Ripple tailored toward banks and financial institutions - few “issues” with traditional blockchains, such as we see in Bitcoin and Ethereum
A lot of people are aware of what the Ripple project is trying to achieve. Their version of blockchain technology is mainly tailored toward banks and financial institutions. However, they also issue a warning when it comes to other banks embracing different blockchain solutions. There are a few “issues” with traditional blockchains, such as we see in Bitcoin and Ethereum.
Most institutions will not benefit from embracing blockchain technology. More specifically, they will not see faster or cheaper transactions necessarily. That is rather unusual, considering all experts seemingly agree blockchain is the future. Ripple, on the other hand, takes a more cautious approach. Privacy and speed are not native traits to pure blockchains, unfortunately. This statement will send shockwaves through the DLT industry as a whole.Pure Blockchain Tech Will Not Help Banks
While blockchain works fine for cryptocurrencies, it will not automatically work for banks. In fact, most cryptocurrencies suffer from a lack of privacy and slow transactions. This is especially true where Bitcoin and most other top currencies is concerned. Waiting a minute or more for transactions to complete is not acceptable for financial institutions. Instead, they need a simpler solution without having information sent to all nodes on the network.
Giving every single bank a full copy of a blockchain isn’t a viable solution. Using one single blockchain won’t work either. More specifically, a growing blockchain size means more nodes are needed. As a result, the network will slow down. Plus, there is no public blockchain solution capable of handling a high volume either. Instead, institutions need to use the parts of the blockchain that matter.
The Ripple blockchain works rather differently from all other solutions. Anyone in the world can connect to the platform, without keeping a copy of the ledger itself. Traditional blockchains are not suited for transaction banking, that much is evident. Ripple can process transactions in mere seconds, rather than minutes. Moreover, they have partnerships with dozens of financial institutions around the world.
Header image courtesy of ShutterstockTags: banks, blockchain, Ripple