Banks Adopting Ripple and Ethereum

Ripple (XRP) surged last night on the back of news that American Express’s foreign exchange platform, FX International Payments (FXIP), had partnered with Ripple to use its blockchain technology to provide real-time, trackable payments between (initially) the US and Britain.

XRP jumped nearly 29% on the news to 36c before settling to 33c, though still 18% up on yesterday’s price.  As one analyst explained:

“…it only intrinsically raises the coin price because more adoption means more use of XRP as a bridge for cheaper transfers between currencies... constant usage will mean huge daily volumes and huge liquidity... which will mean higher prices as XRP becomes a genuine digital standard for interbank transfer”

In other words the announcement itself does not see immediate use of XRP and hence fundamental demand lead price pressure.  Rather, one of the world’s largest financial transaction facilitators, American Express, adopting Ripple portends future demand from it and other banking institutions.  On that basis one might see the current price as still very much in its formative stage.

We explained Ripple in more detail when we launched trading it here.

AMEX isn’t the first financial institution to embrace blockchain technology.  Most notably, none other than bitcoin bashing J P Morgan collaboratively developed an Ethereum based platform called Quorum earlier this year.  From International Business Times:

“While Bitcoin is best known as an unstoppable, globally distributed payment system, Ethereum is an unstoppable, globally distributed computer. Each network has its own native cryptocurrency: bitcoin and ether, respectively. Ethereum also supports smart contracts which allow the creation, registry, and trading of bespoke digital tokens representing virtual shares, land titles, identities, debt instruments, or almost anything else a person might want to own or share with the world. In both Bitcoin and Ethereum, every transaction is recorded to a shared ledger called the blockchain. Because everyone sees the same ledger without the human-intensive operational processes financial firms use keep today's records in sync, banks and exchanges have been quick to see the potential cost saving opportunities of moving to a blockchain world.

But there's a hitch. On a public blockchain, all activity is visible to the world, while the actors themselves are shielded behind disposable "cryptographic wallets" that effectively render them anonymous. Unmasking user identities would be akin to publishing everyone's monthly bank statement on the internet, but keeping them hidden means it's easy to avoid anti-money laundering and sanctions checks mandated by governments and regulators.

Enter Quorum. The "enterprise blockchain" platform created by J.P. Morgan, but now part of the public domain, allows groups of banks, businesses, or simply individuals to create a private version of the Ethereum network just for themselves. Participants in a Quorum network can transact confidentially so no one can see who is trading what with whom, while still getting the data integrity and information security benefits of a distributed blockchain system.”

A ‘public domain’ seems a little altruistic for the world’s biggest bank to offer ‘for free’ now doesn’t it….  But recall the sentence above about Ethereum being the “globally distributed computer”.  IBT says:

“As to monetisation, J.P. Morgan insists they are committed to a long term view. If Quorum is Apple's iOS, then smart contracts are apps like Angry Birds. Giving away the operating system means there's a huge base to buy into new products later on, and therefore no plans to commercialise the existing platform. Possible interoperability with both public chain and other closed enterprise blockchains like those in development by IBM, Intel, Digital Asset Holdings, and a slew or others means Quorum can have their cake and eat it too.”

Irrespective, this illustrates the potential uses of the Ethereum network, and holders of Ether (ETH) stand to benefit immensely.

Finally, news just in from Finance Magnates:

“Bitcoin continues to be reacting to market news in yet another volatile session. The top cryptocurrency is rallying strongly today, especially in the past couple of hours. Just after an announcement by the CME Group’s marketing team that the company is planning to start testing Bitcoin futures trading next Monday (20th of November), prices started rallying heavily.”  Refer to our earlier article about CME launching bitcoin.

Of the 4 cryto’s we sell, you can start to see the real difference between them.  Bitcoin and Litecoin are principally (for now) mediums of exchange and monetary assets.  Ether and Ripple are technology platforms poised to fuel the blockchain revolution.  That mix, in addition to the traditional gold and silver, adds further diversification to your wealth diversification strategy.