senior executive at one of the top startups in the DLT space expressed that due to privacy and scalability issues, banks are unable to use distributed ledger technology (DLT) to process cross-border payments.
David Schwartz, Ripple’s chief cryptographer acknowledged the situation by saying, “We are of aware that there’s still time for us to reach there.”
Banks have certainly identified the potential of the new DLT technology. Wherein, if used correctly it is bound to make international payments much faster and cheaper.
And while several banks are currently using Ripple’s bi-directional messaging service xCurrent, it “is not a distributed ledger” said Schwartz.
Ripple might surprise many of its banking clients including Banco Santander because xCurrent was the foundation of its cross-border payments service One Pay FX. With its release in April, this service put an impression of normalizing the concept of using blockchain-based technology.
Unlike the traditional model of a centralized authority, distributed ledgers are based on immutable databases that are updated by a network of computers and secured by cryptography.
XCurrent uses an “interledger” protocol which is capable of providing improvements for existing payment models as well as offers an instant settlement. This, on the other hand, shouldn’t be seen as DLT which Ripple claims to lack privacy and scalability required by clients and banks.
On this, Schwartz expressed,“they consider it essential to keep the transactions of all their customers private as they process thousands every second and accommodate every type of currency and asset imaginable.”