Any investor will tell you that you can make a fortune in the stock market. Nevertheless, everything changed in 2017, when the crypto-currencies led their investors to unprecedented, record profits. Starting the year with a total market capitalization of $ 17.7 billion, digital currencies have completed it with a total of $ 613 billion. This, in turn, means a price increase of 3,300%.
Bitcoin and block: two engines of triumph, crypto-currency
Bitcoin is often called the culprit of the whole celebration, and it makes no sense. It became the largest in terms of trading volume, the most popular virtual asset among traders around the world, and most of all contributed to the growth of the popularity of the blockbuster. Block is a digital distributed and decentralized register that registers all transactions without the need for a Financial intermediary.
In addition to the actual bitcoin, the blockade technology has become an unquestionably important reason for success, thanks to which the altcoyins continue to grow. The development of the blockade stems from the idea that the existing banking system has fatal flaws, which must be eliminated. Among the shortcomings are high fees for money transfers caused by the role of banks as an interested party in financial transactions, slow transactions, especially if they pass through state borders (sometimes in this case it may be necessary to wait three to five days).
Blocking to success brings three specific advantages. Firstly, decentralization, which guarantees that neither party to the transaction or cybercriminals will be able to obtain vital information for the operation of the network. Block is considered to be exceptionally secure, because its data is stored on hard drives and servers around the world.
Secondly, blocking excludes Financial Institutions from the equation as intermediaries. The less people take the transaction fee, the less this transaction will cost. So, either ordinary people will benefit, or at least the business will make a big profit.
But the most important thing is that the blockage can significantly speed up the processing of remittances. Since reconciliation and proof of transactions occur around the clock, seven days a week, transactions that used to take several days to reach the payee now reach it in seconds. Blokchein can transform the financial services industry, also making life easier for retailers, high-tech start-ups and the energy industry through logistics innovations.
Ripple breaks into the game
The former gray horse market, you can say, “revenge” bitkoinu for all the worthy projects left on the sidelines of life. Ripple developed in the shadow of bitcoin, for 53 weeks showed an increase of almost 50 000%. Similar successes, this token is entirely due to the peculiarities of its detachment.
The main task of Ripple is to establish partnership with large financial institutions and replace existing payment systems. In June 2016, it was announced that seven global banks tested the blocking project under different loads, but Ripple’s finest hour really came only with the conclusion of a partnership with American Express (NYSE: AXP) and Banco Santander (NYSE: SAN) and the holding the first real cross-border deal in mid-November 2017. This partnership allows American Express customers to send payments to UK Santander accounts via FX International Payment network without any cards, and their transfers will be processed on Ripple’s blockbuster. It is widely believed that such steps will lead to the emergence of instant transactions.
Earlier this month, Ripple got even more glory by announcing a partnership with MoneyGram International (NASDAQ: MGI) money transfer service. This deal mostly focuses on the Ripple token, XRP, aiming to speed up its cross-border transfers. The idea was that some domestic currency, for example, a dollar, can be quickly converted into XRP, and then converted to the currency of the country of destination outside the United States as quickly as possible.
The partnership with MoneyGram is very interesting, considering that the prices for transactions in Ripple are a fraction of a cent (compare with bitcoin, the cost of translation of which can approach $ 30).
To be happy early
But still investors of Ripple will find a lot of reasons for concern. I would like to cite three main problems of the project, not ranking them by their importance.
1. Large banks develop their own blockhouses
One of the most serious problems for crypto currency is the relatively low entry threshold. You will only need time, finances and a team that knows how to write computer code, write a block and a digital currency tied to it.
But Ripple would have to do something else besides smugly looking at competitors in the rear-view mirror. Despite the focus of the project on cooperation with the largest financial institutions, banks, in turn, do not necessarily consider Ripple the solution to their problems. In August 2017, six world banks – Barclays, Credit Suisse, the Canadian Imperial Bank of Commerce, HSBC, Mitsubishi UFJ Financial Group and State Street, announced attempts to create a “token for mutual settlements,” which was supposed to exist on their own closed blockade. According to Haider Jaffrey, head of the analytical department of UBS for strategic investments and finteh-innovations, this project should start at the end of 2018 – there will be a slow but steady deployment of the system.
Investors in this regard should be aware of two things: first, these banks have deeper pockets than Ripple’s, and secondly, it’s much easier to convince the banking system to join the testing of the blockage developed by the bank itself, and not an outsider, as Ripple. In short, it’s possible that the Ripple team is too tough to compete with the financial institutions.
2. The value of the system is doubtful
Technological value of Ripple is questionable, because in the portfolio of the company there are only two “field” tests. Investors Ripple should seriously consider the capitalization of their assets, which is $ 55 billion on January 21. This amount is really huge for the block, which was only two times tested in real conditions and which is only to be integrated into more or less large-scale systems. Ripple is a technology that is now only at the stage of implementation in the services of the financial industry.
Compare with the etherium, which for a while gave way to the market capitalization of Ripple – it happened during the incredible growth of the latter at the beginning of this year. The Enterprise Ethereum Alliance employs partners in about 200 different institutions around the world who invent ways to introduce the etherium into their services. Token cooperates with financial institutions, high-tech companies, energy companies and even governments, to some extent testing the possibilities of introducing its own detachment and smart contracts into all spheres of life. Efirium has shown on the basis of scaling of transactions results much better than Ripple, and has the potential to become a new locomotive of the financial sector.
Moreover, Ripple will first have to deal with the obstacles that financial institutions will build as they integrate. Blocking does not always go well with the current business organization, and banks can incur long and serious losses if they decide to use Ripple products.
3. Ripple block can not exceed the rest
Another serious problem is that the Ripple network, advertised as technologically perfect, may not remain that for a long time.
According to the analysis of HowMuch.net, the Ripple network is capable of processing up to 1500 transactions per second, which is more than 200 times higher than the transactional bitcoin speed. The fees for transfers from Ripple, as already mentioned, are the shares of a cent. Now the facts are on the side of Ripple, but there is no certainty that in the future it will remain so.
Although not all blockhouses were specifically designed for maximum compatibility with the financial services industry, today there are quite a few projects without transaction charges at all. Although the commission at Ripple is tiny, yet blockboys generally without commissions, obviously, are much more attractive.
In addition, there are also tokens, the transmission speed of which is even faster than that of Ripple. RailBlocks, the crypto currency, calling itself a “token without delays”, based on the lattice structure of nodes, withstood during tests extreme loads of 7000 transactions per second. RailBlocks does not have any fees for transactions, because the work of a complete node, according to the team, is almost worthless. The architecture of the RailBlocks network, among other things, contributes to scalability.
Although the attempt to compare Ripple and RailBlocks is similar to comparing two exotic fruits from different parts of the world, the idea here is to point out the absence of barriers to entry into the race. This situation foreshadows the emergence of an ideal system at almost any moment. In fact, there are absolutely no guarantees that provide Ripple a place in the sun as a blockade, which is used by the financial sector.
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