Mike McGlone, Bloomberg’s senior commodity strategist, thinks Ripple may successfully disrupt the cross-border payments space.
The veteran analyst is concerned, however, that Ripple’s exposure to XRP and the volatile crypto market could be a liability.
Says McGlone in his recent Crypto Outlook report,
“Ripple Labs’ 2019 partnership with MoneyGram suggests markets still see potential for disruption in cross-border payments, yet Ripple’s exposure to its own cryptocurrency threatens its enterprise software venture. The project’s investors, including Mastercard, Visa, Capital One, Citigroup and Bank of America, are likely just hedging.”
Ripple owns more than half of the total supply of XRP and the company’s CEO, Brad Garlinghouse, recently said the company needs to sell some of its holdings on a routine basis in order to stay profitable.
Overall, McGlone thinks cross-border blockchain projects have an uphill battle in replacing the current system.
“Governance, scalability, standardization and security concerns provide a healthy moat around the existing infrastructure, such as Swift.”
McGlone also sees a future where central bank digital assets could impact payments and compete with projects like Facebook’s Libra.
“If nonbanks could access central bank money directly, it could create unintended consequences for the Fed and disintermediate commercial banks’ role as credit creators and maturity transformation machines.”
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