Yesterday, somebody transferred 90,000,000 of Ripple’s XRP tokens between two unknown wallet addresses, prompting crypto sleuths to question the purpose of the move. Usually transfers of this size involve the wallet of an easily identifiable cryptocurrency exchange, but in this case, both transaction identities are unknown – making the move that much more suspicious. It was announced today that wildly-popular trading platform eToro has added support for XRP on its eToro wallet, a traditional trading system that now supports both fiat and cryptocurrency.
However, the more impressive aspect of the equation is the incredibly low cost of the transaction – only 0.005 XRP. The total number of XRP tokens transferred equates to more than $33 million in value but incurred a fee of almost a third of a cent. A similar transfer of fiat currency between traditional banks could easily incur a fee upward of $1 million. In reality, converting the 90,000,000 XRP into usable fiat currency would undoubtedly attract additional fees, but the transaction exhibits the potential that digital assets pose for the future of international remittance.
Disadvantages of XRP
Of course, XRP is not a proof-or-work (PoW) blockchain and as such, doesn’t require any mining, which is why it attracts almost zero fees. This means that while it doesn’t suffer from the high costs involved with mining, some believe it lacks some of the benefits offered by PoW networks. There is some debate as to whether it’s consensus method is superior to that of Bitcoin but since the two technologies are so vastly different, a direct comparison is impractical.
This year has seen Ripple aggressively work towards forming partnerships with banks in order to improve international payments, at one point appearing to challenge the decades-old SWIFT standard used by most financial institutions. With the ability to handle 10,000 transactions per second, it certainly seems more appealing than the slow Bitcoin network. However, as long as the Ripple corporation allegedly controls the majority supply of XRP, it will continue to receive criticism from skeptics regarding its decentralization – one of the key aspects of cryptocurrency.