Five Major Banks Are Jumping On Board The Cryptocurrency Train Through Ripple’s Blockchain Technology

This year has arguably been the best for cryptocurrencies and their underlying blockchain technology. This is particularly owing to the steep surge in the value of most currencies. The rapidly growing interest in cryptocurrencies has thus been attracting a lot of attention even from the banking sector probably because it is clear that cryptocurrencies are here to stay.

What is Ripple and why is it attractive to the banking sector?

Bitcoin is currently the most popular digital currency out there not only because it was the first digital currency to hit the mainstream a few years ago but also because it is introduced blockchain technology. It is also the cryptocurrency with the highest value against the dollar. However, an altcoin called Ripple has risen in value by a margin of 10,000 percent this year alone, thus attracting a lot of attention. This means it is one of the cryptocurrencies that have offered the highest return in value in 2017.

Blockchain refers to the secure and decentralized system that facilitates the store and transfer of data while eliminating the problem of double spending. It is also secure because it cannot be hacked, making it an ideal solution for digital transactions. Most cryptocurrencies and their blockchains usually target a niche market. For example, Bitcoin was created as a store of value. Ripple and its blockchain, on the other hand, focuses on simplifying bank transfers which is why it is attractive to banks.

Ripple announced in June last year that it had struck partnerships with numerous banks including Italy’s Unicredit, Spain’s Banco Santander, the Canadian Imperial Bank of Commerce, and UBS which is based in Switzerland. These partnerships have mostly revolved around testing.

“We’ve reached the stage where a significant number of these banks are moving to commercial production. What’s significant here is the space is moving beyond experimentation and moving into actually deploying Ripple blockchain,” stated Chris Larsen, the CEO of Ripple during an interview held last year.

Ripple announced more recently that Banco Santander’s U.K unit and American Express had also jumped on board the Ripple Blockchain to facilitate real-world transactions. These partnerships might significantly increase the pace of international payments. Blockchain technology makes it possible for transactions to be carried out almost instantly which is a stark contrast to the regular banking systems through which take days before transactions can go through.

Faster transactions will offer a lot of benefits especially in e-commerce and businesses in other industries. The fact that banks are also interested in taking advantage of the advantages that blockchain offers might hint towards the fact that financial institutions are acknowledging that they cannot stop the cryptocurrency movement and are thus eager to jump on board. They are thus adapting to take advantage of future opportunities, a move that might also allow them to retain customers.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Image courtesy of Karl Baron via Flickr