With news that Woori Bank has finalized their plans to use the Ripple based platform. They have tested Ripple’s cross-border remittance service with great success. Other Korean Banks are starting to take notice and are seeking to use Ripple for their banking system for faster global transactions. Woori Bank is looking to implement Ripple by next year. They will act as the test bed for Korean Banks. If it is a success look for more Korean Banks to use Ripple by the end of next year.
So why is Ripple great for Banking?
Ripple is a private, centralized, permission based Blockchain. It is basically the opposite of bitcoin. To really understand Ripple we need to first understand how information gets exchanged between countries. For example, once you build your credit score in America, it won’t be accepted when you move to Korea. There are different systems and rules that are applied in Korea. Most of all they don’t take into account all the work that went into building your credit score in America. Same goes for the financial industry. In fact, it moves slower in the financial sector because of all the laws, rules, and regulations involved.
Replacing the SWIFT System
Banks use the SWIFT system when sending money from country to country. When people do wire transfers, the SWIFT system is what is used. However the SWIFT system is an old and outdated technology. It is very expensive and takes 1-2 days to clear. Money can be lost because of the exchange rates as well. However with Ripple, there is a agreed upon protocol that would be real-time and cost virtually nothing. Customers will be able to send money from country to country quickly and basically for free.
Why Korean Banks Can Benefit?
There are millions of Koreans that live outside of Korea and make money abroad. Many find it hard to send money back to Korea. How with Ripple customers will be able to send large amounts of money in and out of Korea. Ripple will be an alternative to the old style of global transactions. Through the protocol, the money can be monitored and follow each countries laws and regulations.
Why is Ripple not Free?
The reason why Ripple is not 100% free is that because if they made it free there will be a higher chance that people will spam the network. So once it does a transaction a fraction of the ripple coin (XRP) gets destroyed increasing the value of Ripple. Ripple can handle thousands of transactions per second and can handle the huge fluctuations in the network traffic. The banking industries will hold 70% of the market share which will help in case of market crashes and make Ripple a really stable cryptocurrency moving forward.