Well, well, well. Ripple, the company behind the controversial XRP cryptocurrency which has been criticized for obfuscating the nature of its partnerships with financial organizations, has announced a tie-up with global payment network MoneyGram.
MoneyGram, which saw a $1.2 billion acquisition from Alibaba’s Ant Financial affiliate collapse following security concerns from the U.S. government, said it has agreed to pilot XRP, the cryptocurrency controlled by Ripple, within its payment flows using Ripple’s xRapid product.
Ripple reached a record-high of $3.65 per coin earlier this month which briefly made it the world’s two largest cryptocurrency based on total coin market cap. That price represented a huge surge from $0.006687 one year prior, but concern around the actual usage of XRP has seen it drop down to $1.72 as of today.
The price of XRP over the past year, via Coinmarketcap.com
That concern was best expressed in a New York Times article published last week — when the coin market cap of XRP hit $140 billion — explaining that more than 100 banks use Ripple’s software, but yet there’s just one publicly announced customer using XRP. That’s Mexico money transfer business Cuallix. Further, financial industry sources cited by the Times expressed skepticism that any banks would adopt XRP.
Ripple’s CEO, Brad Garlinghouse, sparred with Times journalist Nathaniel Popper on Twitter, claiming that Popper had written his story without conducting two interviews that the company had arranged for him.
It certainly appears that MoneyGram may have been one of those two interview.
MoneyGram says it is the world’s second-largest cross-border payment company, with a claimed $356.8 million passing across its service per quarter as of Q3 2017. Its payment volume during the period was actually down five percent year-on-year due to economics conditions in the U.S., its largest market.
“Every day blockchain technology is changing the norm and encouraging innovation. Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid. We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers,” Alex Holmes, MoneyGram’s CEO, said in a canned statement.
It’s important to recall that this deal is only a trial and that MoneyGram has committed to testing XRP for a portion of its transactions, not all of them. The exactly amount that XRP will be used for is unclear at this point.
Nevertheless, XRP’s believers will be buoyed by this announcement.
Beyond usage, there are plenty of other question marks around XRP. Unlike others that could be used by banks or financial institutions, XRP is centralized and controlled by Ripple, which decides when to release more coins to the market. That goes against many of the principles of other blockchain organizations, including Ethereum Foundation, which strongly advocate for fully decentralized systems that are free of the potential influence of companies.
Disclosure: The author owns small amounts of cryptocurrency, but no XRP