In an interview shared by Amelie (@_Crypto_Barbie) on X, Ripple CEO Brad Garlinghouse highlighted the potential of Ripple’s XRP Ledger (XRPL) to revolutionize the global banking and payments industry, positioning XRP as a formidable alternative to traditional systems like SWIFT.
Garlinghouse emphasized that Ripple offers liquidity and messaging solutions, which he suggests could replace the antiquated architecture of SWIFT and the liquidity provided by major global banks such as Citi.
Ripple’s Innovative Approach
According to Garlinghouse, Ripple’s core innovation lies in combining liquidity with messaging in a single solution. In contrast, SWIFT is a messaging-only protocol that connects financial institutions globally. The CEO noted that SWIFT was created over 50 years ago and has seen limited architectural changes since its inception.
As a result, the system has become slow and prone to errors in today’s fast-paced digital landscape. “SWIFT was developed 50-plus years ago. It architecturally hasn’t really changed,” Garlinghouse said.
Ripple’s technology seeks to address these shortcomings by leveraging modern advancements to facilitate faster, more accurate, and cost-effective cross-border payments.
Ripple offers a decentralized financial technology solution that enables real-time settlement, reducing the time needed for cross-border transactions from days to mere seconds, with negligible fees, as Arrington Capital CEO Michael Arrington recently experienced.
SWIFT’s Shortcomings
Garlinghouse was particularly critical of SWIFT’s slow processing times and error rates. According to him, the SWIFT protocol has an error rate of approximately 6%. Errors often occur due to mismatched information, such as incorrect account details, which can cause transactions to be delayed or reversed.
These issues are exacerbated by the fact that SWIFT is a one-way messaging protocol. Any mistakes or inaccuracies in the data require a manual correction process, which adds to the delays.
Garlinghouse highlighted how Ripple’s technology could significantly reduce this error rate by providing real-time feedback when transaction details are inputted. This real-time feedback would help reduce errors to a negligible rate of 0.1%.
“We see instead of a 6% error rate as reported for SWIFT, you see, you know, 10 bips of error,” Garlinghouse noted, referring to a drastically lower error rate Ripple aims to achieve.
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Ripple’s Advantage in Liquidity and Speed
In addition to addressing SWIFT’s messaging inefficiencies, Garlinghouse pointed out that Ripple’s solution offers a liquidity mechanism that many traditional financial institutions rely on major banks, such as Citi, to provide.
By integrating liquidity directly into the transaction process through XRP, Ripple can help financial institutions free up trapped capital that would otherwise be used as pre-funded accounts in different markets. With its unrivaled offering, XRP could completely disrupt the global banking system.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial loss.
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