Do virtual currencies really threaten existing digital payment systems and traditional financial institutions? Or can they co-exist and help to bolster both ecosystems?
If you are familiar with the global crypto ecosystem, I am positive you must have heard of a rumor making rounds recently, suggesting that the recent spike in Ripple’s XRP prices is as a result of the pull by MoneyGram. People familiar with the matter believe the continued increase in Ripple (XRP)trade transactions in Mexico is most likely attributed to the partnership with MoneyGram.
Curiosity level raked even higher when other crypto prices fell and XRP maintained its sudden spike.
During an interview on the FintechBeat podcast, Ripple’s boss Brad Garlinghouse laid the rumor to bed, confirming the much suspected liquidity. While Garlinghouse did not exactly say that the payment firm MoneyGram is directly responsible for the continued spike, he did consent to the fact that MoneyGram is responsible for up to 50% boost in recent XRP transactions.
Ripple’s CEO explained further that the boost came via remittance to Mexico. With remittance rate continuously soaring, the partnership with MoneyGram is undoubtedly a huge pull of the recent spike. Through the partnership, MoneyGram acts as an intermediary, converting the dollars of family members looking to send money back home into Ripple’s XRP.
This, according to Garlinghouse, operates by what the industry calls on-demand liquidity. “It’s a public ledger. You can see where volumes are growing, contracting, and we’ve talked publicly about it – partly because of MoneyGram as well as some other customers who are using what we call On-Demand Liquidity. The product is moving [capital] so that you don’t have to pre-fund,” he explained.
Stressing on the unique relationship between the Mexican pesos and Ripple’s XRP, Garlinghouse added:
“You can see that the volume of transactions between XRP and the Mexican peso, at a time when crypto trading dropped by about 50% over the summer, that volume grew by more than 50%. That’s because there’s real utility, and that’s a growing amount of traffic, and we’re continuing to grow that amount of traffic. So you can see the percentage of XRP to MXN – Mexican peso transactions. As that grows, it’s a pretty safe bet that a larger and larger percentage of that is actually utility and no speculation.”
While confirming the unique role MoneyGram and others play in the rise of XRP, Ripple’s boss admits that cryptocurrencies including XRP and Bitcoin(BTC)trade are largely speculative. He also affirmed that it may take a while before virtual currencies will be directly used by consumers – going by his definition of a currency.
