Implementation of Blockchain in Banking Unlikely: Says Ripple
Ripple feels banks may not be ready to adopt blockchain
Blockchain technology has been pitched as the next revolution since the internet. It is expected to disrupt traditional systems by streamlining operations in various industries. This however, may not be applicable in the banking industry. Even with its ground breaking technology, blockchain has its limitations. The short coming make it hard to apply in sectors such as banking.
According to Ripple, a major blockchain startup company, banks are unlikely to adopt the use of the technology. As it is, it has low scalability. Also, its transparency aspect does not favor privacy in the finance sector. During an interview with Reuters, David Schwartz, Ripple’s chief cryptographer said;
“Although banks acknowledge that the technology can be used to improve processing of international payments, there are several factors that prevents its implementation. Some of the factors that the financial players cite are privacy problems and low scalability.”
Ripple’s blockchain based xCurrent
Ripple developed a service known as xCurrent. Although it is based on the blockchain technology, it does not carry the shared ledger function. Unlike other networks similar to the ethereum, xCurrent does not allow access to network peers. As such, it would be more superior and attractive in the financial industry given its dedication to privacy. The platform can be used to change how businesses are operated in the financial industry. This is evidenced in the remarkable results in Ripple’s xRapid pilot test on xCurrent. Financial institutions who participated on the platform in the pilot recorded savings of 40-79%. Further, the transactions processes had significant time reductions from 2-3 days to around 2 minutes. In a strange twist however, banks rejected ripples offer of the ‘classic’ blockchain solutions.
In their arguments against the technology, banks reportedly claimed that ‘you cannot simply put everything in blockchain. This may sound as a reluctance and lukewarm attitude towards the impressive technology. Even so, this is not a open and shut case. A Spanish based international bank Santander, recently launched a blockchain based payment protocol. The technology operates its international bank transfer service on One Pay FX and. The ripple powered technology launched in April was hailed as a first in the financial sector on blockchain adaptation.
Nevertheless, ripple is hopeful that it can improve on its application to be more acceptable in banking.