TLDR
- XRP transactions settle in just 3 seconds, significantly faster than traditional banking systems.
- Ripple offers technology for accessing existing liquidity, not direct liquidity provision.
- $50 billion in liquidity is traded daily across digital assets like XRP, Bitcoin, and Ether.
- Traditional bank transfers can take up to 24 hours and incur extra fees, as per a banker’s experience.
Ripple’s CEO, Brad Garlinghouse, recently discussed the impressive speed of XRP transactions during a conversation with a banker. The exchange highlighted a key difference between traditional banking systems and digital asset technologies, with Garlinghouse emphasizing that XRP can complete a settlement in just three seconds.
Traditional Banking and Payment Delays
A banker who had previously participated in a fellowship at the Bank of England shared his experience with traditional banking systems. He explained that transferring funds from the Bank of England to Centendaire UK took around 24 hours to complete. This transfer also incurred a $10 fee, and the payment was uninsured during this time. He pointed out that such delays, particularly the 24-hour settlement period, could present problems for people in lower-income brackets who might struggle with these additional costs.
While acknowledging that some critics may exaggerate the issues with the system, the banker suggested that the inefficiency of such transfers needed urgent attention. His comments set the stage for a deeper discussion of the potential of digital assets like XRP to address these problems.
Garlinghouse’s Response on XRP’s Role in Liquidity
In response to the banker’s concerns about liquidity, Garlinghouse clarified Ripple’s position in the market. He explained that Ripple does not directly provide liquidity but offers technology that helps users access liquidity that already exists in the marketplace. Garlinghouse pointed out the scale of digital asset trading, mentioning that around $50 billion in liquidity is traded every day across various digital assets like XRP, Bitcoin, and Ether.
He also explained that the concept of a “run on Ripple” was not applicable to Ripple’s business model, as the company does not act as a liquidity provider but instead facilitates access to existing liquidity. Garlinghouse acknowledged that while digital assets might face challenges in terms of liquidity, the overall market shows that liquidity is abundant and active across different platforms.
The Speed Advantage of XRP Transactions
The key part of the discussion came when Garlinghouse addressed the speed of XRP transactions. He made it clear that, unlike the traditional banking system, where transfers can take hours or even days, XRP transactions settle in just three seconds. This statement emphasized the advantage that digital assets have in terms of transaction speed, making them a potential solution for enhancing payment efficiency.
The banker’s earlier example of the 24-hour settlement period stood in stark contrast to Garlinghouse’s claim of three-second settlements. XRP’s rapid transaction processing could potentially transform global payment systems, reducing the time and cost involved in international money transfers.
Ripple’s Technology and the Future of Payments
Amelie, a crypto advocate who shared the video, pointed out that Ripple’s technology could offer significant improvements to traditional banking systems. The conversation between Garlinghouse and the banker showcased the potential for digital assets, like XRP, to speed up payment systems and reduce transaction costs. Garlinghouse’s emphasis on XRP’s quick settlement time could encourage further discussions around the broader adoption of blockchain technologies in financial institutions.
The discussion highlighted the growing interest in digital assets as a viable alternative to conventional payment methods, with Ripple positioning itself as a key player in this transformation.
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