JP Morgan Chase, which is the biggest bank in the United States, just announced plans to launch its own cryptocurrency, and that’s something that doesn’t quite go down well with Ripple.
Ripple is the blockchain-focused company that created XRP, and it has been lobbying across the world to have banks adopt XRP as a base currency in settling cross-border payments for banks that use its RippleNet.
Now, JP Morgan means to challenge XRP’s supremacy in this niche by introducing its own coin for the same purpose. However, this hasn’t gone unnoticed by the big people at Ripple who see JP’s plan as nothing more than a flawed plan. Ripple’s own Brad Garlinghouse had some very sharp words to say about bank-backed cryptos.
They’re Unrealistic And Doomed To Fail
According to Brad, bank-backed cryptocurrencies are unrealistic since they can only be used by the bank or banks that have created them.
That means that if a group of banks come up with their own cryptocurrency to handle transactions, they would have to create a separate framework to streamline transactions with other banks outside the group. That makes the whole process even more cumbersome than the existing system.
The best case scenario would be for all banks across the world to team up and agree on a single crypto to use, but that scenario is highly unlikely in an industry plagued with so much competition and geopolitical differences. In that case, any attempt to introduce a cryptocurrency backed by any bank is futile and destined to fail.
XRP Helps Modernize Payment Systems
Going further, Brad explained that XRP comes in as the ultimate answer to this problem, especially given that it’s an independent cryptocurrency that can be adopted by any bank without having to draft different rules for each institution.
As such, XRP excels in modernizing the financial system by boosting liquidity and transaction processing speeds for cross border funds transfer.