- According to Ripple, XRP is 1/10th as volatile as fiat for cross-border payments.
- The current SWIFT system is so slow it exacerbates international payment risk.
- XRP payments clear so fast that the exchange rate risk is negligible.
The math busters over at Ripple have crunched the numbers and conducted a study that concludes that XRP is 10 times safer for making international payments – or as Team Ripple explains, one-tenth as volatile as fiat for cross-border transactions.
Ripple’s head of Global Institutional Markets, Breanne Madigan, took to Twitter on Thursday to highlight this “unfounded criticism” that digital assets have been getting lately regarding their volatility.
Comparing XRP Volatility With Traditional Cross-Border Payments
SWIFT is the current international standard for cross-border payments. It’s also a 46-year-old institution and is archaic by technological standards.
International wire transfers that route through SWIFT take anywhere between 1-14 days to clear. Ripple’s study, in particular, compares a typical wire transfer between U.S. dollars and Mexican pesos (USDMXN).
It then compares this using XRP as an intermediary:
Comparing the volatility XRP to fiat in cross-border payments | Source: Ripple.com
The study concludes that XRP is only risky for exchange rates if:
- You hold Ripple’s cryptocurrency for a few hours between transfers, or
- SWIFT drastically reduces the time it takes to clear international wires
Since an average transaction takes between 5-7 seconds to clear and SWIFT is unlikely to improve their process any time this century, neither of those points are an issue. Ripple CEO Brad Garlinghouse highlighted this very question in an interview he gave earlier in October.
“If you multiply 270,000 seconds [just over 3 days] in a low-volatility asset and you compare that to 3 or 4 seconds in a highly volatile asset like XRP,