[Photo: FBI agents out in the field. Source: sofrep.com]
A while back (January, 2017), 16 proposals from various payment providers were submitted to the Faster Payments Task Force and Ripple (XRP) made haste of the opportunity to pitch its fast, secure and cheap payment option. This task force was led by the Federal Reserve of the United States of America.
The task force worked from 2015 – 2017 and engaged a bunch of stakeholders on the strategies and possibilities of improving the United States payment system. The Taskforce might have been active over a year ago, but as I research more and more about what it is all about, I get this idea that they were pretty much checking out blockchain technology and perhaps the Ripple (XRP) network 🙂
What exactly are these goals and strategies to improve the U.S payment system?
The Federal Reserve of the United States had seen (and probably is still working on) a need to keep up with the changing technologies for money transfers and did not want to be left behind.
Hence why it engaged technology stakeholders to guarantee the following goals:
- Increase speeds of payments in a cost effective manner
- Securely transfer any funds inside the U.S and globally
- Do so in an efficient manner that improves value to consumer and businesses
- Apply these payment methods internationally
- The payment system would have to be collectively identified and embraced by a broad array of payment participants, with material progress in implementing them
The Federal Reserve then had the following strategies to achieve these goals:
- Actively engage with stakeholders on initiatives designed to improve the U.S. payment system
- Identify effective approaches for implementing a safe, ubiquitous, faster payments capability in the United States (beginning in 2015)
- Work to reduce fraud risk and advance the safety, security and resiliency of the payment system (beginning in 2015)
- Achieve greater end-to-end efficiency for domestic and cross-border payments (2015 and beyond)
- Enhance Federal Reserve Bank payments, settlement and risk-management services (2015 and beyond)
Why a task-force?
The word task-force means a well trained and experienced unit of professionals – mostly police or military – that can handle a special assignment. They are the elite of the elite! Seal Team 6 would qualify as an armed task-force.
The Federal Reserve wanted to assemble the best minds and organizations to be part of the said task-force. Members included: Consumer Interest Organizations, the Government End Users, Small Financial Institutions, Medium Financial Institutions, Large Financial Institutions, Business End Users, Non-Bank Providers and other Industry Organizations.
How does Ripple (XRP) fit in?
Firstly, Ripple (XRP) transactions are secure on the blockchain. A quality highly appreciated by not only the U.S government, but also all global governments, banks and organizations. This fits in to the goals of the Federal Reserve to have more secure payment options that are free from fraud since they are all recorded on the Ripple ledger.
Secondly, the transaction cost on the Ripple (XRP) network are really cheap. At $0.0004, this is the type of transaction fees that has banks (SBI Consortium) and money remitting service providers (Moneygram and Western Union), dancing at the possibility of extra savings for themselves and to some extent, a means of attracting customers. Cheaper transaction fees in the back-end for banks and money remitting service providers, means lesser front-end fees for their customers. This fits perfectly into the Federal Reserve’s goal of a cheap money transfer option and one that is agreed upon by several stakeholders. Since Ripple keeps getting more partners as the days go by, consensus to use the Ripple Network globally is only a matter of time.
Thirdly, transactions on the Ripple network take 3.3 seconds to settle. This is faster than Swift, Bitcoin, Ethereum or any payment option that is out there. Such speeds in transactions can be used by the American Government to disburse funds to States; to disburse financial aid; to disburse disaster relief monies; and even to pay its service men in areas the United States has its military bases. Such speeds is what the Federal Reserve is looking for.
In summary, the United States Federal Reserve was – and probably still is – looking into methods of improving the country’s payment systems for internal and global purposes. The Reserve formed a task-force with goals and strategies. Ripple (XRP) submitted its proposal then. Only time will tell if Ripple (XRP) will be the payment option chosen by the Federal Reserve of the United States.
If this is the case, this will be a major endorsement for blockchain technology and to some extent, all cryptocurrencies. For Ripple (XRP) we might see a case of a Moon Landing!
In the words of legendary Hip Hop artist, 2 Chainz,
Ripple is looking fresh as hell if the feds are watching
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