Ripple Labs, Inc., a San Francisco-based fintech startup, recently published a demo to explain how its suite of payments technology products work to provide the “internet of value.” Ripple Labs aims to enable people and organizations to “move money like information does today.”
The demo begins by explaining how the Ripple company intends to bring the internet of value to banking. According to the American fintech firm, people are now “demanding global transactions that are seamless, real-time, certain, and cost-effective.”
However, Ripple’s blog notes that the traditional financial system is not equipped to facilitate faster and cheaper transactions due to its centralized and outdated legacy infrastructure. In an attempt to provide better financial services, the privately-held computer software firm has developed RippleNet.
"Global Decentralized Payment Ecosystem"
As described on its official website, RippleNet aims to be “a global decentralized network that brings together a diverse ecosystem of payments players”, which include network users “who only send payments.” This functional group consists of small and medium sized businesses (SMEs), corporates, small banks, and payment providers.
Ripple’s demo further explains that the second functional group, which it refers to as “network members”, includes large banks and payments providers “that serve as the foundation of the network as they process payments and source liquidity.”
Ripple intends to help network members process payments using their proprietary xCurrent product. The software firm notes that xCurrent facilitates real-time, or instant, payments and bidirectional messaging.
To reduce (or eliminate) transaction failure, xCurrent has a “pre-validation” process and “rich data attachments” for each payment. Additionally, xCurrent provides “payment certainty” with what it refers to as the “pre-disclosure of information” (prior to settling transactions).
Other features of xCurrent include “atomic settlement” which aims to provide “pass/fail processing” between all intermediaries on RippleNet.
"Frictionless" Digital Payments
Network members may also source liquidity with Ripple’s (soon to be launched) xRapid, which the company claims provides access to an “on-demand pool of liquidity through digital assets.” This will significantly reduce liquidity costs and the need for maintaining “nostros accounts”, according to Ripple.
Network users (small banks, SMEs, payment providers) may use xVia which is a Ripple-designed product that can be accessed using a “standardized API interface.” It allows users to “originate payments through their banking partner.”
xVia has reportedly been implemented to allow users to access payments networks globally, send payments “on-demand” and in real-time, and include “rich data attachments” (similar to invoices). xVia users are also able to accurately track their payment status because of “end-to-end visibility.”
As CryptoGlobe reported, the XRP token, which is issued by the Ripple company, surged 40% on September 21st, however, Twitter users warned investors that there may be “huge dump” that could follow the token’s dramatic price increase.
Ripple Likely To "Remain Unstable"
In February, crypto derivatives platform BitMEX also warned investors that Ripple’s payment network architecture will likely “remain unstable and [its] trust networks are unlikely to be regarded as reliable.”
BitMEX’s research report concluded that RippleNet, as described in the firm’s whitepaper, would probably “centralise towards a few large banks and fail to be sufficiently different to the existing financial system.”
Parallel Industries, a research consultancy focusing on decentralized resources, recently noted that reaching consensus on the XRP ledger was “trivial” - a view shared by BitMEX’s researchers as they noted: Ripple’s suite of financial products do “not appear to share any interesting characteristics with crypto tokens like Bitcoin or Ethereum, at least from a technical perspective.”
Trivial to reach consensus quickly and achieve high tx throughput with a limited pool of unincentivised validators. Just like PayPal and Visa.— Parallel Industries (@parallelind) September 22, 2018