Ripple plans to provide solutions for central bank digital currencies
Ripple published an article saying that they are controlling a private version of the open-source XRP Ledger so that they can provide a solution for central bank digital currencies. There are several technologies and payment firms that are competing to provide central bank digital currency solutions. These solutions will be profitable for long-term deals and one of their highest clients is Mastercard.
Ripple told that distributed ledger technology (DLT) will be the main basis for CBDC’s, just like today’s cryptocurrencies are. They also added that they do not see it as a bright future. Many central banks do see the dominance of DLT, but they have also raised their concerns regarding the infrastructure and scalability issues.
On scalability concern, Ripple made an edge that their solution has been designed to resolve the cryptocurrency payment issue. The company claims to scale thousands of transactions per second and has done hundreds of thousands in time. They further added that it is 61,000 times more energy-efficient than Bitcoin.
Another pitch that was made in favor of Ripple was their solution RippleNet. XRP Ledger has requested several money transfer companies and a few banks. On the contrary, RippleNet is being used by various big banks that say good things about technology.
Japan’s Bank has been built out of MoneyTap technology, which acts as an interbank payment system. They are even developing ATMs that will be powered by Ripple technology.
Ripple boasted the interoperability potential and proposed a network of CBDC Ledgers to allow full settlement. Recently, four central banks declared about a multi CBDC bridge project so that interoperability can be surveyed.
Whereas substantiality, for some central banks Ripple Technology can be a rational choice.
Is Ripple invulnerable?
The bigger problem for Ripple is optics. Think of it like how many central banks will agree to entertain a company that is in a legal battle with the SEC, whether XRP is a security. If Ripple loses its SEC battle, the company will be crushed by legal claims. That unpredictability will put Ripple in the back seat.
Solution? Ripple can solve this concern in two ways. First, if Ripple is serious about CBDC and received the right feedback, they can set up a sister company to run their operations. And the second could be that they could go to court and file a case.