Ever since Elon Musk dropped the news of Tesla’s U-turn on Bitcoin payments, attention has shifted towards more energy-efficient alternative coins. Ripple Lab’s XRP token appears to be one such coin with strong green credentials and is also solving payment problems right now.
XRP Token Solving Energy And Remittance Problems
The XRP token is one of a growing number of digital coins using far less energy in validating transactions than either Bitcoin or Ethereum. XRP transactions are also confirmed in seconds with little cost compared to Bitcoin that may take many minutes with high transaction costs.
The XRP token can be referred to as an eco-friendly or green coin because of how it was designed with sustainability in mind. According to the Ripple website, XRP is approximately 57,000 times more energy-efficient than BTC.
Contrary to other blockchains that use proof-of-work, the XRP Ledger confirms transactions through a unique “consensus” mechanism and is aiming to become carbon neutral in the next few years.
Through the Ripple Protocol Consensus Algorithm (RPCA), at least 80% of the network’s global validators have to approve a transaction before it gets added to the XRP ledger.
Ripple has always been distinctive from other cryptocurrencies due to its technology. The company terms itself as a payment solutions provider because of its primary focus on using cryptocurrency to enable cross-border payments.
Apart from the XRP token solving the environmental problem by being energy efficient, it solves cross-border problems through its RippleNet network.
National Bank of Egypt joins RippleNet Network
RippleNet is Ripple’s payment platform that consists of a collection of banks and financial technology providers that use solutions developed by Ripple for cross-border payments.
Last week, the National Bank of Egypt (NBE) and Lulu International Exchange, a Dubai-based financial services firm, collaborated to join the RippleNet network — which includes over 300 international banks and institutions.
The partnership would see Lulu Exchange and NBE come together to use RippleNet to facilitate cheaper, quicker international payments from the United Arab Emirates (UAE) to Egypt.
Another recent partnership signed to utilize the RippleNet service was between Ripple’s joint venture, SBI Ripple Asia, and Cambodian bank SBI LY HOUR Bank.
The newly introduced remittance service powered by RippleNet will improve cross-border transactions between Cambodia and Vietnam. Through the distributed ledger-based payments network, Ripple has contributed immensely to the remittance industry.
Unlike Bitcoin and other cryptocurrencies, the XRP token can perform several functions outside the core medium of exchange services. It is useful in making cross-border payments faster, more efficient, and less costly.
XRP also acts as a neutral bridge between different currencies on the Ripple network. Through RippleNet, XRP acts as the liquidity solution developed to solve slow and expensive transactions on the network.
Ripple is also expanding its product suite. In March, the company recommended its XRP ledger to central banks stating that it could help central banks in the issuance and management of central bank digital currencies (CBDCs). This was included in Ripple’s white paper on CBDC published a few months ago.
Is Ripple’s Centralization Its Big Problem?
Digital assets are not perfect. They have their pros and cons. Ripple also has its downsides. It has often been criticized for its centralized way of operation. The Ripple network is centralized because most nodes belong to Ripple, and all XRP tokens have been pre-mined by Ripple.
Ripple’s centralized nature is one of the reasons the SEC alleged that XRP is a security. The SEC had indicated that while Bitcoin and Ethereum are not securities due to their decentralized nature. On the other hand, Ripple minted the entire supply of XRP itself when it first launched, giving rise to it being termed centralized.
However, Ripple has argued that it is decentralized. Ripple’s CTO David Schwartz has previously said that the XRP Ledger is inherently decentralized by design.
The coin reportedly hit $1 earlier today after a prolonged fall in value.
At press time, Ripple’s XRP token is trading at roughly $0.916807, up 5.48% in the last 24 hours, according to CoinMarketCap.
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