Last Tuesday, the UK treasury committee held a hearing on digital currencies with four senior members of blockchain related companies. Ryan Zagone, Director of Regulatory Relations at Ripple defended the use of XRP in cross-border payments under criticism of price volatility by another member of the panel.
Martin Walker, a former product developer at blockchain consortium R3 and now Director of the Centre for Evidence Based Management, said: "You need someone to provide the liquidity to be able to change into and out of Ripple. And holding Ripple, a currency which has seen its price drop 80 percent and then back up 100 percent in the course of the last two months is just not credible. So, putting cryptocurrencies into the financial sector is a huge source of risk."
In response, Zagone said liquidity would only be held in XRP for a few seconds which would limit the potential fluctuations of price. He said: "We're seeing many different use cases. Ripple's focused on using this technology to improve cross-border payments. If you do a cross-border payment it usually takes about two to four days. With Ripple, with this tech, we're doing this in four seconds."
“Our early models have found banks are saving about 60% on the cost of a payment by using our tech so it’s a material reduction that starts to open the market to new types of payments like very small payments, lower cost, more efficiency.”
Zagone emphasized the difference between Ripple and XRP, the latter being a product of an open-source code written by a community. He mentioned that XRP would exist without Ripple and the connection is mainly because Ripple owns a large amount of XRP. As Ripple is not allowed to sell directly to consumers, this XRP is sold to companies with a fixed maximum amount each month. However, questions were raised over exchanges providing consumers the ability to buy the coins.
Other members on the panel were Dr. Grammateia Kotsialou of King's College London and Chris Taylor, Chief Operating Officer of Everledger. Kotsialou's current research focuses on designing voting systems that are compatible with blockchain technology. Everledger uses blockchain technology, smart contracts and machine vision to help reduce the risk of fraud for banks, insurers and open marketplaces.
The UK Government recently expressed support for cryptocurrencies as Matt Hancock made a speech in the Law Society, encouraging the integration of the new technology. He highlighted that the Law Society was looking into the legal implications of smart contracts. Blockchain technology has already been implemented in the World Food Program where Syrian refugees can buy food from shops by having their eyes scanned.