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Ripple was introduced in 2012 with financial institutions in mind. Although a cryptocurrency, it is fundamentally different from others as it is a private, centralized permission based Blockchain, making it an almost complete opposite to Bitcoin, which is a public, decentralized permissionless-based Blockchain. This, the two have been made for different applications all together. Ripple was created with the aim of enabling secure, instant and nearly free, global financial transactions of any size with no chargebacks, through their real-time gross settlement system and currency exchange and remittance network. Furthermore, even though, Ripple has an open-source protocol, it is not a plug-in and use solution as most other alt-coins, and it does not rely on crowd-sourced support. Additionally, unlike most other alt-coins, Ripple was made to be recognized as a legal tender by government agencies and financial institutions, thus providing it with instant liquidity and ability to purchase marital goods. The intrinsic properties of Ripple shield its evaluation from being largely based on assumptions and speculation.


With the emerge of global E-commerce corporations such as Amazon, Uber, Netflix, Apple, and Google, the need for new transaction infrastructure has become evident. The nature of these global E-commerce corporations is to provide on-demand, real time services. Thus, the payment they process is high volumes of low value payments at high through-put. Unfortunately, the current infrastructure is outdated and slow, usually requiring two to three business days for a transaction to take place from one financial institution to another. There has been decrease in the global banking relationships which has added to the slowness of the processing of payments. This process is done through a network of banks which adds to the time delays ad is also associated with risk and errors. There is then the issue of global reach, at this time there is no financial institution that has global reach, which is usually due to compliance and fees. There are multiple intermediaries that stand between transactions which cause the delay in transactions between financial institutions. 




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Figure   SEQ Figure \* ARABIC 1 Unserved global payment demands on the rise as global banking reach decreases

Cross-border payments between two financial institutions would entail the following. The sending bank would send money to the corresponding bank, the currency would then have to be exchanged and sent to the correspondent, the receiving correspondent then sends the money to the receiving bank. Each step of this process has added fees, and takes time, with the typical time delays being between 2-4 days.

Ripple believes that the new payment infrastructure should be an IP-based payment infrastructure in a global scale network of servers which use Blockchain technology. They believe that in the future, money will exchange hands as blocks of information which holds majority of its value, thus bypassing the costly intermediaries in place today. Ripple’s role in the future will be to provide a routing of transactions between two parties. Ripple employs the inter-ledger protocol (ILP), which allows for transactions to settle atomically in real time across networks. This means that the transactions settle all at once, or not at all. This technology eliminates delays and lags as payments move from one network to another, while facilitating high velocity and high-volume payment processing.

Ripple has created the technology for building processing features that allow for them to create tailored features for banks across the globe. They then package this technology into an enterprise package solution which they call Ripple Connect which is then sold to banks which then allows banks to make transactions with other banks using this technology. The schematic below shows the connectivity of different banks to the ILP through Ripple Connect. Ripple wires banks through the ILP first and then they wire the network that the banks are connected to through the ILP. This allows for banks to make transactions between any entity that has Ripple Connect. The common protocol makes it possible to make a single interface that services all global payment networks. In addition to banks, Ripple has created interfaces which allows for third-parties, such as Hedge funds to use this technology thus providing them with more liquidity.

The Ripple technology allows for all parties to have access to cheap liquidity. The optimization of the Ripple technology providing liquidity between these parties is via XRP. Using XRP banks have seen up to 60% reduction of costs when managing their global forex and forex trading. Banks no longer will have reconciliation issues associated with errors, all which result in a significant cost and exposure. XRP allows banks to transfer funds from a country with one currency to another with another currency all while having a streamline of liquidity and reducing costs and risk. 

Some of the disadvantages associated with Bitcoin (BTC) and Ethereum (ETH) are associated with their governance, which are also run by a few major mining pools located mostly in china.  This allows for specific amount of systemic risk that is not acceptable for institutional adoption. From a speed standpoint, BTC settlement generally takes about 60seconds longer than XRP. From a Risk standpoint, BTC and ETH both present associated risks, with the first of those being exposure. The long settlement risks of BTC and ETH creates risks that are not tolerable by institutions. There are also misaligned incentives, such as BTC mining. From a security standpoint, ETH is an untested and unknown system. In fact, it is written in an unknown scripting language. XRP and the ILP are run by institutional validators such as MIT and Microsoft. Thus far, they have never had any payment issues or lost transactions. This is the most efficient settlement system to date. Settlements with BTC take about an hour, ETH which takes 15-30seconds, XRP takes about 3-5 seconds. With regards to distribution, XRP goes to financial institutions that provide liquidity to the provider network. Instead of incentivising a handful of miners, such as BTC and XRP, Ripple incentivises liquidity and everyone who uses it equally.

Ripple will connect different payment system using the Ripple API, which include Ripple API Fidor. Fidor is a German bank which was named the most innovative bank in 2013 by International Finance Magazine, which is the first bank to officially implement decentralized payment technology into its operations. All members of RippleNet are connected through Ripple’s standardized technology xCurrent. This is the first global real-time gross settlement (RTGS) system that allows financial institutions to message, clear, and settle their transactions with transparency, speed, and efficiency. This system is a cryptographically secure, end-to-end payment flow with information redundancy and transaction immutability. This system is built within the banks existing infrastructure, thus minimizing any business distruption.

There has been a lot of enthusiasm for the banks to adopt to Ripple’s system. In addition to cost savings, and reduction of time delays, the firm provides rebates that cover 50-300% of the integration and first-year’s license fees. This is covered by $300M fund that the company has put aside to fund their “RippleNet Accelerator Program” that covers the volume rebate and adoption marketing incentive.

At this time, there are 75 banks and payments providers are active on Ripple’s network. Additionally, the company is partnered with 90 other banks across the globe. These banks include, National Australia Bank, AXIS Bank, Banco Santander, Standard Chartered Bank, BBVA, Westpac, Wier, Cross River Bank, and Kansas-based CBW.

In simpler terms, Ripple allows one institution to send currency to another, without any intermediaries. It facilitates this with a marketplace of liquidity providers, whom compete to provide the best rates. Ripple then automatically chooses the best rate by settling the payment, which takes only 3-6 seconds, allowing for instant, bilateral, straight-through processing. 

 Ripple Currency transfer system

Ripple Currency transfer system

To further expand on the points above, the core difference of XRP are its greatest strengths. BTC and ETH both lack regulation. This may be the sole reasons that has led to failed ETF proposals on various occasions. XRP is will be held mostly by financial institutions as a liquid entity. XRP as a currency will be as close as to the World Bank and SWIFT as one could get. XRP was made specifically for financial markets which is the reason why they specifically targeted regulatory compliance. Furthermore, XRP is transaction times are much quicker due to its adherence to distributive ledgers DLT standards, which is a requirement for many financial institutions to be insurable. 


In May 1st of 2017, Ripple announced that a consortium of 47 banks have successfully completed a pilot implementation of Ripple in Japan. This move made Japan the first country in the world to enable domestic and international real-time money transfer via cryptocurrency. The result of this news led to 730% increase in XRP from $0.051580 to $0.430085 in matter of 16 days. Japan is not the only adopter of XRP technology. Other recent adopters of distributed ledger technology include, India, Central Europe, Middle East and Africa (CEMEA) regions.

Japan is the third largest country with a GDP nominal of $4,841.22 B and fourth in the world with a purchasing power parity (PPP) of $5,420.228 B. Currently, the GDP per capital is approximately $41,300 (vs. united states $57,400). Japan’s GDP composition breakdown consists of 1.1% agriculture, 29.6% industry, and 69.4% services. It is safe to assume that Japan will not only fully adopt this technology but also encourage its trading partners to do the same. Japan’s major trading partners includes US, China, Hong Kong, Australia, and South Korea. Assuming that Ripple is used for the industry portion of Japan, which is about 30% of Japan’s GDP, it would mean that Ripple would be handling about $1452.3 B USD in Japan, every year. To put that in perspective, at the time of writing this report, the current market capitalization of Bitcoin is $312 B.

In spring of this year, India-based Axis Bank and Yes Bank announced that they will soon begin leveraged distributed ledger tech for cross-border transactions in hopes to make banking simple for their consumers. It is important to note that India’s GDP is about 1/3 of Japans. Abu Dhabi bank, which is the largest bank of UAE, has also begun to offer cross-border transaction services with ripple distributive ledger technology as well. Dubai’s larger industry is energy, followed by Real Estate and Finance. Although, their GDP is much smaller than India and Japan, about $350 B, one can anticipate that Ripple will handle most of the UAE’s transaction volume.


One of the main areas of concern is the way XRP is distributed by Ripple. Generally, cryptocurrencies are either pre-mined or mined by the distributors, and in cases where the currency is pre-mined, the creators hold only a small fraction of the coins. However, in this case, Ripple owns 60% of the coins. The concern would be that they could significantly affect the price of XRP by flooding the market. Ripple has taken steps to help alleviate some of these concerns by placing a significant portion of these coins in an escrow account [i]. The account is to release/unlock 1B coins / month for the next 4.5 years. This is approximately $14B or 88% of the firm’s total XRP.

Secondly, there is areas of concern surrounding the amount of XRP awarded to the founders. Jed McCaleb, Chris Larsen and Arthur Britto, awarded themselves 20B XRP upon inception of the company. McCaleb later left the group to start his own version of Ripple, called Stellar, and upon leaving, he decided to sell his share of XRP. This resulted in a legal battle, that was eventually settled, and provided a schedule of which the coins were to be sold[ii]. Ultimately, he is able to sell his XRP by 2019. This is generally not an ideal situation, as the money from Ripple, is potentially funding a competitor.

Thirdly, XRP is destroyed when “used” as a transference fee. This essentially raises the value of each XRP, as there would be less XRP available to everyone. So, if 10% of XRP was used/discarded for network fees, this would increase the value of everyone’s XRP by 10%. The concern here is the fact that Ripple owns such a large quantity of XRP which means that they will be the beneficiary of ~60% of all network fees.  However, there are approximately 11.5 million SWIFT transactions per day, if Ripple captures just 10% market share any dilution of XRP by Ripple management could be easily offset.  While it is impossible to put an “intrinsic” value on XRP, it can be assumed the velocity of money will hold a major role with any appreciation.


On November 27, 2017, India’s AXIS Bank announced the launch of its instant, cross-border payments solution, which uses Ripple’s block-chain technology is now up and running[iii]. This allows customers to receive payments from UAE’s RAKBANK using the platform, while corporate clients in India can receive payments from Singapore’s Standard Chartered Bank in real-time. To put this in perspective, with regards to market share, AXIS Bank own 11% of credit cards, 7% of debit, 17% of mobile banking, 44% of forex cards, and 4% of savings accounts in India[iv]. Again, this is an example of the velocity of money.

On November 28, 2017, TechCrunch Founder Michael Arrington, announced that he is raising $100M for a hedge fund that will buy and hold crypto-assets while making investments in token sales and equities and debt[v]. This fund will be name Arrington XRP Capital[vi]. The fund, will be the first to require all limited partners (LPs) to make investments in XRP. The fund will also use XRP for all distributions and fees. Arrington said that the fund has about $50M committed to date, and plans to close it before the year’s end. The reasons he chose XRP are two-fold, he states that having a hedge fund that is dominated by cryptocurrency makes it easier for investors with cryptocurrency to invest, thus saving on fees. Secondly, second to using their fast infrastructure, they open doors to non-U.S. investors allowing them to invest in the fund without having to rely on the fiat methods for cross-border currency transfers, thus reducing risk and fees [vii]. Additionally, GMO Coin, The Japanese currency exchange which is a virtual currency trading subsidiary of GMO Internet Inc. (TYO:9449) with a market capitalization of $217.19 B, announced that the pending enlargement of its cryptocurrency offering will add Ripple in addition to Litecoin[viii].


  • Ripple (XRP) provides a smooth transaction system for transference of funds globally, with the goal of reducing the fees and the extensive amount of delays associated with such transactions.
  • Unlike PayPal or Visa, there are no transaction fees associated with Ripple. A small portion of Ripple, the equivalent to ~1/1000th, is disregarded as payment for each transaction. This is used as a safety precaution in an event if an attempting to put through millions of transactions all at once.
  • Ripple increases speed, providing interoperability, decreasing costs and risks, while broadening payment reach.
  • XRP can become a Wall Street favorite as it is made for the financial institutions, they host conferences with central bank officials and other high-finance luminaries.
  • The customer base, is mostly financial institutions, in different countries, such as Japan and India.
  • Although, the 4th ranked in terms of market capitalization, XRP has not become a mainstream cryptocurrency as of yet in U.S., in fact, majority of the investors are from South Korea.
  • The supply of Ripple stays constant at 100 Billion.
  • The current price of each XRP is $0.25 USD with a market cap of $133.7 M
  • While providing a value or price target for XRP is nearly impossible, we agree with Ripple management that XRP could reach the $2.00USD level in 2018. Our thesis for such price appreciation is demand driven. And prospects for outpaced demand should occur if the banks mentioned earlier in this report utilize Ripple and the XRP “currency”.













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Dr. Tiam Feridooni

Written by: Dr. Tiam Feridooni MD, PhD, BSc Dr. Feridooni, graduated from Dalhousie Medical School in May, 2018. Prior to enrolling in medical school, he completed his Bachelor of Science with Honours in 2010 in Biochemistry. He then obtained his PhD at Dalhousie University in Pharmacology in 2014, with a focus around regenerative medicine and stem cell transplantation. Dr. Feridooni has been published numerous high impact journals and has also co-authored a few books.