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Ripple xRapid could go live “in the next month or so”

Posted: 18 September 2018 7:05 pm

What's xRapid and why does it matter?

Ripple could launch xRapid "in the next month or so," said Ripple head of regulatory relations for Asia-Pacific and the Middle East, Sagar Sarbhai to CNBC.

"I am very confident that in the next one month or so you will see some good news coming in where we launch the product live in production," he said.

xRapid has been under testing, seeing light use in specific trials, for a while now. And news that it could be rolling out commercially within the next month might be a significant development.

What makes xRapid different?

xRapid stands in contrast to other Ripple solutions in that it actually uses the XRP token to provide liquidity, rather than just being a kind of blockchain-based messaging system like Ripple's xCurrent.

xCurrent might be a more cost-effective system for banks to send money between each other. It's generally more suited for use along well-trodden and popular payment corridors since it's a more efficient language for banks to speak to each other within their existing relationships.

xRapid, however, is actually about moving digital money in the form of XRP when needed. It's generally as simple as converting one currency to XRP, sending the XRP overseas, and then converting the XRP to the desired other currency. One of the preferred exchanges nominated by Ripple will typically carry out these conversions.

Relative to xCurrent, this has a few serious implications:

  • It actually uses XRP. It will actually involve the usage of XRP the token, rather than just the XRP ledger. This increase in demand may push up prices.
  • XRP is deflationary based on usage. The minute transaction fees involved with XRP usage are burned. The idea is that the total supply gradually decreases over time. If the amount of transactions on the network multiplies suddenly, that's quicker deflation. Although it probably won't make much of a difference for a long time.
  • It allows Ripple to move into the remittance space. xCurrent is more about slow, high-volume payments between banks. xRapid focuses on quick low-volume payments of the kind found mostly in the enormous remittance sector. The commercial release of xRapid cracks open the doors to a much wider variety of customers, such as Western Union and MoneyGram, both of whom have been trialling it.

Global remittance flows are worth over $600 billion per year, and the vast majority is in small amounts to developing countries. Whoever has the lowest fees possible, and ideally allows transfers by app, will be in a position to capture individual corridors.

So while banks and remittance companies are struggling to offer the best solution to customers in individual markets, and competing for dominance, Ripple aims to be the best option for serving all of them. With its wide range of partnerships, xRapid might roll out extremely quickly and spark a fee race to the bottom. This in turn might bring on even more clients (the banks and remittance companies) to Ripple.

Ripple is being contested by other solutions such as Stellar, but if the commercial release of xRapid is only a month away and if its partners are keen to start using it as soon as possible, it stands to grab up a sizable portion of the market quite quickly.

The timing of the commercial xRapid release, and the release of the Ripple-based MoneyTap app, might not be a coincidence either. It looks like both will be going live at about the same time.

In a nutshell

Basically, the international money moving business is enormous. It makes bitcoin look like chickenfeed.

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Just the remittance sector, which is just a fraction of the total industry, handles more than twice as much money per year as the entire cryptocurrency market cap. It's possible that XRP as a token could find a use across a significant portion of that enormous total, not that it needs to in order to experience noticeable differences.

And Ripple is in a good position to get at multiple facets of the whole, both with the release of xRapid and by pushing xRapid onto existing xCurrent customers. Given the size of those markets, Ripple doesn't even need to make an especially large impact for XRP to experience a fundamental shift in economics and underlying demand.

Assuming even a moderate degree of things-going-well on Ripple's part, and that the news of xRapid's commercial release is true, it might be pretty safe to assume interesting things for XRP prices in the next few months – just in time for Christmas.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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