As always, it is Nick here back to your daily crypto news and Analysis, and today were going to be talking about Ripple and xrp. So just dive in and lets start off with this video here from Ripple themselves, and it is saying traditional global payment systems are far from efficient in this video CEO Brad garthinghouse details. How were moving barriers or removing uh barriers? Sorry for crypto and business listen closely to this crypto is helping transform Finance businesses today in a few different ways, and I think one of the challenges the industry has been to focus on solving real problems for real customers and ripple, obviously, from its earliest days, focused On the problem around cross border payments thats a point of a lot of friction as measured by speed and cost, and by focusing there weve been able to have a big impact on that. You know relatively small piece, but I think over the next years, youre going to see many Financial transactions where a middleman sits a middle transaction, an intermediary. Those will get removed and well use blockchain and other digital asset type Technologies. To remove that friction, and I think all of society will benefit from improving the efficiency of those those systems. I think youll see that certainly youve seen it in security settlement as an opportunity uh. You know the financial transactions around bonds around derivatives. A lot of these things take a while to settle and the friction Associated actually holds back the industry.

Insurance is an industry. I think youre going to see touched. Uh trade Finance is an industry that really Ripple some of our customers have invited us to participate in and youve seen an experimentation around identity in real estate and title management, and you know these are all examples where I think its so hard to predict where this Will go in the same way that 25 years ago, when I first got involved in the internet of information, I never could have predicted on my smartphone Id press a button and Id have a car picking me up minutes later. You know. I think this will permeate lots of different parts of our society and what he is talking about: having DLT crypto driven assets, all that kind of stuff being a a core piece of the puzzle for this new Financial system. This new global payment system, its already happening um – I I want to take it back to this PDF file uh. This is from Ripple themselves. Uh were gon na go to slide 10.. This was posted back in June of 2015 Ripple as an Innovative solution to the ways we pay, and this is actually from. So this was a submission to the Department of Finance, Canada and lets go to slide 10. Real quick – and this is talking about safety and soundness, minimizes cost and risk through real time, bilateral payments. This is through Atomic settlement and here is the settlement infrastructure.

You can see it straight through processing, three to six seconds: uh EDC liquidity provider, a FX cost liquidity provider B, FX cost, and you see the entire way that this really kind of works. Obviously, since then, since 2015, we had a little bit of a better uh sort of diagram for this um. But here is the overall breakdown of it. So real time settlement obviously is going to eliminate or reduce many of the risks that plagued todays system uh. With its Reliance on intermediaries for crossword payments and uh example of the risk include operational risk, FX risk principal risk Market conduct risk as well as replacement cost risk. You guys can see the full breakdown here. I dont need to read all of these, but ultimately it makes the entire system a lot more costly. You also have a lot more issues in terms of payments, failing theyre, extremely slow, theres, a lot of issues here, theres, not a lot of transparency. Things like that. A lot of issues are plaguing The Current financial system and ripple is really solving all of them, and here you have todays limited transaction visibility. Again. Transparency is a big problem. This is the middlemen, The intermediaries, Limited transaction, visible ability, sending Bank Central counterpart, Central counterparty and then over here you have the receiving bank and theres just a lot of risk involved. Here the system is extremely broken, and this is a 2015 article really kind of breaking down um, not only their entire system, but how it enhances the existing compliance programs as well like here.

You have everything that they are really kind of focused on. For example, you do see customer onboarding and kyc unchanged. Anti money laundering and transaction monitoring improved end to end fund at traceability, Accurate fee confirmation in terms of USP, pre disclosure, payment status, real time receipt, confirmation, fund, transfer settlement Ripple solves that, and it really is something revolutionary. When you look at this, and the reason why were talking about this is because for the longest time we know that Ripple was capable of doing Atomic settlement and they were like the DLT of choice for a lot of these major. You know areas since then. We have seen a lot more projects come up, um but Im talking about this, because we recently just seen uh this Post it from the Federal Reserve Bank of New York and it is Project Cedar, improving cross border payments with blockchain technology. So now its kind of its its crazy, you know um. If we go back two years ago, three years ago there was a lot of talks about the Federal Reserve, utilizing xrp um. One of my most popular videos on this channel is me talking about the Federal Federal Reserve using xrp for instant settlement. Things like that um and here we have them really kind of breaking down Central Bank. Digital currencies. Uh, utilizing DLT all this kind of stuff to improve the speed, cost and access to critical elements of the wholesale crossword payments Market, um, and also its talking about a foreign exchange spot transaction, which is a 7.

5 trillion dollar market. This is actually actually pretty crazy, um. So I know that this is very zoomed out. Let me zoom in, for you guys a set. We could read all of this so heres. The problem. Space crossword repayments are Financial transactions between central banks, private sector Banks, corporations and other institutions based in separate jurisdictions, and we know that FX spot trades are among the most common wholesale crossover payments, as they are often required to support broader transactions such as for international trade Or foreign asset investment, now the problem with todays crossword payments is the functionality of them um. You know you have it takes two days for them to settle during these two days. Counterparties are exposed to settlement counterparty and credit risk which, among other things, can hinder an institutions ability to access liquidity. Now listen Im, not going to 100 say that they are utilizing. Xrp here or The xrp Ledger, or anything Ripple involved uh. But what I like to see is the fact that the Federal Reserve is now realizing the opportunity here around crypto and blockchain. When we do see here, results, project Cedar showed that blockchain enabled crossword payments can be faster simultaneously or simultaneous and safer faster payments in the test environment transactions on the blockchain enable DLT or distributed Ledger system settled under 15 seconds on average um Atomic settlement. The simulated Ledger Network enabled Atomic settlement, meaning both sides of the simulated transactions were settled either simultaneously or not at all, and reducing the risk currently borne by counterparties, say for an accessible transactions.

The DLT or the distributed Ledger system design, enabled payments on a 24 7 365 basis and supported objectives related to interoperability by enabling transactions across separate, homogeneous ledgers networks representing a variety of financial institutions, including Central and private sector Banks. So this is very interesting to me. Um, I really do think that, at the end of the day, when we look at everything happening around this system, Ive always said that Ripple and Quant will play a vital role, and this really kind of is confirming that again. Do I believe that Ripple is the key player here its hard to say, but all we know is that this comes out a day or the same day as uh weve seen. The digital dollar could speed foreign exchange settlement uh, which was a huge area of focus on this channel. We talked about it and then I have this full on breakdown of project Cedar over here as well now in here its its actually kind of funny. But there is so many mentions of DLT liquidity settlement. You know were looking at rapid payments here. The benefits here are very interesting, um, its the same benefits that weve been talking about year over year for so long around xrp and ripple and its all centered on instant and atomic settlement. Utilizing DLT, while also revealing promising applications for blockchain and wholesale payments, and presenting questions for future research. Now one things first for sure here and Im not going to say 100 xrps utilize during this entire, you know process no, not at all um.

What we do know is that this FX Market, which is a seven trillion dollar every single day Market, its the largest wholesale Market in the world, could be fully disrupted by crypto um. The very interesting topic of all this is that cross border transactions are going to be the core process of this having something that could disrupt that entire process. Going all the way. Back to this Beginning, video, like I said like the traditional system, is 100 broken. We need a new system. I do think that Ripple could play a vital role here. Um, the question is: will they I do think that they among many other players, will play a role, and I think that this is very beneficial because, like I said theres a lot of money here, do we need to grasp all of it? No, absolutely not. I even said this time and time again, even with cbdcs, you know when you look at cbdcs its not going to be a one size fits all its not going to be one DLT for cbdcs to be issued out on. You know. Ive always said that there will be public and private players within this entire market and when you look at the substantial amount of dlts that are already out there, you know we are already seeing cbdcs launching on hyperledger on Corda on this that you know right now. I think the xrp Ledger has two cbdc projects already issued out on it.

I do think that xrp with the xrp Ledger will play a vital role here and theres a large amount of demand for the speed for these efficiencies. The use cases here are also very interesting because they are centered on central banks, utilizing this on a day to day basis in terms of the FX Market as well, which is a massive amount of money. I mean, like listen, seven trillion dollars a day. I remember when people were surprised about um. You know Swift transactions, transacting five trillion dollars a day that was like, I want to say a couple years back now um, but this is to me crazy, because this is like 2.5 quadrillion dollars per year. If we see that settled on DLT technology centered around crypto, I mean listen Im here for any and all dlts utilized within this, because we dont need one DLT to fit this entire system. Do I think that that would be great if there was one and we were able to jump into it yeah, but this is also why diversifying to multiple dlts that are extremely efficient because listen if all of them are going to play a vital role here. Theyre all going to increase in value, and we do see the the so this is like their breakdown of this, as you guys do see up here like this, is their um experiment, design uh? So you can see this full on breakdown. Wholesale cross border payments can be slow and limited in Access.

Is it a problem? Uh theres a distribute, Ledger technology solution for wholesale FX settlement that results in instant and atomic settlement, in which a rap cbdc is the settlement asset. They dont mention the DLT. They just say there is one um and we do see critical assumptions. Issues of speed are rooted in the settlement stage of the current state FX spot transaction. Current delays and settlement times are driven in Party by manual validation. Current limitations in Access are driven in part of counterparty risk and uh barriers to incident and atomic settlement. In the current state can be removed through a technology solution, a low Fidelity, rap cbdc prototype can be developed to demonstrate a significant reduction in settlement time and uh. Here you guys have the full on breakdown. Here I focus on instantaneous settlement, Atomic settlement and interoperability. This is very interesting. I would love to know more information on this Ive been scouring the internet for uh, some more information on what dlts will be utilized within this. I havent seen anything on it um, but this is very bullish. Listen. This is very bullish for crypto in general, because we see the results here. The results are that blockchain enabled Payment Systems settle transactions in fewer than 10 seconds on average and that throughput across the system increases as additional currencies are included. This indicates that a modular ecosystem of ledgers has the potential for continued scalability and that DLT can enable Atomic settlement faster than the current industry.

Standard of two days should processes that were abstracted in the phase one prototype, such as compliance checks and Market making be similarly streamlined, so um they are ready for this listen. The Federal Reserve has been behind a lot of things. Weve been talking about the Federal Reserve working with you know, Ripple with xrp for a while, even connecting to Volante Technologies. I think that, as we see a lot more of these trials being ran a lot more research being done. I do believe that we will see a ton of development happening on DLT um. I do believe that going all the way back to 2018, when we did see a submission by Ripple around the potential Federal Reserve, actions to support interbank settlements of faster payments, Im sure that this got noticed at some point in time. Uh. This talks about a liquidity management tool, an rtgs Service as well. I mean this was very, very interesting to read back in 2018 and even today I think its more interesting than ever, because this is the rtgs service, real time payment by payment, interbank messaging and settlement. In the Federal Reserve accounts 24 7 365 operating Around the Clock, full payment Information, clearing and settlement carried in payment message available to depository institutions eligible to hold a Federal Reserve. Account agents could submit payments on behalf of a depository institution. Access through Reserve Bank channels fed line end of day balance is recorded for each day of the week and then here you have potential liquidity management tool.

This would offer a way to move money outside standard business hours between a master account and another Federal Reserve account use its support. 24. 7. 365 real time Settlement Services for faster payments. Potential functionality could include Bank initiative transfers agent, initiated transfers automatic transfer standing instructions. This is very interesting, a lot of questions here that were answered by Ripple, of course, and um yeah. I mean, I think that this, like probably got seen at some point in time. They probably know about Ripple Im sure that they know about Ripple with ripple Nets and xrp, and I think that they know about all these major systems. Um Ripple has been trying to get into talks with the Federal Reserve for a very long time. Uh recently weve seen the former Ripple advisor moved to the Federal Reserve uh. He will supervise the Federal Reserve. I remember when this happened back in July. Everyone thought this was very bullish. I think that it is um, but again is all this directly tied to Ripple, not necessarily, but I will say that when we look at what the Federal Reserve is doing and when we look at how large of a market this is like. This is 2.5 quadrillion dollars. If this just gets settled on crypto, driven dlts and assets, then guess what this entire Market is going to erupt like no one has ever seen before, and this is going to be bullish for anybody, whos, holding xrp or any crypto.