Results of the Bank of England/Ripple Proof of Concept
The Bank of England (BoE) recently released its blueprint for its next generation real-time gross settlement system (RTGS), which will form the backbone of the UK’s payment infrastructure. One element of the vision set out in that blueprint was potentially adding synchronisation capabilities to its future RTGS system. This would enable payments in RTGS to be executed simultaneously with a movement of another asset. One potential usage of this capability could be cross-border payments, where movements in the sterling RTGS system could be synchronised with movements in another currency.
Through its Fintech Accelerator, the Bank selected Ripple earlier this year to test whether blockchain technology could enable this “Global RTGS” capability and today released summary results of the proof of concept (PoC).
The BoE’s PoC specifically looked at how Ripple’s solution could support the synchronisation of cash movements made using two simulated RTGS systems utilizing the open-source Interledger Protocol. The BoE says that “the PoC was a useful exercise to develop the Bank’s understanding of synchronisation and possible technical solutions.” In other words, Ripple’s solution showed promise in enabling RTGS systems which seamlessly support interoperability globally.
Brad Garlinghouse, CEO, Ripple, said: “We believe in an Internet of Value, where cross-border payments should move at the same speed as information – like photos or emails – moves on the Internet today. Critical to making that vision a reality is enabling real-time settlement across domestic systems. To that end, the Bank of England’s PoC with Ripple is a watershed moment. We applaud them for being one of the first central banks worldwide to look at how blockchain technology can power instant international payments.”
Read the Bank of England report on the project here.
Ripple - XRP Ledger Decentralizes Further With Expansion to 55 Validator Nodes
Today we are excited to announce that the XRP Ledger ecosystem has
expanded to 55 validator nodes, an increase of 120 percent since May.
These new validators include WorldLink, Telindus-Proximus Group, Bahnhof
(Swedish ISP) and AT TOKYO Corporation, and join a growing network of
leading companies and organizations currently validating transactions on
the XRP Ledger, including MicrosoftMassachusetts Institute of Technology (MIT) and CGI.
Last month, we shared our strategy to make the XRP Ledger more decentralized.
We are committed to continued diversification and decentralization of
the XRP Ledger validator ecosystem to further increase its resiliency
and robustness (you can learn more about validators, the servers that
confirm transactions on the ledger,here).
Ensuring our enterprise-ready public blockchain is as strong as
possible through additional validators is necessary to make XRP the
globally preferred digital asset for payments.
Mathew Pulickel, Senior Vice President, Emerging Technology at WorldLink, said: “We believe Ripple’s network will revolutionize commerce in the future and the way our customers do business, and that’s why we have chosen to run a validator node on the XRP Ledger. In the same way that communication and document sharing dramatically improved with email, Ripple and the digital asset XRP will have an equally impactful effect on the time and cost associated with cross-border payments.”
We also plan to add two third-party validators to the XRP Ledger’s Unique Node Lists (UNLs) in the coming months. UNLs are an important subset of trusted nodes that can validate transactions, vote on protocol changes via amendments and modify fees on ledger. While Bitcoin chooses validators solely on mining power, XRP Ledger validators are chosen based on performance, reliability, and security. This includes assessing a possible UNL against the following criteria:
- Server topology
- Server uptime, including 24-hour incident response capabilities
- Speed of server updates following new releases
- Network agreement rate
- Verification with Extended Validation Certificate
- Public Attestation via ripple.txt file or DNS TXT record
If your organization is interested in setting up a validator on the XRP Ledger, you can find more information here.
Ripple(XRP) Q2 2017 Markets Report
In order to continually improve the health of XRP markets globally, we will share regular updates on the state of the market including quarterly sales, commentary on previous quarter price movements and related company announcements.
In Q2, market participants purchased $21M directly from XRP II, LLC*, Ripple’s registered and licensed money service business (MSB). These buyers tend to be institutional in nature and their purchases include restrictions that help mitigate the risk of market instability due to large subsequent sales. Additionally, XRP II, LLC* sold $10.3M worth of XRP. These sales are executed daily as a small percentage of overall volume. For Q2, they represented 0.09% (9 basis points) of the total $11.06B traded.
Market Commentary: Things Have Changed
Q2 2017 was one of the most significant quarters to date for XRP markets. In fact, it might represent a sea change in XRP’s adoption and relevance in the space. Though it’s difficult to discern which of the many developments was most important, the most dramatic had to be XRP’s price increase. XRP finished the quarter at $0.263, a stunning QoQ increase of 1159% and YTD growth of 3977%. At its peak on May 17, XRP reached $0.394, up 6012% this year and 1787% this quarter. There were some indications in Q1 that the days of sub one cent prices for XRP were in the rearview mirror, but this type of paradigm shifting performance was certainly difficult to predict.
Recent Announcements and Market Adoption
There were a number of significant announcements and events which clearly contributed to XRP’s incredible second quarter.
The Q1 report stated that Ripple would communicate XRP developments more frequently and Q2 saw some very important announcements:
Each of these was instrumental in helping to drive XRP interest and volume in Q2. The market responded favorably to the escrow and decentralization announcements in particular. They both laid out clear plans for Ripple to address the top concerns about XRP, building the market’s trust in Ripple and XRP.
Blockchain Adoption on the Rise
From a broader perspective, a number of sovereign institutions and international corporations signaled an interest to adopt digital assets and blockchain-based solutions generally.
Taken together, the positive XRP-specific news and the generally favorable and embracing stance by established institutions were key catalysts of activity, not only in XRP markets, but in digital asset markets broadly.
Volume Growth: It’s Now Easier to Access XRP
As it pertains to XRP’s use case, the most compelling market evolution in the second quarter was the growth in volume generally, and of fiat volumes specifically. In Q1, XRP/BTC contributed to 85% of total daily volume. In Q2 that number dropped to 63%. In fact, XRP/FIAT volumes in Q2 were 21 times greater than XRP/BTC volumes in Q1. While some of this can be attributed to growth in USD and EUR pairs at Bitstamp and Kraken, the bulk of this transition was due to increased activity on Korean exchanges. On May 14th, Coinone became the first exchange to list KRW/XRP. Bithumb and Korbit followed suit shortly thereafter. Since then KRW has represented 52.1% of total daily volume, easily surpassing every other cross, including BTC.
Correlation to Bitcoin and Ethereum
As the quarter unfolded, there was a decided shift in XRP’s relationship to the rest of the digital asset space, particularly BTC and ETH. It is evident from the chart below, that as XRP began to rally in early May, it decoupled from ether and simultaneously began trading more closely with bitcoin. Now, all three assets experienced significant growth in Q2, but XRP led the way, driving correlations to nearly an annual low in late May, where things got truly interesting. As ETH finally began to rally, and XRP and BTC stabilized in early to mid-June, a clear divergence occurred. Likely due to its increased listings and off-ledger volume, XRP’s correlation to BTC steadily climbed to nearly 50% and simultaneously dropped to -40% against ETH. This makes sense since ETH’s rally began later, but the relationship change is stark and merits close attention, especially as it could impact how market participants structure their portfolios.
Volatility Lands with Relative Normality
Lastly, XRP’s price appreciation was, not surprisingly, accompanied by an increase in volatility. Q1 daily volatility averaged 8.87%, an elevated figure due mostly to a material uptick at the end of the quarter as XRP markets came to life. Q2 saw a continuation of that activity, and average 30-day rolling volatility peaked at 36.1% on April 20th. In June, however, markets came back to relative normality and volatility retraced to 8.03% to end the quarter, a good sign going forward. The digital asset space in general, because of its relative youth tends to skew volatile. With increased participation and requisite liquidity, that tendency should abate, another market development to monitor over the following months.
Last quarter left us with much to think about, and even more to do. We plan to focus on three areas of liquidity development as we drive XRP towards its natural position as the digital asset standard for international value transfer. We are looking into formalizing the lending program we mentioned in the Q4 report, building out our OTC markets by bolstering our broker/dealer networks, and finding more ways to provide greater transparency to markets. Most importantly, we are accelerating the pace of our investment in the XRP Ledger to build on its speed, uptime, and scalability, to ensure XRP is the most trusted enterprise-grade digital asset.
*XRP II, LLC is licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services.