XRP Seeks a Right Place In Post-COVID Finance

XRP Seeks a Right Place In Post-COVID Finance

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Ripple CTO David Schwartz in a series of podcasts revealed the details of the creation of the third cryptocurrency XRP and shared his opinion on how it will develop in the post-pandemic era.

Schwartz acknowledged that XRP was created without a clear idea of how the cryptocurrency would be applied. The driving motive was the admiration for the first cryptocurrency. Bitcoin impressed the world by the fact that all data and all transaction rules were transparent and public. No need for mediation anymore.

“We felt that that was the key innovation to Bitcoin,” recalls David Schwartz.

But his team had their own vision of the consensus algorithm. Proof of Work which is used in the Bitcoin blockchain turned out to be heavy and slow. The Ripple team had their own idea, which they called a Distributed Agreement Algorithm. It works faster, with no mining, no power consumption.

When the idea was confirmed in practice, they began to think about how to apply XRP. Ultimately, after exploring many opportunities and testing market expectations, Ripple concluded that the best use of XRP is to make cross-border payments, “because that’s where there’s pain.” Schwartz notes that before XRP was used, things were going so badly in international payments that even the first solution on the Ripple platform was better. International payments in XRP are so good today that hundreds of partner financial institutions use them.

CTO Ripple speaks about what will happen to XRP after the pandemic, with the professor of economics and political science at the University of California, Berkeley, Barry Eichengreen. Barry sees the key to understanding current economic events in the past. But such a new phenomenon as COVID-19 has no parallels in human history, so there are no direct analogies. According to the professor, a pandemic in its consequences for the economy is similar to a world war. Therefore, it is right that governments have taken action to support financial markets. However, an unprecedented increase in liquidity will lead to hyperinflation in the future. Therefore, investors are looking for opportunities for the preservation of the value of the assets.

Gold doesn’t really have intrinsic value – it’s a kind of social contract, gold is valued because people have agreed to value it. The same can be said for cryptocurrencies. Cryptocurrencies may well replace gold. Moreover, Barry advised against stablecoins, since their value is pegged to the dollar or euro. With the fall of fiat currencies, stablecoins will also fall. And cryptocurrencies do not have these risks.

The time for speculation in cryptocurrencies is passing. The time comes to use them in payments. This may be the real value of XRP in the post-pandemic era.