Weiss Ratings, a well-known US financial research company, tweeted Azimo. Namely, about the money transfer service that will use the Ripple ODL (On-Demand Liquidity) service.
A tweet at first glance gives an unpopular opinion. However, as you read it, it reveals a hidden meaning with respect to the Ripple XRP.
Money transfer service #Azimo will use #Ripple's #ODL service to speed up the fund transfer in Philippines. Why not use #stablecoins instead? #USDT is more liquid than #XRP. This would have been a novelty in 2015. Now there are better options than XRP for moving fiat around.
— Weiss Crypto Ratings (@WeissCrypto) February 27, 2020
Weiss Ratings, a well-known US financial research company, tweeted Azimo. Namely, about the money transfer service that will use the Ripple ODL (On-Demand Liquidity) service. A tweet at first glance gives an unpopular opinion. However, as you read it, it reveals a hidden meaning with respect to the Ripple XRP.
Weiss Ratings claims that stable coins are more liquid than Ripple XRP. There are currently better options than the Ripple XRP. Including, for faster fiat payments. This directly indicates that stable coins can also be used based on the XRP register. Which, in principle, is a true judgment. The question also is why XRP is more prevalent than stable coins. And why do payment providers choose Ripple? Why do not they choose stablecoins, such as USDT, instead of XRP, despite their liquidity?
Counterparty risk – the risk that one or more parties to a money transaction will not fulfill their obligations under the transaction. Counterparty risk is especially relevant in markets where contingent values can far exceed the size of underlying securities, such as cryptocurrency transactions.
Stablecoins are actually unstable and do not protect against counterparty risks. In addition, stable coins such as Tether [USDT] must be backed up with real fiat money, which must be kept in a bank account. As history shows, USDT had a report stating that in fact it does not have a 100% secured reserve. Thus, he does not cause much confidence.
Liquidity is the flexibility of buying / selling an asset without drastic changes in the price of an asset. And when it comes to stable coins, then yes, liquidity is the biggest determinant. Everyone thinks about this first of all, when it comes to stable coins provided by fiat. Is not it?
Since stable coins are provided with fiat, they immediately fall into the category of restrictions. Namely, they are regulated by normative acts, which are usually applied for fiat currencies. Thus, it reduces the efficiency of the conversion process, making it less liquid than cryptocurrencies.
Infrastructure plays the most important role in accelerating money transfers. UI / UX and user experience are vital. Ripple has changed the digital payment infrastructure in this regard. With RippleNet xCurrent and Xvia, the ecosystem is built to meet the demands of target customers.
This type of infrastructure is not found in stable coins. Stable coins (USDT), allow people to send, receive, store, exchange and accept cryptocurrency payments on the Internet. However, they do not accelerate liquidity for the paper currencies themselves. At the same time, XRP acts on the contrary – it accelerates liquidity.
Stablecoins are the next milestone in the evolution of digital currencies. These stable cryptocurrencies can provide a breakthrough in the adoption of digital payments. Ripple has more resources and infrastructure for cross-border payments than any other cryptocurrency.
Ripple is already developing stablecoin support. This of course is an extremely positive step for the future of money transfers and payments. It also creates a foundation for stable liquidity management, which is so necessary in modern economic realities.