Santander Group, the international Spain-based bank, will introduce a mobile app that uses technology from the cryptocurrency startup Ripple to power fast cross-border payments. However, the product does not use XRP, the cryptocurrency that exploded in value in 2017 on the promise that it would become the backbone of Ripple’s new global bank settlement system.
Instead, Santander’s app, according to CoinDesk, will use a Ripple product called xCurrent, which is not based on a public blockchain and does not have an associated cryptocurrency. The xCurrent-based service, referred to simply as “Pay” in a recent Santander earnings presentation, is projected to go live in the U.K., Spain, Brazil, and Poland in the first quarter of this year.
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Ripple, the company, holds tens of billions of dollars worth of XRP, the cryptocurrency it created and which is also sometimes referred to as Ripple. The price of XRP on cryptocurrency exchanges outperformed many other digital assets for much of 2017, by some measures even briefly overtaking Ethereum as the cryptocurrency with the second-highest market value.
But there has been sustained confusion in the market about the precise relationship between Ripple’s services and XRP. Some of its products, like xCurrent, don’t use XRP at all. Another service, xRapid, does use XRP as a money-transmission medium. XRapid has been tested by several remittance providers, including MoneyGram. All of Ripple’s services promise to lower the cost and increase the speed of sending money around the world.
XRP’s role in Ripple’s various products is important because, while cryptocurrency prices are currently mostly driven by speculation, they will ultimately be determined by demand for practical applications. The degree to which banks and other customers buy or hold XRP will determine whether its market value – currently at over $36 billion even after a 60% decline from December highs – is justified.