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article imageFour reasons for Ripple's recent rapid recovery

By Ken Hanly     Sep 23, 2018 in Technology
Over the last week, cryptocoin Ripple (XRP) has shot up from recent lows well below 30 cents, surging 140 percent. Ripple has even passed Ethereum to become the second largest coin by market cap after Bitcoin which is still by far the largest.
Ripples rise and background
An article written yesterday provides some reasons why XRP rose so fast growing almost 63 percent within 24 hours.
Wikipedia describes Ripple as follows: "Ripple is a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs Inc., a US-based technology company. Ripple is built upon a distributed open source internet protocol, and supports tokens representing fiat currency, cryptocurrency, commodities, or other units of value such as frequent flier miles or mobile minutes.[3][4] Released in 2012, Ripple purports to enable "secure, instantly and nearly free global financial transactions of any size."
Ripple's payment system focuses on facilitating transfers between major financial institutions. Many supporters of cryptocoins see them as a replacement for traditional fiat currencies. They would like to overthrow the present banking system. However, Ripple in contrast wants to provide technology that will make the existing banking system more efficient. It has worked with the status quo every since its beginnings.
As Brad Garlinhouse the chief executive officer (CEO) of Ripple said last March: “We were, from the beginning, really looking at how we work with governments, how we work with banks. And I think some in the crypto community have been very much, ‘How do we destroy the government. How do we circumvent banks?’” This attitude has helped Ripple gain crucial partnerships with important financial players. These partnerships include the China-based payment provider Lian-Lian, the Saudi Arabian Monetary Authority and Western Union among many others.
xRapid's launch
XRapid is a blockchain-backed tool designed by Ripple for easing cross-border fiat transfers between financial institutions. The system was tested last May on running payments between the US and Mexico. Transactions costs were reduced by 40 to 70 percent. The system bypassed traditional foreign exchange providers. The system was vastly more speedy than the traditional methods taking just over two minutes to complete a transaction. McKinsey research claims that typical international payments take between 3 to 5 working days to complete.
The recent jump in the price of Ripple could be explained by the fact that the company announced that xRapid could be launched commercially within the next month or so. Sagar Sarbhai, the head of regulatory relations for Asia-Pacific and the Middle East for Ripple said September 17: “I am very confident that in the next one month or so, you will see some good news coming in where we launch the product live in production.”
Ripple has already partnered with three international exchanges, BItrex in the US, Bitso in Mexico and Coins.Ph in the Philippines that will enable xRapid to move between XRP, US dollars, Mexican pesos and Philippine pesos. Ripple is also considering entering the Chinese market.
Some Reddit users suggest that xRapid has already been launched but will be announced officially later and this is why the coin has had a spurt upwards.
PNC joins RippleNet
PNC is one of the top ten US banks with 8 million customers and branches in 19 states. On Sept. 19 Ripple announced that PNC had joined RippleNet. It will use the net to process international payments to its customers. RippleNet is a decentralized network of banks and payment providers that connect through using Ripple solutions such as xCurrent.
The solution will allow PNC business clients to receive payments instantly. Ripple's vice-president for product management Asheesh Birla said that this was a first step towards using other Ripple products: “It’s a way [for the banks] to get their toe into the water.”
Ripple has so far avoided being labeled a security
Several ongoing lawsuits allege that Ripple is a security. However Sarbain points out the open-source protocol of the XRP ledger and its independence from the corporation. Ripple controls only seven percent of the nodes used for validation. He argues that XRP investors do not secure a shareholder-like position when they purchase the asset. He notes that Australia, the Philippines, and Thailand all consider XRP a commodity. Thus, it is likely that the US Securities and Exchange Commission will not consider Ripple a security and this has been a bullish decision in the past for cryptocoins.
FOMO, the fear of missing out
With these developments and the huge surge in buyers, many investors may be buying simply for fear of missing out. Observers note that as soon as Ripple started to advance on September 18 other investors decided to also buy into the market. In a Digital Journal article on September 9th I suggested that as the price of Ripple dropped well below 30 cents this could attract buyers. This seems to have happened as well. At earlier prices Ripple was a bargain.
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