Based in the blockchain friendly Malta, Binance has in two short years evolved into a reliable exchange. It is not only where most trading volumes emanate from but over time, Changpeng Zhao and team have been increasing features to cater for all lines of traders. Last year for example and following pressure from the so-called XRP Army, they made XRP base. Now, there are hints that xRapid will be adopted by the exchange following Michael Arrington’s praise of Binance’s OTC and their efficiency.
Michael Arrington is the partner of the Arrington XRP Capital and before delving into blockchain, investing in promising projects, he was the Editor at the Tech Crunch. However, differentiating itself from other hedge funds and even Binance in this case is the fact that his fund is denominated in XRP. He has close ties with Brad Garlinghouse, the CEO of Ripple Inc, and although he isn’t involved directly with Ripple Inc, his inclination and support of XRP hints of his confidence.
Even though there is no official confirmation that Binance will indeed adopt xRapid to slash costs and improve efficiency, Michael Arrington’s comments on Binance’s OTC could spur them to incorporate the tech. Previously, Changpeng Zhao has been quoted saying:
“We’re focused on launching more features right now, so we are working with a number of other partners. With xRapid, there’s nothing going on right now, but in the future, we’ll definitely want to add them as a partner.”
It’s all About Liquidity
Overly, Liquidity is a big knock on altcoins. Bitcoin, being the pioneering crypto asset with a massive following, is no doubt liquid though not as fluid as government issued fiat. The objective of xRapid therefore is to create an ecosystem around XRP while ensuring that the coin is an accessory, a liquidity tool for financial institutions and payment processors. Ripple is behind xRapid and according to their official description of the one of the three main solutions, the option is specifically designed for:
“Payment providers and other financial institutions who want to minimize liquidity costs while improving their customer experience. Because payments into emerging markets often require pre-funded local currency accounts around the world, liquidity costs are high. As a result, xRapid dramatically lowers the capital requirements for liquidity.’’
Western Union’s Pilot
From the above, it is crystal that adoption of xRapid is beneficial for institutions. Western Union did pilot the program before and although their CEO was dismissive of the tech saying it didn’t result in any visible gain, Asheesh Birla said that was because they were testing with low volumes. That is understandable especially when they are testing, piloting a technology that is set to disrupt the very model in which they are turning huge profits from.
“We are always criticized that Western Union is not cost-efficient, blah blah blah, but we did not see that part of the efficiency yet during our tests. The practical matter is it’s still too expensive.”
After all, Western Union’s general model is predicated on the mere fact that sending money across borders is supposed to be expensive. Ripple’s xRapid flips that and it has been proved beyond that processors and banks processing the tech could end up saving up-to 70 percent of costs. It is costs saving that the CEO of Western Union, Hikmet Ersek, is interested in.
Binance’s Use Could Fast Track Adoption
Therefore, given the benefits that Binance can draw from xRapid once they confirm the use XRP as a liquidity tool, investors will no doubt reap big benefits. Investments will likely flow to XRP, a digital currency issued by Ripple Labs, and even form a base from where more Chinese processors will follow Lian Lian route, connect to the RippleNet via xCurrent, and later upgrade to xRapid. As the CEO Arthur Zhu explicitly laid out the benefits:
“With RippleNet, LianLian International will now be able to give merchants and consumers quicker, more cost-efficient payments into China, which they weren’t able to before. We also look forward to connecting other RippleNet members to LianLian.”