Ripple was put on the defensive at a hearing on cryptocurrencies and blockchain at the U.K. parliament on Tuesday.
Ripple and XRP ware in hot waters after Martin Walker, a former developer at blockchain consortium R3 and current director of the non-profit Centre for Evidence Based Management criticized Ripple’s current products and said that technologies are unlikely to solve inefficiencies in the country’s financial sector.
Defending Ripple was the company’s director of regulatory relations, Ryan Zagone, while Dr. Grammateia Kotsialou, postdoctoral researcher at King’s College London and Chris Taylor, chief operating officer at asset tracking blockchain startup Everledger, were part of the panel that answered the British Parliament’s Treasury Select Committee’ questions.
Zagone stated that the core benefit of Ripple’s technology is tracking money transfers however, Walker argued that the company’s technology doesn’t offer anything more than the existing SWIFT messaging system, saying “ the hard thing about tracking payments is actually getting the people involved in the payments to actually upload status.”
“So simply having a blockchain doesn’t actually get people to update the status of where the payment is,” he continued.
Walker also criticized Ripple’s pilot projects that include XRP being used to bridge between two currencies in an international transaction (a role currently played by the U.S dollar).
“You have the concept of a crossing currency to deal with that scenario where there’s a lack of liquidity,” said Walker.
He further explained:
“You need someone to provide the liquidity to be able to change into and out of Ripple. And holding Ripple, a currency which has seen its price drop 80 percent and then back up 100 percent in the course of the last two months is just not credible. So, putting cryptocurrencies into the financial sector is a huge source of risk.”
Furthermore, the ministries at the hearing also expressed concerns about XRP’s relationship with the Ripple Labs.
Member of Parliament (MP) Stewart Hosie said that “if people buy XRP, a financial asset from Ripple Laboratories, it doesn’t entitle them to an ownership stake, there’s no right to be converted back into conventional currencies, and it doesn’t pay any return. It also seemingly has no purpose.”
Against which Zagone pushed back by saying “that’s a common misconception.”