Ripple and XRP Could ‘Capture Significant Value’ from $2 Trillion Global Payments Market, Says Crypto Asset Manager Grayscale
The institutional crypto asset manager Grayscale has released a year-end report on Ripple and XRP.
The report covers the origins of both the San Francisco startup and the digital asset, outlining Ripple’s attempt to leverage XRP and reshape the global remittance landscape.
“Together, XRP and XRP Ledger were designed to address liquidity challenges faced by financial institutions using traditional payment channels (i.e., SWIFT, ACH, FedWire system).
By providing the means for fast, secure, and low-cost conversions between varying units of value (e.g., commodities, fiat currencies, and other digital assets), the network has the potential to capture significant value from a global payments market worth an estimated $2 trillion USD.”
Grayscale, which offers exposure to XRP through its Grayscale XRP Trust, highlights the differences between the XRP Ledger and blockchains like Bitcoin and Ethereum.
It also breaks down Ripple’s XRP-based remittance service ODL, which is designed to leverage XRP to eliminate pre-funding for cross-border payments.
“Instead of a supporting blockchain protocol, it uses the XRP Ledger to validate transactions by requiring network participants to reach consensus. In addition, the development and maintenance of the technology is partially overseen by Ripple, which is funded through their own reserves of XRP and by private investments from influential investors, including Andressen Horowitz, Google Ventures, Digital Currency Group and Pantera Capital.
XRP Ledger technology is also integrated with a unique subset of Ripple’s products and services (e.g., RippleNet, On-Demand Liquidity) targeted specifically for financial institutions. These factors have propelled XRP’s increasing adoption as a global payment rail and helped to establish XRP as the third largest digital asset in the ecosystem by market cap.”
The report also reviews the potential disadvantages of XRP, noting that development of the digital asset is “partially overseen” by Ripple, as well as the fact that Ripple owns more than half of the total supply of XRP.
The authors identify regulatory uncertainty as a potential pain point for XRP. While the US Securities and Exchange Commission has clearly stated that Bitcoin is not a security, it has yet to go on the record about XRP.
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