XRP might not be the Platonic ideal of a peer-to-peer currency, but a wave of new adoptions shows that Ripple must be doing something right. In addition to extending RippleNet to “close to 200 banking and financial partners”, and a handful more for xRapid, the company behind the third-largest cryptocurrency has also facilitated “billions” in inter-company payments for its banking partners in northern Europe.
In an interview with The Banker, Paula da Silva, head of transaction services at SEB, confirmed that the Sweden-based banking group had adapted Ripple’s fintech platforms for high-volume trades:
We exploring the DLT. We are not yet using any crypto. We are fit yet for that, we believe. But other DLT, we are exploring how the benefits look and also how to connect those to legacy systems, as we have to live with both for quite a long time, probably.
Mrs. Da Silva was speaking at the Sibos 2018 conference in Sydney. Her employer, Skandinaviska Enskilda Banken AB, serves 3,000 corporate clients and 400,000 SME’s, as well as four million private individuals. Crypto or not, Ripple’s ledger technology has been a hit, she confirmed:
Before this year, it was only one customer on it then. Now we have all customers on SEB doing transfer inter-company between Sweden and the US, they are on the Ripple platform. So we have a couple billion going through that and we are trying to understand how that goes, and what we’ll need to make it happen even better, and in the future exploring what could be the next step of this.
Building From the Banks Up
Maximalists will object, correctly, that this is not a coup for cryptocurrency, and Mrs. Da Silva herself emphasized that there was no cryptocurrency involved.
But that may be what makes Ripple’s long-term play a winning strategy. One of the biggest struggles in bootstrapping a cryptocurrency is developing network effects: there’s no value in a payment system with no users.
Most aspirants have tried to jumpstart their payments systems by attracting new users (e.g., Stellar’s enormous airdrop) or by incentivizing merchants (like Electroneum) or simply attracting gullible users (Initiative Q). However, this strategy seems to move in fits and starts: most users, including the most voracious crypto enthusiasts, are unlikely to use crypto for payments more than a few times a year.
Ripple’s strategy, on the other hand, is to sell DLT and crypto solutions to banks and payment providers: the kinds of parties whose businesses require using the payment technology many times per day. Moreover, the fact that cryptocurrency is an optional part of the settlement process—RippleNet clients can use XRP for instant liquidity, but doing so is not obligatory—allows banking partners to experiment with digital ledgers leaving the rails of legacy banking.
It might not be totally in line with Satoshi’s vision, but in terms of real use, Ripple is several yards ahead in the race to adoption.
The author has minor investments in XRP and Stellar.