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Ripple, the world currency of tomorrow



"Civilization invincibly tends to the unity of the idiom, the unity of the metre, the unity of the currency, and the fusion of nations into humanity, which is the supreme unity." Victor Hugo, Acts and Words, 1875-1876. Victor Hugo already called in the 19th century for a total fusion of the peoples of the world. One and only one nation, the human nation.


Money is the cement of peoples. Money is the element that makes it possible to materialize exchanges between individuals. To create a global nation, it would therefore be necessary to create a global currency. For the time being, the dollar is the global monetary reference. The dollar is now used in 87% of the world's foreign exchange transactions; major commodity markets, from cotton to oil, corn and precious metals, are quoted in green notes; more than 60% of central bank reserves are denominated in dollars and half of world trade is in US currency.


The dollar is the monetary equivalent of English, in terms of language, business or scientific research: its omnipotence is measured by the overwhelming proportion of people who use it. All peoples associate the dollar with the United States of America. It is therefore difficult for them to accept this currency as their reference currency.


The Economist in its January 9, 1988 issue (vol. 306, pp. 9-10) prophesied the arrival of the world currency for 2018. This one is symbolically called the Phoenix. This fantastic animal that was reborn from its ashes after having passed away. Thus, The Economist believes that this currency will come into being because "today's national currencies will then appear to be the cause of most of the economic disruptions of the last century".


It is on this burned area that this new world currency will flourish. "National economic borders are gradually dissolving. As the trend continues, the attractiveness of a monetary union across the major industrialized countries will seem irresistible to everyone (...). As telecommunications technology continues to advance, future transactions will be cheaper and faster. ".


The Economist had accurately predicted the current economic and financial context as the 21st century approached. If the general public will obviously think of Bitcoin as the future world currency, nothing could be more inaccurate.


"The prince alone has the right to mint coins, whereas he alone has the right to demand that his testimony be authoritative among an entire people." (Rousseau, Emile or De l'éducation, 1762). Nowadays, The Prince should not be understood as the State but as the financial system as a whole. Everyone has at least a Visa or Mastercard. However, the Bitcoin was not dubbed by the Banks. The Ripple does.


In September 2012, Chris Larsen and Jed McCaleb co-founded OpenCoin in San Francisco, California. In 2013, OpenCoin announces that it has completed a fundraising campaign with several venture capital companies. In the same month, OpenCoin acquired SimpleHoney to help it popularize virtual currencies and make them more accessible to the average user. On September 26, 2013, OpenCoin officially changed its name to Ripple Labs, Inc. and in 2015 will simply become Ripple.


The Ripple is a cryptomonnaise but not only. The term Ripple includes several different programs. The Ripple vision to facilitate cross-border payments. Ripple technology including xRapid, xCurrent and xVia. The Ripple cypto-currency which is designated by the sign XRP. The Ripple company and finally the network that uses Ripple technology, RippleNet.


The "Ripple protocol" is already being used by several banks. This technology makes it possible to significantly reduce international payment delays, which are currently counted in days, and which could become almost instantaneous, placing Ripple in the same category as SWIFT, Visa, MasterCard, and PayPal. Rejected by the "geeks" and "cypherpunks", who defend individual freedoms and encrypted currencies as a way out of the rut of financial institutions and states, the Ripple is supported by banks.


The National Bank of Abu Dhabi has recently begun to use technology for some of its transactions, particularly for cross-border transactions. UBS, UniCredit, Crédit Agricole, Santander or more recently TransfertGo are already using its blockchain, which allows funds to be transferred free of charge. The blockchain (chain of blocks in French) is comparable to a digital and public account book, in which is recorded everything that corner owners (tokens) have bought, sold and transferred since the corner was created. No name is indicated, but long sequences of characters. This chain makes it possible to keep an exhaustive history of transactions and to check their validity. More than 120 banks are currently in partnership with Ripple, and use the xCurrent blockchain product.


Ripple could eventually replace SWIFT (Society for Worldwide Interbank Financial Telecommunication), the international network for the circulation of bank flows. Faced with this threat, SWIFT is increasing its innovations. In early 2017, the interbank network launched Global payments innovation (GPI), a service that offers network bank customers the opportunity to make cross-border payments faster, more transparent and traceable. A tracker allows them to see in real time and from start to finish the status of each payment, until the payment is confirmed when it has been credited to the beneficiary's account. With GPI, you just have to go to his bank's website to see where your payment is at. Not sure, that this innovation will make Ripple and his xRapid wobble.


Sagar Sarbhai, Ripple's regulatory relations manager for the Asia-Pacific and Middle East regions, explained that only xCurrent was currently used and that the XRP currency did not play a role with this solution unlike xRapid. Ripple describes the xRapid solution as a gateway using XRP assets to process cross-border transfers in cash more quickly. Ripple said they are now working with three exchanges, Bittrex, Bitso and Coins.ph, who will use xRapid technology to accelerate XRP transactions on their respective platforms. Those who use this product can benefit from an improvement in transaction speed from 2-3 days to nearly two minutes only.


The XRP will serve as an instant source of liquidity for all three platforms, and can be directly exchanged for the respective local fiat currencies, such as the US dollar, Mexican peso or Philippine peso. "Ripple is interesting because its currency is similar in this case to a supra currency that considerably facilitates currency exchange. It is as if banks had a single currency with universal value," says Thierry Dinard, a consultant at HSBC and head of development at Syrtals, a firm specialising in payment instruments. The only disadvantage is the high volatility.


It is difficult to say exactly how much an XRP ripple token is really worth, because the number in circulation is not clear, and the network used by banks does not necessarily need the XRP token to work with traditional currencies. At the beginning of Ripple, all the tokens were mined at once, and some of these ripples were put on the market (about 15%), another part was kept by the founders (about 20%), and the rest (about 65%) was set aside for injection into the grid later. For some, this is problematic because, if it is sufficient to multiply the number of tokens by their unit price to calculate the capitalization of a cryptocurrency. In case everything has already been pre-mined, ideally only the tokens actually in circulation should be taken into account.


Currency also impacted by dematerialization


There are hundreds of cryptomones in circulation. While not all of them are willing to replace fiduciary currencies, they are all part of a global trend in our society. Dematerialization. Twenty years ago, CDs or DVDs were sold by the tens of millions each year in all major retailers. Nowadays, one click is enough to acquire a film or music and enjoy it almost instantly. Cash exchanges will follow the same process thanks to Ripple and xRapid. It is only the first link in the chain towards total monetary dematerialization.

According to economist Philippe Crevel: "We can quite imagine the end of cash money, i. e. notes and coins, in our Western societies. Some countries have already moved in this direction, particularly in northern Europe. This is the case in Sweden, which has always been at the forefront of banking activities. At home, more and more institutions refuse to be paid in cash".


The Cap 22 report, aimed at saving the French government 30 billion euros, recommends in its proposal number 16 to follow this trend and abandon cash in the near future.

According to this report, the proportion of cash transactions is lower in France than in other European countries. It is estimated that 55% of transactions are paid in cash in France, compared to 89% in Italy, 75% in Germany and about 60% in the United Kingdom. Only Nordic countries such as Sweden and Finland have lower rates. 92% of French people prefer the bank card for daily purchases. Cash represents less than 5% of the total amount of transactions by value according to converging estimates. Indeed, in France, cash is used for small purchases. For good reason, small traders rarely allow the use of bank cards to pay small amounts. The thresholds are often set at 10 or 15 euros. This very often requires finding the nearest distributor, which can sometimes be problematic with the banks' policy of scarcity of these devices.


Cap 22 advises to organise this movement in several stages by eliminating cash, cheques and stamps for tax and social security payments within two years and then to make it compulsory to accept dematerialised payments (credit card, telephone, bank transfer) for all purchases, without minimum amounts and to gradually reduce the circulation of cash towards complete extinction.


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