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Aug 2015 - Perspective - Doc # FIBA55X

Perspective: The Ripple Effect: The New Age of Transaction Infrastructure

Author: Lawrence Freeborn


IDC expects that payments through Ripple or similar protocols will grow exponentially in the years ahead. As such protocols supersede Bitcoin, the distinction between cryptocurrencies and new payment protocols will become clearer, and the banking industry will embrace the protocols. Thanks to the support of Ripple Labs and other interested parties, Ripple is currently best placed to take this market share. In the short term, more parties will undergo pilot and proof of concept projects, and domestic banks are likely to partner with counterparts overseas for the purpose. There will be an initial opportunity for banks or companies like Earthport to charge clients for the ability to make instant global payments, especially as IDC expects initially that Ripple will be adopted not as an industry-wide solution like UK Faster Payments, but by innovative banks.

However, the fact that the US Federal Reserve is prepared to countenance a new payment network based on the principles of a distributed ledger shows the strength of the idea. The innate advantages of speed, reliability and transparency of protocols such as Ripple will see them win out over conventional payment networks. International payments are increasingly out of step with the customer experience consumers and businesses expect in their modern dealings, and a payment network based on distributed ledgers, such as Ripple, is a 21st century solution to this problem.


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