XRP Ledger is a blockchain project that specializes in cross-border payments. Its development company, Ripple, has adopted it with large institutions such as Santander Bank and Standard Chartered to improve cross-border payments through RippleNet. Efficiency and transparency (this does not mean they use XRPL or $XRP).
Foreign media (The Crypto Basic) believes that based on the practicality of XRPL, the price of $XRP is likely to be underestimated; under the premise of the increasing adoption rate of XRPL, the bank remittance business of SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is likely to be replaced by it.
Global coverage of XRPL and SWIFT
According to a report by the Financial Crimes Enforcement Network (FinCEN), SWIFT processes more than $5 trillion in transactions per day, which is equivalent to $1,250,000,000,000,000 per year. XRPL would only need to capture a fraction of this to cause $XRP’s demand and market cap to surge significantly.
Although XRPL has high transmission efficiency and low cost (the processing time is within 3~5 seconds, and the handling fee is close to 0), SWIFT has formed a payment network with 11,000 financial institutions around the world and has the advantages of traditional finance. Decades of trust foundation; in comparison, XRP's market coverage obviously still has a long way to go.
Regulatory uncertainty for XRPL
Regulation is a major hurdle for XRP to overcome, especially legal battles with the U.S. Securities and Exchange Commission (SEC). Recently, the SEC once again appealed against Ripple, firmly stating that $XRP is a security. Before the lawsuit is concluded, XRPL may not be widely accepted by financial institutions, which will become one of the obstacles to the large-scale adoption of XRP.
XRPL and SWIFT Liquidity
XRP allows high-speed settlement of cross-border payments, but to operate at the scale of SWIFT, its liquidity infrastructure still needs to be further upgraded; currently Ripple is using $XRP as an intermediary for legal tender through its On-Demand Liquidity (ODL) assets to achieve high-efficiency conversion between legal currencies to make up for the liquidity shortcomings of XRPL.
Where will $XRP go after XRPL replaces SWIFT?
(The Crypto Basic) believes that if XRPL or ODL can handle 5~10% of SWIFT’s total transaction volume, the valuation of $XRP will reach at least US$10 trillion, and its price will be pushed up to more than US$100; if it completely replaces SWIFT, $XRP will reach $1,000, but this will only happen if the above thresholds are overcome.
Could XRPL replace SWIFT?
In fact, SWIFT has been co-developing blockchain solutions for cross-border payments with the smart contract platform Chainlink as early as 2022, and has announced sandbox test results in 2023 and this year. Nigel Dobson, general manager of ANZ Banking, said that through the tokenized asset transmission framework, SWIFT has been able to shorten the settlement time of cross-border transfers to within 15 minutes. Although it is still not as efficient as XRP’s settlement in seconds; for international banks, the long-established SWIFT is easier to integrate into the platform, which may give them no reason to look for other solutions.
Image source: SWIFT.comSWIFT distributed ledger PvP settlement mechanism
On the other hand, the SWIFT tokenization platform uses Chainlink CCIP. This technology allows tokenized fiat currencies or CBDC to flow seamlessly between the blockchain networks of different banks, completely eliminating the cross-chain liquidity dilemma, and this also It is XRPL’s competitive advantage that is difficult to match. With SWIFT launching pilot transactions in 2025 and its tokenization platform expected to be adopted globally, the possibility of XRPL replacing it will become even slimmer.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
