Surprise! RippleNet and XRP are two different things. They are both transaction facilitators provided through the same company, but used for different purposes. XRP, the cryptocurrency, draws most of the attention when in reality, RippleNet gets most of the use. This carries massive implications for XRP, yet as I’ve come to realize, many still do not understand the fundamental difference.

Breaking Down Ripple’s Payment System

Ripple’s payment network is split into three parts: xCurrent, xRapid, and xVia. xCurrent corresponds to RippleNet, and xRapid corresponds to the component with all the notoriety: XRP. It commands the #3 overall spot on CoinMarketCap, boasting 1500 transaction/second capability, a $35 billion valuation, and fees less than one penny. Its lesser known counterpart, RippleNet, offers similar yet inferior capabilities, and carries a tangible valuation of $0. It is not traded as a currency, and offers no direct investment opportunities. It is Ripple’s workhorse, however, despite its relative lack of regard.

Ripple’s partnerships now number well over 100 and continue to grow. Each of these financial institutions are able to transact with each other seemlessly using RippleNet.

Simply defined, RippleNet is Ripple’s proprietary implementation of Interledger Protocol. It is not a cryptocurrency, but it does route payments between different digital asset ledgers through applied cryptographic escrow. More specifically, a hold is placed on the funds to be released only when a cryptographic condition is met prior to expiration. In doing so, it isolates both senders and receivers from intermediary risk, but does not provide public key infrastructure or identity tracking. This process is commonly referred to as ‘Atomic Interledger Payment,’ but does carry some dissimilarities to Atomic Swaps. Think of it as an Atomic Swap system for traditional payment systems.

RippleNet facilitates 89 out of every 100 transactions made between its participants. It is most appropriate when users wish to transact in the same currency or between highly traded currency pairs. For example, an American bank wishing to conduct business with a German bank via RippleNet is a perfect use case, as the EURUSD trading pair carries the most worldwide volume. With this much liquidity on the table, there is always plenty of demand to see the transaction through without delay.

So when is XRP used?

Let’s look at an alternate example to the one above. Instead, we have a Turkish bank wishing to conduct business with a German bank. In this transaction, the EURTRY trading pair would be used, because Germany uses the Euro and Turkey uses the Lira. This market does not offer much liquidity compared to the EURUSD market. In fact, there may not be any RippleNet-equipped Eurozone banks who wish to transact in Lira. This poses a problem.

Enter XRP. It can be denominated in any currency, and is the perfect method of monetary transfer in this instance. It enables institutions to send capital across borders without any foreign exchange headache or fees. Transactions take 4 seconds. While only 11 out of every 100 transactions conducted between Ripple partners take place this way, each partner may be inclined to maintain an XRP reserve for such situations, driving demand. As partnership increases, so does reserve demand .

Why is XRP falling in value vs USD?

Too many reasons. The overarching market has been in full correction mode for weeks now, and is only now reaching strong support levels. Whether or not we break through the support depends on what news and regulation we are hit with between now and the Lunar New Year. Ripple has also suffered from the fallout of the irrational exuberance seen near the end of December that sent it to an all-time-high of $3.84 (CMC spot) where it briefly claimed the #2 spot. The climb was a bit overblown to be sustainable, making the natural market correction all the more devastating. Also, investors have started to realize that the partnership announcements are not as directly beneficial to the XRP price near-term as was once believed. It is clear that Ripple is channeling all partners toward XRP, but it may take more time than short-sighted investors care to allow. Finally, rumors of XRP being added to Coinbase have yet to come to fruition, although several other notable exchanges have picked it up.

What is on the horizon for XRP?

Ripple has been bombarded with positive news throughout the pullback. For one, it continues to line up more commitments to xCurrent. Banco Santander, a leading UK bank, has been testing the system for 18 months now and plans to launch its groundbreaking international payment service Q1 2018. It will incorporate Apple Pay, allowing users to send up to £10,000 securely.

Once the app is downloaded, users need to complete their profile details and can then start to make payments. It connects to Apple Pay, where users can confirm payments securely using Touch ID. It lets users transfer between £10 and £10,000 and payments can be made from GBP to EUR and USD. Currently, payments made in EUR can be sent to 21 countries and US Dollar payments to the USA only.

While xCurrent itself incurs nearly 0 fees, Santander will be tacking on its own fees. It has pledged to be open and transparent with the fees.

The national Bank of Abu Dhabi has also begun using Ripple for cross-border payments. This is the first time the Middle East will be able to experience the benefits XRP will bring.

Woori Bank has concluded phase one testing of Ripple. Phase two involves more in-depth protocol checks, after which it plans a possible launch on the network. Phase two is estimated to complete February 14th, and we will eagerly await the results.

Mercury FX and IDT, two international payment providers, have announced partnerships with Ripple on January 24th. Both companies will use xRapid (XRP) to deliver fast, cost-effective remittance services. Alastair Constance, CEO of Mercury FX commented:

Digital assets promise fast transaction speeds, but XRP is far faster than all of them, including bitcoin. Cutting settlement times from hours and days to just three seconds or less will remove billions of dollars in unnecessary intermediary fees.

These partnerships are in addition to the MoneyGram partnership announced on January 11th. Moneygram is the 2nd largest money transfer company worldwide with 350,000 agent locations in over 200 countries. It will soon begin channeling its payment flows through xRapid and also plans to merge its ecosystem with Ripple’s through xVia.

Finally, Japan’s SBI Holdings launched its digital asset exchange a few days ago in beta. The exchange lists XRP exclusively, lending remarkable credibility to xRapid and propelling it forward. Japan has solidified its footing as Asia’s crypto haven since it licensed 11 exchanges in September 2017. On the SBI partnership, Ripple’s senior VP had this to say:

Today’s decision to make XRP the primary digital asset of SBI Virtual Currencies shows the utility, efficiency, and scalability respected financial institutions around the world see in XRP. This is a critical step forward in our mission to build XRP liquidity and build an Internet of Value.



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