In the rapidly evolving world of digital finance, XRP stands out as the practical cryptocurrency since it is associated with Ripple’s RippleNet. Many cryptocurrencies in the market serve as a speculative asset. But XRP has carved out a leading global transaction system. How? Ripple’s RippleNet — a proprietary network for financial institutions plays a critical role in enhancing XRP utility in cross-border payment networks. What is RippleNet? How does it enhance XRP utility? Let’s delve into and explore them in depth.
What is RippleNet?
RippleNet is Ripple’s global payment system designed to render speed, low-cost, and reliable cross-payments across the globe. Traditional banking systems usually rely on globame payment platforms like SWIFT which is an outdated one. But, RippleNet leverages the latest blockchain technology, eliminating intermediaries, reducing transaction fees, and real-time transactions within seconds.
Because it connects financial institutions, banks, and payment providers across the globe into a single payment network. As a result, users can tirelessly transfer money internationally using Ripple’s RippleNet. How does it impact XRP usability? RippleNet comprises several key solutions:
- xCurrent – It is used for messaging and transaction settlement
- xVia – This solution is used for payment APIs
- On-Demand Liquidity ODL – It is used to source instant liquidity on XRP.
Among these, On-Demand Liquidity (ODL) is the major phase where XRP usability is enhanced.
The Role of XRP in RippleNet
XRP is one of the core utilities of RippleNet, and its function is centered around its function as a liquidity tool. In traditional global payment methods, banks and financial institutions needed to hold pre-funded accounts with foreign currencies. This ties up a large amount of capital and increases transaction costs. RippleNet eliminates this pre-funding requirement by enabling financial institutions to use XRP as a bridge currency via the On-Demand Liquidity (ODL) service.
How XRP Enables ODL?
- Whenever a user initiates a ross-border payment on XRP, using ODL, local currency on fiT will be converted to XRP.
- Then, XRP will be sent across XRP Ledger within a few seconds.
- Once it reaches the recipient end, partnered financial services will convert XRP to the receiver’s local currency and deploy.
XRP and RippleNet Global Reach
RippleNet has enhanced its utility in over 70 countries by partnering with 100+ financial institutions like banks, payment providers, and remittance services. Some well-known institutions are Santander, SBI Holdings, PNC, and more. All these institutions have solidified RippleNet’s role in modernizing the global financial infrastructure. The more institutions partner with RippleNet, the more the usability of XRP will be enhanced across the globe. This is because when the RippleNet network grows, the use of XRP as a bridge currency will be increased across nations.
XRP and RippleNet in Emerging Markets
In emerging marketplaces, financial infrastructure for cross-border payments is less developed. With RippleNet and XRP, users can access efficient solutions for remittance and international money transfer. For instance, XRP remittance flows in regions like Latin America, Southeast Asia, and Africa at high-speed transactions. Furthermore, RippleNet blends with XRP ODL service, allowing fintech companies and local banks to render speedy and low-cost money-transferring facilities to individuals and businesses.
RippleNet and XRP Use Cases Beyond Payments
- Decentralized Finance (DeFi)
- Optimize Liquidity and Manage capital efficiency
Final Thoughts
As RippleNet has been partnering with banks, payment providers, and financial institutions across the globe, XRP is significantly enhancing its usability in the marketplace. It solves transaction issues like cross-border payment liquidity and inefficiencies. Hence, many businesses and individuals are transforming global finance infrastructure into XRP.
