The firm behind the XRP cryptocurrency, Ripple, is entering the central bank digital currency (CBDC) race with a CBDC Private Ledger pilot, the company said in a blog post on 3 March.
According to the announcement, the new Ripple private ledger — meant to help banks issue and manage CBDCs — will be based on the same open-source distributed ledger technology (DLT) as its current XRP Ledger. The company stated its believe that most future CBDCs will be based on DLT, and that the majority of blockchains on the market can not provide the “transaction privacy and control” a central bank needs, which was the reason behind. Ripple further said that:
“The CBDC Private Ledger meets even the highest of security standards for Central Banks with each having complete sovereignty and ability to customize based on their own unique privacy and policy requirements.”
The company also stated that transactions on the CBDC Private Ledger will be “cost-effective, reliable, and close to instantaneous”. It further claimed scalability is not an issued for its technology, which according to Ripple can handle “tens of thousands of transactions” per second currently, and can potentially scale to “hundreds of thousands TPSs”.
Interoperability is another concern of central banks Ripple thinks it can solve. As per its blog post, the company has seen “over 5,400 currencies” being issued on its XRP Ledger so far — including its native XRP — which can be used as a “neutral bridge asset for frictionless value movement between CBDCs and other currencies”.
While Ripple is not the first firm trying to provide CBDC solutions to banks, it might have trouble finding clients considering its recent trouble with the U.S. Securities and Exchange Commission (SEC). Back in December, the SEC filed a lawsuit against Ripple and its executives accusing them of raising more than $1.3 billion in an “unregistered, ongoing digital asset securities offering”. The most recent update on the matter comes from Ripple’s CEO, Brad Garlinghouse, who tweeted on Wednesday: