- Ripple CBDC platform is said to have the required features for mass adoption as it leads the ecosystem to a massive transformation.
- However, there is an issue of a consistent framework for regulating CBDCs.
Virtual currency backed and issued by the central bank, Central Bank Digital Currency (CBDC), has been one of the most popular innovations in the financial world with 130 countries exploring it. According to a report by the Atlantic Council, only 30 countries were considering CBDC as of May 2020. Interestingly, about 64 countries are currently in the advanced phase of the exploration.
Of the G20 countries, 19 of them are reportedly in the advanced stage with 9 of them already in pilot. 11 countries have so far launched a digital currency fully. The US is said to be making progress with its retail CBDC as other G7 banks including the Bank of England and the Bank of Japan are developing prototypes and consulting public and private sectors for stability issues.
With that, It is important to note that Ripple has been one of the leading providers as its CBDC platform offers an all-in-one solution that provides governments with everything they need to deploy and maintain a reliable CBDC.
The protocol allows financial authorities to launch their private networks using XRP Ledger technology, offering an efficient and scalable solution. The benefit of using a private network means that governing bodies can mitigate the risk of unexpected network congestion while also exercising control and authority over the network.
Ripple is preferred because XRPL processes transactions within a split second and at a cheaper cost. On top of that, it is designed to handle thousands of transactions within a second. Ripple’s CBDC platform is also said to have an interoperability edge that allows the integration of local, domestic, and international networks of other CBDCs based on Ripple.
Use Cases of Ripple CBDCs
According to the Ripple CBDC platform whitepaper, the lack of a consistent framework for regulating CBDCs is one of the common challenges to adoption.
Another hurdle is the lack of education of the CBDCs and their work in addition to the privacy and security concerns that come with this asset class. Interestingly, CBDCs are said to be anti-crypto as they defeat the foundational ethos of crypto – giving complete ownership of assets to users. These, according to reports, affect adoption.
Regardless, Ripple Labs is expected to bring massive transformation to the ecosystem, having been involved in 20 global banks in CBDC initiatives. Ripple is currently working with Colombia, Bhutan, Pulau, and Montenegro in their CBDC pilots.
The Ripple CBDC platform’s efficiency is said to be enough to accelerate mass adoption. Its other merits are trustworthiness and financial inclusion.
Trustworthy – Ripple Labs is one of the largest and most recognizable companies in the crypto world. Governments are far more likely to choose known and trusted names over unproven platforms from smaller teams. Boosts Financial Inclusion – The Ripple CBDC promises to be accessible and as easy to use as traditional payment methods.
