Ripple, the company behind the XRP cryptocurrency, has been making waves in the fintech industry with its ambitious vision of creating a global payment network that can rival Bitcoin. In a recent interview with CNBC, Ripple CEO Brad Garlinghouse explained how XRP can solve a billion-dollar problem plagues the current cross-border payment system.
What is the billion-dollar problem?
According to Garlinghouse, sending money across borders is slow, expensive, and inefficient. He said that banks and other financial institutions must pre-fund accounts in different countries with local currencies, which ties up capital and creates liquidity issues. He estimated about $10 trillion of trapped capital in these accounts worldwide.
How can XRP solve it?
XRP, the native currency of Ripple’s payment network, can act as a bridge between different fiat currencies and enable instant and low-cost transactions. Garlinghouse said that XRP can reduce the cost of cross-border payments by 60-70% and increase the speed from days to seconds. He also claimed that XRP is more scalable, secure, and environmentally friendly than Bitcoin, which consumes much energy and has a limited transaction capacity.
Why is XRP better than Bitcoin?
Garlinghouse argued that XRP has a clear use case and a real-world problem to solve, while Bitcoin is more of a speculative asset and a store of value. He said that XRP is designed to be a medium of exchange and a unit of account, which are the essential functions of money. He also predicted that XRP will surpass Bitcoin’s market capitalization as more people and institutions adopt it for cross-border payments.
