Ripple Reveals Results Of First Pilot Tests Using XRP Cryptocurrency

Blockchain startup Ripple has revealed the results of the first pilot tests using the XRP cryptocurrency it created.

Blockchain startup Ripple has revealed the results of the first pilot tests using the XRP cryptocurrency it creat

The third-most-valuable cryptocurrency by market cap, at $31.4 billion, XRP is part of a larger effort within the venture-backed startup that raised $93 million from Santander, CME Ventures, Accenture and more to free up dormant capital stored in accounts around the world.

Instead of the time-consuming and cumbersome process of storing money in international accounts just in case they need it, Ripple hopes that users will move the value using the XRP cryptocurrency and software, freeing up that capital for other uses.

But in spite of the relatively high cryptocurrency valuation along with some equally high-profile business deals with American Express and others that are using non-cryptocurrency-related services, the actual value of XRP to the banking industry is hotly debated.

While the potential for large-scale use of XRP is still far from certain, the data points revealed today are among the most concrete evidence that the XRP cryptocurrency might have larger applications than just buying low and selling high.

“The exchange rates were very competitive, and the transaction times were unbelievable,” said Alistair Constance, director of Mercury FX, which participated in one of the pilots. “It was lightning fast compared to using the correspondent banking network Swift,” the interbank messing platform that connects more than 11,000 financial institutions today.

Constance confirmed numbers revealed in a statement this morning by Ripple that showed 40%-to-70% reduction in costs compared to other foreign exchange providers and an average payment time of two minutes, compared to two to three days for typical cross-border payments

The part of the transfer that relied exclusively on Ripple’s XRP Ledger took on average two to three seconds, according to the statement, with the remainder of the processing time occurring at the originating and receiving digital asset exchanges and local payment rails.

However, the ledger can theoretically conduct only 1,500 transactions per second, compared to Visa’s 24,000 transactions per second. While Swift’s total capacity is less clear, it conducts about 30 million actual transactions per day, or about 350 per second.

For Mercury FX’s part of the pilot, the London-based foreign exchange sent one donation of approximately $100 per day for seven days to a nonprofit in Mexico called Mision Mexico that uses surfing as a form of rehabilitation. Instead of the donation going through the traditional correspondent banking system, the value was transmitted almost instantly via XRP and converted to Mexican pesos when it reached its destination.

“I figured for us to use the XRP network to do that was to kill two birds with one stone,” said Constance, whose subsidiary Ethical Currency is a Mision Mexico partner. "If anything had gone wrong it wouldn't have mattered terribly as we’d have just sent an extra donation to charity."

To facilitate, the series of transactions Constance and another pilot tester, Paul Dwyer of money transfer firm Viamericas, used Ripple’s xRapid product, which is designed to make it easier for businesses to increase liquidity using XRP, according to a statement.

It’s important to note that the xRapid liquidity product that relies on the XRP cryptocurrency is different from other Ripple products that are being explored by more than 100 members including banks and other financial institutions. Only a relatively small number of institutions are using xRapid, including remittance giant MoneyGram, payment processor Cuallix and telecom provider IDT.

Nevertheless, Ripple’s senior vice president of product, Asheesh Birla, positioned the data as a step toward potential broader adoption in a statement:

    It’s encouraging to see positive xRapid results because they validate what many in our industry already know: certain digital assets have utility.