Ripple Labs announced yesterday it’s new xRapid payment protocol is now commercially available.
In Ripple’s annual two-day Swell conference, Ripple CEO Brad Garlinghouse said three institutional customers — MercuryFX, Cuallix, and Catalyst Corporate Federal Credit Union — will use the newly available xRapid protocol.
Ripple’s payment system, called RippleNet, is comprised of three different protocols, of which only xRapid uses the native XRP token to transfer capital. The other two products, xCurrent and xVia, do not use XRP.
xCurrent and xVia do not use permissionless systems. They rely on what Ripple calls the Interledger Protocol (ILP), a consortium ledger that connects participating banks’ internal ledgers to one another. Ripple said banks can employ xCurrent to safely share transaction information, personal data, and more between banks, thus eliminating the need for a counterparty.
Critics of Ripple have said that XRP is not needed for transaction settlement in xCurrent or xVia, so Ripple hopes that xRapid’s adoption will prove XRP plays a valuable role in its payment suite.
When customers use xRapid, they connect to a digital asset exchange and switch the input currency for XRP. This XRP is transferred to a receiving customer and converted into the output currency. For example, a customer can send USD to an individual in Europe who receives the USD in euros.
“It sources liquidity from XRP on exchanges around the world. As a result, cross-border transactions occur in minutes and at a lower cost compared to traditional methods, which take days and incur high foreign exchange fees,” according to a Ripple press release.
Still, some are doubtful that xRapid will prove to be the largest use case of the RippleNet products. Because xRapid is the only Ripple product actually using XRP, some say that if it doesn’t take off, there will be no demand for the token and no justification for its market value.
While Ripple institutional customers have been using a pilot of xRapid for a year, it remains to be seen if more institutional customers will onboard or XRP’s utility will warrant long-term demand.