Ripple’s Brad Garlinghouse – Volatility risk higher in fiat transaction than XRP

Ripple’s CEO Brad Garlinghouse appeared in an interview on June 21st, 2018 with CB Insights to talk more on the future of FinTech and further discuss his company, Ripple, in detail.

This year, XRP price has ranged from about 50 cents to 4 dollars which communicates high volatility. Brad’s theory on volatility risk of cryptocurrencies, especially in case of XRP is intriguing and very well formulated. He believes that there is a lot of misconception in the market; mainly the one that says cryptocurrencies can never solve payment problems at scale due to volatility.

Brad argues with a succinct explanation:

“So I can enable an XRP transaction in 3 seconds and so I have to take the volatility risk of XRP for 3 seconds. Or I can use a fiat and use wire transfer, and I’ll say through Swift, and that usually is about 3 days. 3 days is 270,000 seconds. So it’s almost a 100,000 times longer than an XRP transaction. The way you calculate volatility is volatility times time so if you reduce the time by a dramatic amount, even if the volatility is a lot higher you actually have less volatility risk through an XRP than you do in fiat transaction through Swift.”

Another intriguing point is that people could use Bitcoin instead of xRapid. To this, Brad says that Ripple has thought of building such product where Bitcoin could be used to utilize its liquidity; the issue is that a Bitcoin transaction today takes about 1.5 hours, which boils down to that much duration of volatility risk against the 3 seconds that xRapid takes.

Therefore, xRapid is uniquely positioned to solve the cross-border payment problem.

During the talk, the CEO also wipes any doubts about the difference between Ripple and XRP; he claims that people conflate the two and says:

“Ripple is different than XRP. We use XRP as we build tech solutions on top of it. The primary product that we use today is xRapid… if we have a bilateral relationship and I’ve pre funded dollars and I have lets say pesos, then we can settle it using a product called xCurrent. That’s fiat to fiat.”

At the time of writing, XRP is trading at $0.51 with a market cap of over $20 billion. In the past 24 hours, XRP price has changed by -4.44% with a volume of over $212 million.

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