Today, crypto and blockchain are more mainstream than ever. Every major news agency is talking about crypto or having a discussion about how the crypto markets are doing on a daily basis, and it even went on prime-time on SNL. There is a palpable excitement for crypto that is showing no signs of slowing down – tokenization is here to stay.
It is estimated that at least 46 million Americans own cryptocurrencies today, and many other countries are adopting this technology at higher rates. Large companies like Square, Robinhood, Visa, Mastercard, and PayPal are firmly integrating crypto into their product stacks. World famous DJs offer exclusive NFTs to their worldwide audiences. Even central banks are diving headlong into the potential of crypto – around 80% of central banks are investigating use cases with central bank digital currencies (CBDCs), with 40% already testing proof-of-concept programs. Last month, El Salvador became the first country to adopt Bitcoin as legal tender, and in the US, Miami is taking steps to turn the city into a hub for crypto.
Ever since Ripple was founded, we’ve understood the potential of crypto to transform the financial system – from changing the way money moves around the world, to near-instant payment processing, to the way we do it Borrow and lend money through DeFi platforms.
In 2012, when Ripple first hit the market, crypto and blockchain largely lacked the infrastructure, liquidity, and confidence required to launch. At the time, there were few exchanges with a volume of a few million dollars a year compared to traditional exchanges like the Nasdaq with a volume of around $ 5 billion a day. Today there are hundreds of exchanges around the world that turn over billions of euros every day.
With this increasing adoption, there is a growing need for tokenization, the use of digital tokens to represent ownership of any type of asset (physical or not) on a blockchain. Tokenization is changing the way people buy, sell, track, and manage assets – everything from art and real estate to intellectual property, stocks, and supply chain goods. In fact, the World Economic Forum predicts that 10% of global GDP will be tokenized by 2027. With years of experience working with financial institutions (FIs) using blockchain-based technologies, Ripple is uniquely positioned to partner with businesses for this future. No question about it – anyone who does not accept these new technologies will be left behind.
Preparing the company for the crypto future
Ripple keeps evolving. We are expanding from a cross-border payment network to a platform that offers tokenized services that provide crypto capabilities to the company and prepare them for a future where crypto is central. RippleNet was originally designed to address the speed, cost, and transparency challenges of cross-border payments for those severely underserved by the financial system as a whole.
On average, the consumer fee to send money across borders is 7% or a $ 14 fee to send $ 200. Small and medium-sized enterprises (SMEs) also experience exorbitant costs and high expectations from their customers. With fewer banks lending capital to SMEs since the 2008 financial crisis, these companies have been struggling to get loans to supplement their already limited working capital (around 70% of emerging market SMEs have no access to credit, according to the World Bank). In addition, late payments to overseas suppliers, employees, or other critical partners can be very damaging to these companies.
With RippleNet, payment service providers and midsize banks have a better way to compete and avoid having to pay huge fees that are inevitably passed on to their customers and don’t have to wait days for payments to be delivered.
On-Demand Liquidity (ODL) eliminates the need for pre-financing – for cross-border payments by using XRP as a bridge between two currencies. When the first movers started using the product, it became clear that the PSPs and digital first banks, which specialize in wire transfers, e-commerce, and SMB payments, would get the most benefit – high volume, lower Value that medium to large banks have long ignored. Today, ODL fulfills a real need – the ODL volume in RippleNet in 2020 was a nominal value of 2.4 billion US dollars.
In October 2020, we launched the Credit Line, an extension of ODL that enables RippleNet customers to raise funds on demand to initiate large-scale cross-border payments using XRP. Unlike established companies that have large balance sheets that allow them to scale their business quickly, many fintechs and small and medium-sized enterprises (SMBs) lack the capital and resources to stay competitive. Before moving to RippleNet, they didn’t have access to the same services as traditional FIs and were overcharged for legacy systems – sometimes even using expensive VC money to fund cash flows. We are constantly building to meet the needs of our current and future customers.
It all starts with a wallet
Since customers were ready to switch from pure fiat to crypto-enabled flows, we were able to easily add new services and features such as ODL and credit line. In the future, every customer will join RippleNet with the same basic service and wallet that supports both crypto and fiat. With the introduction of the wallet, customers are now ready to take advantage of the latest blockchain-enabled solutions that keep them up to date – the platform is designed to be seamlessly updated and new services to be added as the customer requests. In the future, customers will be able to use their Ripple-enabled wallet to store XRP, BTC, stablecoins and anything that is tokenized.
We got the idea of creating a platform that can be built on top of a platform, worked brilliantly with Cisco back in the 80s – they first brought networking into the company and then were perfectly positioned when the internet started simply building on that foundation . Offer customers additional services such as security tools and collaboration software. We do the same with RippleNet. Customers choose to work with Ripple because we are a trusted source of corporate crypto that will help them grow and scale their business.
When we launched ODL commercially in 2018, the payment flow required payments to be made in fiat, converted to XRP, and then converted back to fiat currency in the destination country. Over the years we have refined ODL and optimized the product to improve efficiency and experience. Today, ODL customers can send XRP for cross-border payments directly through a crypto wallet. You can use your wallet to get XRP on demand instead of having to get it through a third party. This gives customers more flexibility and choice and at the same time reduces friction in the payment flow. It also gives our customers the ability to quickly grow and scale with new partners and currencies by simplifying the onboarding process and enabling multiple currencies through a single wallet.
FlashFX, an innovative payment technology company based in Australia, was founded on the belief that smart technology is key to unlocking the potential of global payments. They are constantly looking for new ways to integrate cutting edge technology to provide the most innovative services to their customers. As a long-standing ODL customer, FlashFX is one of the first to connect with a customer who uses Ripple’s new ODL model. As such, they are now able to support payments in GBP – a currency that ODL did not previously support. FlashFX is just one customer growing their business with Ripple’s products.
This follows on from the incredible global momentum for Ripple. Above all, the APAC region is exploding with growth and opportunity thanks to progressive crypto regulation and innovative companies looking to seize the chance to be leaders in the crypto space. For Ripple, we see some of our biggest growth volumes here. Transactions in Southeast Asia grew ten-fold in 2020, driven by existing RippleNet customers and new connections.
New clients like Novatti joined Ripple’s global payments network and used ODL to facilitate payments from Australia to the Philippines, and we acquired 40% of Asia’s leading cross-border payment specialist Tranglo to accelerate the expansion of ODL and credit lines in the region. As more companies want to add crypto-enabled services, customers like Novatti and Tranglo play an important role in the network as Fiat entry and exit ramps.
Today it’s about when and not whether crypto will play an essential role in the future of financial services. This industry has advanced at full speed over the past decade and is only getting faster. The future belongs to those who build bridges between the traditional financial world and the new paradigm of crypto and blockchain technologies.
If you are a financial institution looking for a competitive edge to grow your business through crypto, contact us today. We are also hiring for a range of positions – check out our vacancies.