Ripple, the company behind its eponymous cryptocurrency (XRP), has lately been on a streak of forging alliances with financial institutions all over the world, developing relationships to add banks to their Ripplenet via their xCurrent product. Along with partnerships in India, Singapore, and Saudi Arabia, it has now announced a collaboration with a major Brazilian private bank.
Besides having its own cryptocurrency, Ripple is known for providing backend payment solutions via xCurrent, its brand payment transfer solution, through which it facilitates frictionless cross border payments for global entities such as banks, exchanges and payment providers.
Through xCurrent, Ripple uses blockchain technology to perform its payment transfers for these institutions, and the usage of blockchain in addition to Ripple’s developed solutions ensures that the transfers are faster, securer, and inexpensive as compared to the solutions set in place by these entities now.
Ripple Shaves Time And Costs With International & Brazilian Privates
Keeping all of this in mind, it came as no surprise when one of the largest banks in Latin America and the largest private bank in Brazil, Itaú Unibanco, recently joined with Ripple to use the same xCurrent solutions in order to enhance its own payment transfer services.
Itaú Unibanco will be using the service to improve its international payment transfer system through the blockchain based functionalities that Ripple brings to the table.
Patrick Griffin, Ripple’s head of business development, stated that with this collaboration, Ripple hopes to help resolve the issues that regular customers face when it comes to international payment transfers, since it is very important for that to be done in an age where the customer expects convenience almost as a basic right.
[bs-quote quote=”“Whether it’s a teacher in the U.S. sending money home to his family in Brazil, or a small business owner in India trying to move money to open up a second store in another country, it’s imperative that we connect the world’s financial institutions into a payments system that works for their customers, not against them.”” style=”default” align=”left” author_name=”Patrick Griffin” author_job=”Head of Business Development” author_avatar=”https://cryptobriefing.com/wp-content/uploads/2018/02/Ripple-Icon.jpg”][/bs-quote]
A Positive Ripple Effect
Being a payment solutions provider and not just a facilitator of cryptocurrency, Ripple’s aim is to have both of these operations of its company be acknowledged and identified as primary solutions within their respective markets, and continuing to form partnerships with global institutions is certainly going to help Ripple achieve that objective.
Yet, the question of the impact on XRP remains. Many investors learned last year that, just because Ripple is deploying products like xCurrent, this does not mean that there is a fundamental change in the real use and demand for XRP in the context of processing and use of payments.
There may a speculative run on the demand for XRP from investors based on news, yet speculative demand by investors for XRP on deployments of products like xCurrent does indicate a tangible increase in the underlying demand for XRP by consumers or partners.
How the news could affect the value of XRP
To understand the effects of this deal, we might need to look at Ripple’s history in terms of market value first.
Ever since its launch, in 2014, it has seen relative movements in its price, but remained largely flat; then it started seeing a steady increase in price from month of April, where it commanded a price of thirty cents.
It continued its gradual growth buoyed by the bull run of Bitcoin towards the end of 2017, where other cryptocurrency basked in the glory of Bitcoin’s success and saw an increase in their value, Ripple also benefited from the trend and enjoyed its all-time high of more than $3 across all markets in the first week of January 2018.
The increase in the price came primarily from the rapid moves made by Ripple in conducting meetings with members of the Federal Reserves of several countries, as well as its many announcements of partnerships with many banks and financial institutions. Many of these announcements pertained to partner additions to Ripplenet and the use of xCurrent, with a few institutions like Moneygram piloting xRapid, the product which uses the XRP currency to conduct payments.
However, it was not long before it faced a drop in its value, especially after rumors of an overall ban of cryptocurrencies from South Korea that also affected almost all cryptocurrencies at the time.
Ripple has since recovered from that fall, and is currently trading at around the same price of just above $1 as it was being traded in the last week of December 2017.
According to historical data at CoinMarketCap, recent news of Ripple’s collaboration with major corporations has helped XRP’s price to go up. For instance, when Ripple announced its partnership with Lian Lian from China, it helped increase the price from around $0.75 to go above $1 within just a couple of days; whereas, news of its collaboration with an exchange from the UAE only helped sustain the price of XRP.
If this historical trend is to be believed, then this recent news could also help in increasing the price for XRP, or at least help sustain it for current holders at the very least. However, Ripple does exist within the context of the overall markets and announcements in a bear market may not contribute significantly to stability or price growth.
The questions this year, for many “hodlers” of XRP will be, how many institutions will opt to pilot XRP based products, and will they adopt it this year or over the course of several years?
Disclaimer: The author has traded XRP in the past and is a “hodler” of the cryptocurrency as well.