members.  This may be modest in size but it contains some impressive names including: AMEX, UBS and Standard Charter. As more members join the network, the demand for XRP will follow.  Ripple at one time was worth $132 billion but now a mere $37 billion. In the long term scheme of financial world innovation, this could prove to be a real value.