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Why is XRP Good For Payments?

Artwork by Milad Fakurian

 

Created in 2013, XRP is one of the first cryptocurrencies to have instilled a different consensus mechanism than Proof of Work (PoW) and Proof of Stake (PoS). Since its inception, not only has it secured a spot in the top 10 cryptocurrencies, but it has also demonstrated the potential of crypto as it pertains to payment settlements and the financial system as a whole.

XRP – The Cross-Border Payments Solution

XRP aims to solve a $10 Trillion problem

With its proven enterprise-grade performance, XRP is a crypto currency designed to facilitate all types of value transfers around the world. Although such a trait may seem dispensable to the average consumer, it could very-well revolutionize the way banks and financial institutions operate internationally. Integrating a cross-border solution such as XRP with the financial services industry would enable a plethora of opportunities and liquidity. This is especially significant when you factor in the trillions of dollars that are being transferred on a yearly basis by the global payments industry. 

What Are The Benefits of Using XRP

Low-cost, instant payments to every corner of the world 

XRP is a digital asset specifically optimized to operate as a high speed, secure and scalable means of payment. What makes it special is its real-time settlement system which uses a unique shared public ledger similar to the way Bitcoin records transactions. However, unlike Bitcoin’s blockchain, the XRPL can simultaneously process payments of multiple currencies, allowing users to transact in the (fiat) currency of their choice. This reduces exposure to both currency exchange and transaction fees.

Let’s explore some more key benefits:

  • Transaction settlement
    • The  network can handle up to 1,500 transactions per second and is capable of settling a payment in under 4 seconds.
  • Scalability
    • With a throughput comparable to Visa, XRP can operate 24/7 around the globe.
  • Stability
    • Stable and lower energy consumption of the technology makes it ready for wide scale enterprise and institutional adoption. 
  • Distribution
    • 150 + validators form the decentralised network of the distributed XRP ledger. 

How is XRP Used?

The XRPL supports XRP payments as well as other, more specialised payment types such as:

  • Direct XRP payments
    • Simple XRP transfers performed on the ledger.
  • Cross-currency payments
    • Automatically exchanges one currency to another upon arrival
  • Checks
    • Deferred payments which can be cancelled or cashed by recipients.
  • Partial payments 
    • Used for delivering flexible amounts which can be beneficial for returning payments without incurring additional costs.
  • Escrow 
    • Allows users to set aside their XRP for future payments or settlements, dependent on certain conditions being met

The world is gradually moving towards a cashless economy. With its wide array of applicabilities, XRP could potentially become an integral part of this transition. As adoption from both institutions and enterprises increases, the future of cross-border payments could one day perhaps be assisted by cryptocurrencies such as XRP.   

Jack Dunam
Jack Dunam