Ripple Claims Scalability Issues Will Likely Keep Banks From Using Blockchain

Banks are unlikely to adopt distributed ledgers in cross-border payments, for now, claims Ripple. Privacy and scalability issues could keep financial institution from adopting the nascent technology instead of their legacy systems or SWIFT.


Chief cryptographer at Ripple, David Schwartz recently said in an interview that blockchains aren’t ready for adoption in cross-border payments by banks. Ripple’s xCurrent platform is currently being used by several financial entities, including Banco Santander which launched an international remittance service in April.

Acknowledging Blockchain’s Current Limitations

The daily cross-border remittance volume that banks work with is currently out of reach of blockchains. Schwartz said, “I will concede, we haven’t gotten there yet.”

He also commented on Ripple’s investor and user of its xCurrent platform, Banco Santander. The bank launched a cross-border remittance service called One Pay FX in April. He said that while the ‘bi-directional’ messaging platform eventually plugs into a blockchain, it “is not a distributed ledger.” The system uses cryptography but does not have a shared distributed ledger like Ethereum. He also underscored that these ledgers are not yet private or scalable enough for the banks.

Banks Are Still Not Convinced

A similar sentiment was expressed by Marcus Treacher, senior vice president of customer success at Ripple. He said,

“We started out with your classic blockchain, which we love. The feedback from the banks is you can’t put the whole world on a blockchain.”

The company’s xCurrent platform has been adopted by several financial institutions and remains more popular than xRapid, a blockchain solution that uses native XRP tokens to settle transactions quickly. The former solution uses an immutable “interledger” protocol which improves the efficiency of existing payment networks by providing them with an instant settlement.

Schwartz added:

“What we hear from many of our customers is that it’s imperative to keep their transactions private, process thousands every second, and accommodate every type of currency and asset imaginable.”

Founded in 2012, Ripple is a prominent blockchain startup, and its XRP token is the third largest cryptocurrency in the market with an over $20 billion market cap.

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