Yesterday Ripple published a blog post saying it’s piloting a private version of the open-source XRP Ledger to provide central banks with a solution for central bank digital currencies. Numerous technology, consulting and payments firms are vying to provide central banks digital currency (CBDC) solutions for what will be lucrative long-term deals. One of the highest-profile ones is Mastercard.
Ripple says that “distributed ledger technology (DLT) will be the basis for most CBDCs, just as it is for today’s cryptocurrencies”. We don’t believe that’s a foregone conclusion. While many central banks see the advantages of DLT they’ve also voiced concerns about the novelty compared to existing infrastructures and the scalability issues.
This scalability issue is where Ripple makes its pitch that its solution is designed to issue cryptocurrencies and for payments. The company claims it can scale to tens of thousands of transactions per second and potentially hundreds of thousands in time. It also notes that it’s 61,000 times more efficient energy-wise than Bitcoin. But then central banks weren’t about to use Bitcoin.
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