XRP Too Slow And Centralized For Banks: Nano Founder

Nano Founder Banks Won't Use XRP

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XRP adoption is unlikely as it’s slow and too centralized, says the founder of Nano (NANO). He thinks banks are unlikely to accept it as it would give Ripple Labs, XRP’s creator and biggest hodler, a near-monopoly on the entire Forex market.

Colin LeMahieu, who created the Nano cryptocurrency, explained to Crypto Briefing that the financial sector couldn’t use XRP. In his eyes, the fact that Ripple controls more than half of the total supply – with no obligation to spend or burn it- makes it “too risky” for the banks.

“Many FX firms I’ve talked with have considered and dismissed them based on the fact that one company holds over 50% of the market cap,” wrote LeMahieu in an email. “A single company holding this much of a position on a currency isn’t something they would accept from a risk perspective.” 

Is XRP centralized?

The XRP token is specifically designed as a transaction network for the financial sector. Banks can convert fiat funds into XRP and then send it to the recipient-bank, who convert it back into the local currency. Whereas traditional payment transfers can take up to three days to settle, XRP transactions can complete in seconds.

More than 100bn XRP tokens were created, exactly six years ago today. Out of the total supply, the creators retained 20%; the remaining 80% was given to Ripple Labs. Since then tokens have gradually been distributed to users.

In May, the company moved the supply into an escrow account; this gives it access to a billion tokens every month. Nearly 41bn tokens are currently in circulation, with the remaining 59% still held the Ripple escrow account. In Q3 2018, Ripple sold 400m XRP tokens. It would take at least 5 years* for the company to distribute the remaining supply.

Up until this summer, it was common practice to use ‘Ripple’ and ‘XRP’ interchangeably when describing the token. But in an email sent out in July, Ripple Labs dissociated themselves from the XRP token, which they described as an “independent digital asset”. 

The company still owns more than 60% of the XRP total supply, but as the Chief Marketing Strategist explained to The Street at the time, this didn’t necessarily mean they controlled it, “We happen to own a lot of XRP – we own a lot of cash, chairs, and computers.”

Nano is faster than XRP

Nano is fast. Most blockchains use a legacy structure; blocks are processed and confirmed sequentially. The Nano blockchain is based on a block-lattice architecture. Each user effectively has their own blockchain that is incorporated with other Nano users.

Tests in October found a Nano transaction to Binance completed in roughly three seconds, seven seconds faster than XRP. Stellar Lumens (XLM), another settlement token, could complete in six seconds.

Unsurprisingly, LeMahieu believes Nano is the best solution for the settlements market; it’s a fast and feeless payments solution. Banks want to speed up a process that can take days to confirm. He points out that Nano allows near-instant settlement and also lowers overhead costs, meeting the real-world priorities for most FX traders.

LeMahieu also argues Nano is more decentralized than XRP because the total supply is circulation. Surplus tokens not sold or distributed were burnt. No private entity, or even the Nano team, owns more than half of the supply.

“Our biggest differentiator to XRP is that we’re a true, decentralized currency rather than a company”, he wrote. “This translates well to the financial sector which will never really accept a private entity that controls ~50% of the currency supply for various purposes.”

XRP Adoption

Ripple Labs prides itself on its number of partnerships. Many of these are with well-known international banks and financial institutions. Crypto Briefing found out in October that the National Bank of Kuwait (NBK) was in the process of implementing xCurrent, a fast messaging service used by banks before, during and after a cross-border transaction.

LeMahieu believes most banks wouldn’t be able to adopt xRapid, the payments solution that uses XRP, because Ripple controls most of the supply and is too centralized.“XRP is taking the strategy of trying to insert itself as a new, central trading platform,” he wrote. “This is unlikely to be accepted by FX firms since it would be a central point of failure and puts one firm in monopoly control of the entire market. Regardless of how good they think their governance will be, this will be unlikely to ever be accepted.”

The number of banks actively implementing xRapid remains uncertain. We contacted numerous banks who had said previously they were testing it – including American Express, Credit Suisse, UBS and Barclays. All either declined to comment or never returned our emails.


The Nano team itself isn’t engaging in the FX market. Traders can build inter-dealing services on top of the network. Banks could add currency pairs and simply swap into Nano for a cross-border transaction, which would be faster and cheaper than the traditional settlement systems. With the total supply distributed among users, it would also be more acceptable from a risk perspective.

LeMahieu is confident interest in Nano will grow, and says that he is already in talks with a few interested traders. The main selling point is still its speed, three times faster than XRP. He says that this makes it an obvious alternative, “There’s little reason to market this as it’s a natural competitive advantage, anyone able to execute faster trades will win every time.”

*Clarification: an early version of this article overstated the time it would take to fully distribute the XRP token supply. It will take 52 months, not years, to unlock the full XRP escrow. The 5 years is worked out if Ripple Labs sold all 1bn XRP tokens unlocked every month – it will most likely take longer. 

The author is invested in digital assets, but none mentioned in this article.

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