That’s right. The American Express Company has entered the world of cryptocurrency.
It’s a watershed moment.
But the crypocurrency in question, Ripple, is not a currency. Not in the way that bitcoin is, anyway.
Instead, it’s a tool that makes sending money faster and cheaper.
And where other cryptos want to disrupt the financial system, Ripple wants to make the existing system more efficient. So working with big finance is essential.
The adoption of Ripple by AMEX is being done in partnership with Santander Bank in the UK.
It will be used initially for business to business payments between the UK and the US.
This small-scale exercise will act as a litmus test for wider international use.
If successful, it could lead to mass acceptance of Ripple for international money transfer.
Big banks trialing Ripple
This includes Australia’s Westpac and the Commonwealth Bank.
None of them have given in just yet…
The aim of using Ripple is to eventually replace the SWIFT transfer system that banks use currently.
It was recently tested by the Bank of England for this purpose.
The Bank of England redirects £500 billion worth of transactions daily. And Ripple handled it with ease.
After the successful test with the Bank of England, Daniel Aranda from Ripple had this to say:
‘Instead of having to rely on a series of counterparties, it is central bank to central bank, which is lower risk and therefore lower cost…’
AMEX is obviously not a central bank. However, the fact that central banks are running tests of this size shows the potential that Ripple has.
Change often requires a domino moment. A moment when a company or organisation takes a leap of faith.
In my own humble opinion…this is a domino moment.
Marc Gordon, executive vice president and chief information officer at American Express, said on Thursday:
‘This collaboration with Ripple and Santander represents the next step forward on our blockchain journey, evolving the way we move money around the world…’
Why will Ripple be essential for banks?
Because efficiency is the very root of capitalism.
And if Ripple can make the global pool of money more efficient, then it is obviously valuable.
But it’s not only faster than the current existing system. It’s also much cheaper. And once you get your head around the difference that speed makes, then you begin to realise the long-term potential of the technology.
SWIFT payments are secure. But they’re slow and expensive.
Transfers can take days and the fees are exorbitant.
Ripple aims to replace this system. Using blockchain, it will process transactions in seconds, and at a fraction of the cost.
Ripple is also backed by Google. And as the company continues to expand its uses, the value of the coins will continue to climb.
The cryptocurrency enjoyed a 15% spike after the announcement.
But it’s the technology that could re-design the transfer of money on its own.
Junior Analyst, Money Morning
PS: To find out more about the secret world of bitcoin, click here.