Bitcoin Outruns Ripple At Global Remittances, Says New Report
A recent report titled “The Compendium of Cryptocurrency Remittances,” focussed on several cryptocurrencies as well as their respective viability for cross-border payments. Bitcoin and Ethereum were both labeled to have “medium” viability.
Ripple, the company’s xRapid product and the XRP token were given low viability. The Report suggests this is because of the failure of XRP to develop liquid markets in multiple currencies.
Stellar, However thanks to a built-in decentralized exchange and the ability to establish trusted stablecoins has a viability rating of “high.”
“There are no liquid Nigerian naira (NGN) and Ethereum (ETH) market, EOS and Vietnamese dong or XRP and Philippine peso markets,” Harrap observes. “The only market which has sufficient liquidity and people willing to provide a local currency in exchange for a cryptocurrency is usually bitcoin.”
Bitcoin vs Ripple
The head of a Hong Kong-based cash-to-crypto solution had recently stated that Bitcoin (BTC) will always be a better solution for cross-border payments than XRP.
George Harrap, the CEO of Bitspark, says that bitcoin has a clear edge due to its global acceptance and the availability of sufficient liquidity for established remittance companies.
Harrap points to the lack of liquidity with local fiat currencies as the reason for which the remittance industry has not adopted XRP. This disadvantage makes it either prohibitively expensive or simply impossible to use as a cross-border solution.
xRapid makes use of a network of trust lines and gateways to quickly move value across borders and exchange it for the destination currency. This might be relatively straightforward for transactions involving a single currency, but it becomes harder if it involves multiple currencies, according to Harrap.
XRP’s primary markets make use of Bitcoin and USD. Transactions involving USD to a recipient located in a country with a less popular currency, such as the Indian Rupee, would require routing the payment through multiple third parties and quite possibly multiple currencies. Because there is no direct market, transactions based on XRP are more expensive, due to the cumulative exchange costs. Also, the assumption of multiple gateways in these currencies is not always correct, making Ripple, not as viable as a means for transaction compared to Bitcoin.
Harrap also added that the number of Ripple gateways consists of bitcoin exchanges for people to speculate on the price of XRP for BTC and has remained this way for the last four years. These companies are neither remittance companies, nor are they using XRP for its intended purpose. He concluded by expressing the fact that the lack of local fiat currencies connected to Ripplenet settling through XRP affects the viability of this option and restricts its utility as a multi-currency remittance solution.
“It is for these reasons XRP, in its current form, is never used in the crypto remittance industry,” says, Harap.
The report notes that Western Union has trialed Ripple’s products, but have steered clear of xRapid, the solution which uses XRP. The report states, this is because “there is not enough liquidity, depth, nor enough on-ramps and off-ramps for it to work as intended.”
However, it is not fair to compare Bitcoin and XRP considering Bitcoin has been out there in the market longer than Ripple.
Bitcoin Leading the Race
The most significant factor that stands in the way of Ripple is remittances. Remittances are referred to as the money transfers between people across borders and currencies. The majority of remittance payments are sent to developing countries, whose currencies lack liquid markets with XRP. Bitcoin, on the other hand, has been out there for a long time and has more market approval along with some level of regulatory recognition.
Bitcoin also supports direct exchanges to almost all the local currencies. Even though there are approximately 20 tokens that provide support for remittances, they have all failed to establish reliable liquidity channels with smaller fiat currencies.
As of February 2019, 99.9% of all cryptocurrency money transfers are in Bitcoin. Bitcoin initially came into popularity because of its presence on the Dark Web for illegal purchases. However, that is not the case today.
Tech giants like Facebook, AT&T, Amazon embracing cryptocurrencies and blockchain into their products has led to an astronomical rise in the price of Bitcoin. Many experts have speculated an upcoming price correction. However, 1 BTC is worth around a whopping 8,500.79 United States Dollars based on the current market price.