Ripple and SWIFT have been engaged in a race to develop a blockchain- or distributed ledger technology (DLT)-based banking solution for cross-border payments.
To date, Ripple's smaller bank member base has stood against it, as an effective DLT solution depends on amassing a wide network of users. Now, however, two new developments suggest Ripple may be building up its influence.
These latest developments suggest Ripple may be achieving the all-important network effect on two fronts.Discussion of the network effect crucial for scaling a DLT-based solution generally centers on a product's adoption by private groups of banks. Ripple seems to be making steady progress on this front, as SBI Ripple Asia's latest news suggests.
But even more significant may be the fact that institutions like the BofE now seem to be in favor of connecting to these private systems. That's because Ripple's network effect among private users could be amplified if central banks begin linking in to its networks, given the fundamental role of these players in the global financial system.
Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver.
Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions.
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