As the cryptocurrency space continues to grow and defy expectations, it is important that this momentum spreads into new territories, allowing for the benefits of cryptocurrencies to be witnessed worldwide. This is a sentiment that Ripple seemingly shares, as they prepare to establish a base of operations in one of the world's fastest growing economies, China.
With this tweet by Emi Yoshikawa, Director of JV Partnership and Asia BD at Ripple, we are seeing the clear greenlight for Ripple's expansion into the Eastern Asian country.
What Is Ripple
Now for those who are not fully informed about Ripple's capabilities, let's run through a quick reminder of what Ripple actually is.
Ripple provides global financial solutions to banks and payment providers by significantly reducing the cost of cross-border transactions, as well as the time taken for them to settle. Comparing transaction times of mere seconds with Ripple, to transaction times of hours with existing services, gives Ripple a clear competitive advantage in this space.
Through the use of its digital asset, XRP, the 4th largest cryptocurrency by market capitalisation, Ripple is able to cut down on any scaling issues. Reportedly being able to handle 1,500 transactions per second, relative to its peers, Ripple is the clear option to use when conducting cross-border transactions.
Ripple in many ways acts as a bridge that enables users to seamlessly transfer their money. The value of this to businesses is self-evident, Ripple can reduce costs associated with cross-boarder transcations by making the process a much more streamlined one, a benefit that would result in an increase in profit margins for businesses.
Why Get Into China?
China has one of the world's fastest growing e-commerce sectors, with a trade value of its cross-border e-commerce market expected to exceed USD$2 trillion by 2020. This is certainly a big enough market for Ripple to operate and grow in. Capturing this market would likely result in significant monetary gains for the digitial coin and its investors. With notable Ripple investors such as: Santander, Google Ventures and Accenture, Ripple has the backing and the credibility to make some serious moves in the Chinese market.
Casting our minds back to the announcement of its partnership with finance powerhouse SBI Holdings at the beginning of the year, Ripple has gradually been preparing to offer its services to the Asian region. With the formation of SBI Ripple Asia, Ripple hopes to sell and install their cross-border solutions to Asian countries. Having already announced plans to expand into Japan and Thailand, China is just another tick in the box for Ripple.
Potential Headwinds: State Control
Capturing the lucrative Chinese market may not prove as straightforward as one may intially think. Ripple will have to overcome some significant hurdles, one of which may be the Chinese government itself. Chinese central authoritities are well known for their willingness to intervene in market and company activities that they deem out of their control.
Any possible intervention would have the effect of harming Ripple's ability to operate in the Chinese space, which would hurt their growth prospects in the region. However, the government is seemingly supportive of cryptocurrencies as whole, refraining from pursuing measures that would completely restrict the growth of the space in China. A sign that bodes well for Ripple's move into the growing Chinese market.
Conclusion
Ripple is spreading the benefits of cryptocurrencies to new markets, and so, they can only ever be supported in that endeavour. It has the backing and the capital to continue promulgating the cost, speed and scaling benefits of cross-border transactions through the use of its digital asset, XRP.
Through strategic partnerships, Ripple may be able to successfully navigate the hurdles of the Chinese market and come out on top.
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