We Use Only XRP for RippleNet, But Tech is Neutral

According to Navin Gupta, for the time being, Ripple only leverages XRP when facilitating cross-border settlements with RippleNet.

Navin Gupta, the Managing Director for South Asia and MENA at Ripple Labs, has confirmed that the California-based financial technology company currently leverages XRP to facilitate cross-border settlements with its payment solution RippleNet.

Gupta disclosed this while speaking with host Arjun on a Couchonomics episode titled: “Solving Cross-Border Payments with Ripple and the Future of Blockchain.” Gupta highlighted the mode of operation of RippleNet as he sought to share insights on how Ripple makes cross-border payments more efficient.

Managing Director of South Asia and MENA @navinblockchain joined the @Couchonomics podcast to discuss the importance of interoperability and collaboration between different blockchains, financial inclusion and more.

Hear the conversation.🎙️ https://t.co/TFRsjfqWYS

— Ripple (@Ripple) May 2, 2023

Gupta noted that cross-border settlements are costlier and less effective because of the complications that come with them. He pointed out that for a bank to facilitate payment in another currency, the bank would need a nostro account. A nostro account is a bank account that a bank holds in a foreign country, denominated in the currency of that country.

However, as Gupta highlighted, cross-border payments are expensive because the bank needs to cover the cost of bearing the capital cost of the assets deposited in the nostro account. The bank also seeks to cover any losses that may arise from foreign currency depreciation. 

RippleNet Addresses this with XRP

To address these issues, Gupta emphasized that RippleNet exchanges the sender’s currency to its equivalent in XRP and then re-converts the XRP to the recipient’s currency within seconds and deposits the target currency in the desired account.

Speaking on the modus operandi, Gupta explained: “Exactly what is going to happen is, GBP in real-time will get converted to XRP. XRP, within two seconds, will travel to [the] Philippines; and, in [the] Philippines, it will get converted to Philippine peso and the payout will happen.”

Responding to this, Arjun asked Gupta if money is only converted to XRP when Ripple seeks to move it within RippleNet. Gupta noted that Ripple doesn’t necessarily “convert” but rather uses order books from exchanges, such as Bitstamp in the UK and Coins. Ph in the Philippines.

Arjun then asked: “So if you use those open order books to do the conversion, you only do it into XRP?”

“Currently, we only do it in XRP, but the technology itself is neutral. As more cryptocurrencies evolve and they have enough liquidity pairs, then we would use many other things,” he remarked.

At the start of the interview, Gupta confirmed that other assets such as Ethereum and USDC could be used to exchange one foreign asset for another, just like XRP is used, and financial institutions are free to use any asset they prefer when sending money to another institution on RippleNet in a peer-to-peer fashion.

For instance, institution A could convert GBP to USDC, send the USDC from the UK to the Philippines, and then convert the USDC to PHP (peso) in the Philippines. However, Gupta further said: “The reason XRP is used is that it is more suitable for payment: because it takes two to three seconds, it’s extremely fast, and it’s uniquely suited for cross-border payments.”