Skip to main content

How exactly is XRP going to work as a bridging digital asset?

Maybe this is obvious all along to some people. Anyway, I just figured this out. So I thought maybe it's worth sharing.

Previously I thought the bridging consists of two transactions, both on XRP ledger. One from fiat currency A IOU to XRP, the other from XRP to fiat currency B IOU.

Then I saw this:

https://www.xrpchat.com/topic/10981-xrapid-uses-crypto-exchanges-to-route-payments-in-real-time/

So Miguel Vias said in the pilot they used liquidity on bitstamp and bitso. However it's seems the trading volume of XRP/bitso.MXN since the beginning of 2017 is so low that it's virtually no liquidity there. See this:

https://xrpcharts.ripple.com/#/markets/XRP/MXN:rG6FZ31hDHN1K5Dkbma3PSB5uVCuVVRzfn?interval=1d&range=1y&type=candlestick

Then I realized, just like bitstamp, bitso has its own exchange and the liquidity there is much better.

https://bitso.com/trade/market/xrp/mxn

So now it's clear to me there is another way for XRP to bridge cross-border payments. The originating party acquires XRP however it wants, buy XRP on XRP ledger using source fiat currency IOU or buy XRP on an exchange then withdraw to its ripple wallet on XRP ledger. Then it deposit the XRP to an exchange. This happens on XRP ledger. Then buy the destination fiat currency using XRP on that exchange. All of these can happen very quickly since transactions on exchanges are also fast.

Does this make sense? Let me know your thoughts. Thanks!

Comments

Popular posts from this blog

You have to know these about ripple wallet and secret key

TL;DR:

It's possible to find out others' secret keys but it's so improbable that it's almost impossible. Make sure you have a good entropy source when generating your address/secret key.Use multi-sign https://ripple.com/build/how-to-multi-sign/
See the discussion here: https://www.xrpchat.com/topic/6054-questions-about-secret-keysripple-wallet-addresses/

Several possible attacking modes on XRP ledger

https://www.xrpchat.com/topic/7229-a-question-about-validators/?do=findComment&comment=69555

There are several degrees of damage, that trusted validators can do (if they decide to give up their hard-earned trust), in increasing difficulty order:
If a set of them, each of which only trust others in the same set, with less than 20% of them trust validators not in that set, decide to collude, they can create fork.If more than 20% of them decide to collude, they can prevent transactions from being validated.If more than 80% of them decide to collude, they can rewrite history as they wish. 
However, as pointed out by mDuo13@, creating a fork is easy, but making people accept it is hard.