Why do banks need XRP? Here's what the experts have to say

Bittime - Digital assets such as Ripple's XRP are increasingly gaining attention as a solution to various challenges in the global banking sector. With its advanced technology, XRP enables faster, cost-effective, and efficient cross-border transactions.

Banks around the world are beginning to realize the potential of XRP to unlock billions of dollars of stuck capital that is currently unproductive.

In this article, we will discuss why banks need XRP, how the XRP Ledger works, and what experts think about the future adoption of XRP.

Ripple Technology that Changes the Way Banks Operate

Ripple's XRP is designed to solve problems that are common in the traditional banking system, especially when it comes to cross-border payments. Jake Claver, a business consultant, revealed that over $27 trillion of capital is currently stuck in banks due to the inefficiency of international payments.

Also read: XRP ETF: List of 4 Investment Firms Pitching for Ripple Coin Exchange Traded Funds

Using XRP Ledger (XRPL) technology, banks can move money across borders in seconds at a much lower cost.

Ripple isn't just stopping there. The company continues to develop advanced infrastructure involving stablecoin-based payments like RLUSD, which works in sync with XRP. Each RLUSD transfer burns a small amount of XRP, creating scarcity that could increase its value in the future.

Key Advantages of XRP for Banks

1. Faster and Cheaper Transactions

With XRP Ledger, transactions can be processed in less than five seconds and at a much lower cost than traditional methods such as SWIFT. This allows banks to improve their operational efficiency.

2. Reducing Idle Capital

Traditional systems require banks to hold large reserves to facilitate international payments. XRP acts as a bridge between currencies, reducing the need for these reserves and unlocking capital that can be used for other productive purposes.

3. Environmental Sustainability

Unlike other blockchains that use energy-intensive mechanisms such as proof-of-work, XRP Ledger uses an environmentally-friendly consensus protocol, making it an ideal choice for banks looking to adopt green technology.

Also read: Can XRP Displace ETH from the 2nd Position of Crypto by Market Cap?

The Future of XRP in Banking

Experts believe that 2025 will be a crucial year for XRP adoption. Countries like Japan, Singapore, and Thailand have already prepared regulations that support Ripple's technology, with 80% of Japanese banks projected to integrate Ripple's XRP into their systems.

Brad Garlinghouse, CEO of Ripple, stated that the company continues to expand cooperation with global banks and large financial institutions. The acquisition of Metaco for $250 million in 2023 is also an important step towards creating a secure solution for banks to adopt XRP.

Conclusion

With the ability to process thousands of transactions per second, reduce idle capital requirements, and offer efficient payment solutions, Ripple's XRP has proven itself to be the digital asset that banks need.

The technology is not only revolutionizing the way cross-border payments are made but also opening up new economic potential for financial institutions.

If this trend continues, XRP has a great opportunity to become a key pillar in the global financial system.

FAQ

What is Ripple XRP?

Ripple's XRP is a digital asset designed to facilitate fast, cheap, and efficient cross-border transactions using the XRP Ledger (XRPL) blockchain technology.

Why do banks need XRP?

Banks need XRP to address inefficiencies in traditional payment systems, such as slow transaction times and high fees. XRP also helps unlock idle capital that is currently held in reserve.

How does XRP Ledger work?

XRP Ledger uses a consensus protocol that allows transactions to be processed in seconds at a low cost. The technology is environmentally friendly and capable of handling thousands of transactions per second.

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Reference

crypto-news-flash.com, XRP to Unlock $27 Trillion for Banks, According to Business Consultant, accessed on January 22, 2025.

Author: AWW