Not a science experiment: Ripple has been transferring over $180M between US and Sweden for SEB through their blockchain. More than 100 companies have followed suit.
SEB, a Swedish financial group catering to corporate clients, signed a partnership with Silicon Valley-based blockchain company Ripple last year. The collaboration resulted in a service that would enable significantly faster money transfers: “By using Ripple’s distributed financial technology, our customers can initiate real-time transfers between their SEB accounts in Sweden and the bank’s branch in New York,” says SEB Transaction Services head Paula da Silva.
In a press release celebrating their acquisition of over 100 additional clients yesterday, Ripple—which uses the currency XRP, dropped a major detail: apart from the fact that they have $15bn worth of cryptocurrency reserves and are not afraid to use it on their rivals (whether for partnership or acquisition), they have been moving over $180 million between Sweden and the US for SEB in the past few months. The new clients they acquired will also be moving huge sums of money through the platform, adding to this volume.
In an interview with the Financial Times, Ripple CEO Brad Garlinghouse reiterated that they are not playing around: “This is not a science experiment, it is about using real money for real customers.”
Here’s why this is important: (1) scalability, as well as liquidity, have been a hindrance to the mass adoption of blockchains and subsequently, cryptocurrencies as a reliable medium of exchange—and this is a real-life trial run demonstrating the defeat of that conundrum, and (2) that accomplishment, along with the fact that several banks have lined up for the same service is a precedent that may just push even more banks into following their lead to keep up with the competition.
For a cryptocurrency to be successful, it should achieve the promise of being “better money”—that the processes involved will be better, faster, cheaper than current banking. But if a user has to wait hours for a transaction to be confirmed, obviously, that is a backslide. This is exactly what Bitcoin experienced as it struggled with the high volume of transactions, which ultimately ended up in the split that gave birth to the freshly minted Bitcoin Gold, and Bitcoin Cash, which came into existence in August.
To solve the transaction traffic congestion, Bitcoin Cash employed a block size increase to 8Mb, as opposed to Segwit’s 2Mb block limit and follows a more frequent difficulty adjustment system which would supposedly make transactions significantly faster without losing the signatures associated with the transactions—which is what SegWit, or Segregated Witness, does. It also does away with the replace-by-fee, where users essentially dangle higher transaction fees to entice miners to pick up their transactions.
While blockchains fight for market dominance and mass adoption, the common user wins simply by waiting it out—our micropayments across borders will be so much faster and cheaper.