Do you have experience with making a transfer to a foreign country? If so, most likely you will have noticed the limitations of the system. The limitations vary from long transaction times by intermediaries, to hidden fees. A transaction from Holland to another country in the Eurozone usually takes between 2-3 working days. Ripple, a cryptocurrency based on blockchain technology, promises to reduce this to just seconds and for a fraction of the cost.
So, what is Ripple and how does it propose to disrupt the banking industry? In the early days of the internet there were many different mailing systems where users could only send mails to other users who were on the same system as them. The SMTP (Simple Mail Transfer Protocol) made an end to this and users could mail each other freely. The current banking system for wiring money is much like the pre-SMTP era, meaning it is easy to wire money to users of the same bank and hard to wire money to users of another. Ripple proposes to be like SMTP, but then for the banking system using bidirectional messaging between banks and the ILP (Interledger Protocol). Most people understand nowadays that much of the money they possess is digital, however the payment system was designed before the internet era, with few updates.
Whether Ripple will be the system to disrupt the banking sector remains the question, however it is clear that the banking industry needs to modernize and that now there are too many systems involved. Wouldn’t it be great if we could send money to one another as easily as sending an email?
