Ripple Strikes Back at the Recurring Criticism Against Digital Assets’ Volatility
- Digital Assets Too Volatile for Fiat Payment Flows?
Recently, at The Economic Club of New York, Ripple CEO Brad Garlingouse talked about XRP’s use case in cross border payments. He explained how a transaction using the digital asset has far less volatility risk than the one with fiat.
Here is the full interview for all the Ripplers who missed it a few weeks ago.
While a highly volatile asset XRP takes 3 or 4 seconds to process a transaction, a low volatility asset (fiat) takes 270,000 seconds (just over 3 days), meaning you are taking less risk with the digital asset than fiat.
Digital Assets Too Volatile for Fiat Payment Flows?
In its latest insight, Ripple talked about this in detail and tried to prove that this, in fact, is true and the “recurring criticism” against the digital assets that they are “too volatile for fiat payment flows” is simply wrong.
In this small study, Ripple takes two payment use cases — fiat transactions that compare the spot USD-MXN rate to the spot rate after a delay and an XRP transaction that comes to the implied USD-MXN rate through XRP during three types of market conditions, the last month, a rally and a period of decline.
This brings in the following results,
The relationship between the third and fourth columns shows that one or two hours of fiat volatility is about equivalent to one minute of XRP volatility.
“Even during a highly volatile rally period, XRP must still be held for an hour (versus the seconds it’s normally held) to attain the same volatility as a fiat payment.”
The data shows that a typical XRP payment has 1/10th of the volatility exposure of a typical fiat SWIFT payment.
This speed of an XRP transaction means transaction partners are in and out of the digital asset so fast that there’s no need to hedge. As such, the resulting risk much lower with a digital asset like XRP and a reason, as Ripple puts it, why the likes of MoneyGram have been using Ripple products.
Other Ripple News
Ripple has been making many headlines as of late, and here are few of those key stories:
In case you missed it, MoneyGram CEO shared the plans on using Ripple's On-Demand Liquidity by the end of the year:
ICYMI – in today’s @MoneyGram earnings call, CEO @walexholmes announced plans to expand use of Ripple’s on-demand liquidity to new corridors before EOY. “Our partnership with Ripple will be a competitive differentiator in the months and years ahead”
— Asheesh Birla (@ashgoblue) November 1, 2019
Then, like we covered yesterday about Justin Bieber and his management promoting Runs on Ripple to his 121 million Instagram followers, now TransferGo is on the XRP train with the latest:
— JackTheRippler🤫🐻🏦 (@RippleXrpie) November 1, 2019
One thing is for sure, Ripple knows how to keep things exciting and keep the XRP army and community geared up for what is to come during the next crypto market bull run cycle.