Ripple (XRP) is setting out to do what many consider impossible. Get real people in the real world to use a cryptocurrency to buy real stuff.
Ripple’s current hopes are riding on an application programming interface (API) called Coil. To clarify, an API is a payment solution that connects digital platforms with payment solutions.
Coil allows users of YouTube, Wikipedia, Twitch, and other content platforms to pay for content with Ripple. Currently, the Coil payments take the form of donations. However, Coil subscriptions are the next logical step.
Will Ripple (XRP) and Coil Make Money from YouTube?
Obviously, YouTube; an Alphabet (NASDAQ: GOOG) subsidiary, is the exciting opportunity here. In particular, YouTube is the world’s most video streaming service. YouTube reportedly had 1.8 billion users in May 2018, The Business Insider claims.
The plan apparently is to use Coil’s API to collect Ripple (XRP) donations from YouTube users. However, Coil is still in very limited testing on a few YouTube channels. The payments are reportedly tips paid to YouTubers people like.
Importantly, Alphabet (NASDAQ: GOOGL) owns the most used search engine Google. Intriguingly, Coil and Ripple seem to have tacit approval to test their services on Alphabet products.
If it works, Coil’s API has far greater possibilities. For instance, they might use it on ecommerce platforms like Amazon (NASDAQ: AMZN), Etsy (NASDAQ: ETSY), Netflix (NFLX), and Alibaba (NYSE: BABA).
Logical markets for Ripple Payments include video, video games and music. Markedly, the Chinese digital content market grew by 27% between 2016 and 2017, Nikkei Asian Review reports. The National Copyright Association estimated the value of digital content in China at 636.5 billion yuan ($92.7 billion) in 2017.
An obvious use of Coil could be paying for food from Instacart, Ocado Group PLC (LON: OCDO), GrubHub (NYSE: GRUB) or Uber Eats. Moreover, a logical use for Coil is to pay Ripple tips to GrubHub, Uber, Instacart, or Lyft drivers.
Is Ripple (XRP) Secure?
Ripple (XRP) is one of the most interesting cryptocurrencies because it is not blockchain based. Instead, Ripple operates through a sidechain.
Both sidechains and blockchains are encrypted digital pathways through the internet. The difference is that a sidechain has far less encryption than a blockchain. Therefore, a sidechain is less secure than a blockchain.
Conversely, a sidechain is theoretically faster and has a greater processing capability than a blockchain. Reducing the encryption increases the speed and capacity of the sidechain. Obviously, reducing encryption increases a sidechain’s vulnerability.
Ripple has adopted a sidechain called the Ripple Network or RippleNet to get around the blockchain scalability problem. The problem is the speed limit that restricts Ethereum (ETH) to around 18 transactions a second and Bitcoin (BTC) to less than 10 transactions a second.
Solving the blockchain scalability problem is critical because a profitable payment solution will need to process around 10,000 transactions a second. For example, PewDiePie doesn’t want an API on his YouTube channel that will crash if over 100 fans try to send him money.
Why are Speculators Bullish on Ripple (XRP)?
Speculators are bullish on Ripple because it has attracted a lot of high-powered corporate interest.
In particular, big banks like Banco Santander (NYSE: SAN), Westpac, the Royal Bank of Canada (RBC), and PNC Bank have shown interest in RippleNet. Importantly, some major payment processors including American Express (NYSE: AXP) and MoneyGram are experimenting with Ripple.
Ripple itself is experimenting with remittances in Japan. To explain, remittances are the money individuals send to people in other countries. For example, funds a husband working in Saudi Arabia might send to his wife back home in India.
Historically remittances are sent through wire services like Western Union and MoneyGram. In general, wire services are expensive, cumbersome, and limited. In detail, Thai workers in Japan have to make several trips to the bank to send a remittance payment.
Ripple (XRP) Tries to tap a $613 billion remittance market
For instance, a person has to go to Western Union to wire money which has to be picked up from Western Union. That process is expensive because of the fees paid to the wire service.
Remittances are dangerous because people have to take cash to and from the wire service office. Obviously, criminals know people coming out of a wire service office have cash.
Nor is physical danger the only drawback to wire services. Thai workers in Japan often have no way of knowing if remittance money arrived back home without a phone call.
Ripple is interested in remittances because they are big business. The World Bank calculates that people sent $613 worth of remittances in 2017. Significantly, the volume of remittances grew from $573 billion in 2016 to $613 billion in 2017.
Ripple (XRP) Bets Big on Japanese Remittances
In particular, Ripple is working with SBI Remit the largest remittance service in Japan. Supposedly, RippleNet allows you to deposit Japanese Yen (JPY) in an ATM in Tokyo. Impressively somebody can withdraw the Yen in Bangkok as Thai baht (THB) seconds later.
Such remittances are possible because Ripple is working with a consortium of 61 banks in Japan. The Japanese remittance market is potentially huge. There were reportedly 1.28 million foreigners working in Japan in 2017, The Japan Times estimates. Notably that number could grow because of a labour shortage in Japan.
Workers have a huge incentive to seek alternatives to traditional remittances. For example, wire fees can cost a worker the equivalent of 12 hours; or two to three days of wages, The Nikkei Asian Review estimates.
Comparatively, the remittance system is a mess. For instance, Japanese bank tellers cannot tell you how much remittances will cost or how long it will take money to arrive.
Obviously, that creates a nightmare scenario for a construction worker who is trying to help his mom cover the rent back home. Incredibly, it sometimes costs 10,000 yen ($88.67) to send 10,000 yen from Japan to another country.
The Japanese remittance market is an ideal testing ground for Ripple because Japanese banks and regulars are receptive to cryptocurrency. If Ripple remittances work in Japan they could succeed in countries like the USA and the UK.
Ripple (XRP) has Future Moneymaking Potential
In summary, Ripple has future moneymaking potential. Therefore, speculators need to inspect XRP.
Ripple (XRP) definitely has value. For instance it had a Market Capitalization of $21.281 billion, a 24-hour Market Volume of $2.159 million, and a Coin Price of 53.3¢ on 26 September 2018. I think the low Coin Price is one of Ripple’s greatest attributes because of the realistic valuation.
There were 39.809 million tokens in circulation on 24 September 2018, Coin Market Cap estimates. Ripple had a Total Supply of 99.992 billion XRP and a Maximum Supply of 100 billion XRP on the same day.
I believe Ripple is a good long term speculative investment because of the real world uses. However, it will probably years before any of those experiments generate any serious revenues.
How Central Banks will make or Break Ripple (XRP)
Moreover, there is a serious obstacle to Ripple’s plans Central Banks. Tellingly, no Central Bank is visibly using or promoting Ripple.
The Bank of Japan obviously knows of the Ripple experiments in that country. Therefore, the Bank of Japan might plan to test Ripple payments at some point.
Consequently, a central bank could increase Ripple’s value by using it. Conversely, a central bank could destroy Ripple (XRP) by banning or suppressing it.
Given these points, speculators should watch closely to see how central banks react to Ripple. Ultimately, Ripple’s fate is in the central banks’ hands. If central banks accept it; Ripple can become the most valuable cryptocurrency around.