Insufficient privacy is the reason why most banks choose not to use XRP, according to Ripple CEO Brad Garlinghouse.
Garlinghouse made the claim this week during a conversation with one of the XRP Ledger’s (XRPL) 35 most senior validators, a default unique node list (dUNL) operator known as “Vet.”
During the talk, Garlinghouse admitted that privacy features are still insufficiently compelling for certain types of financial giants that the XRP community has been courting for over a decade.
“I asked Brad here what’s the path to get more institutional adoption on the XRP Ledger, so that institutions are comfortable with sharing transaction hashes with us,” Vet summarized. “He said privacy.”
Now that fans of Ripple have had time to absorb the decisions made by SWIFT and Stripe to opt for XRP competitors, Garlinghouse is reflecting on the XRPL’s insufficient privacy offering as a clear obstacle to institutional adoption.
No reason to publish everything on-chain
For reasons of compliance, risk, regulation, or even basic respect for clients’ privacy, financial institutions don’t want to broadcast all transactions — nor even hashed transactions — publicly.
For example, imagine an entity with a steady cadence of transactions suddenly dumping millions of hashes onto the blockchain.
This unexpected flurry might move markets or prompt regulatory probes, needlessly burdening the institution with costly labor simply because it chose to broadcast hashes into the XRPL.
Even pseudonymizing transactions might fail to sufficiently obscure the institution’s identity. Blockchain forensics can often deanonymize transactions through machine learning, big data, probabilistic inferences, or AI.
Read more: Ripple played Trump to pump XRP — now he’s cutting ties
Ripple still working on features the biggest institutions want
To its credit, Ripple is already pursuing an expanded suite of privacy features and adding support for financial institutions.
Indeed, it’s already implemented a know your customer control protocol called Credentials, making it possible to verify identity directly on the XRPL without relying on a third-party service.
XRPL also supports decentralized identifiers, or DIDs, as a way for institutions to manage their digital identities. Vet was also optimistic about multi purpose tokens, DEXs, and XLS-101 smart contracts as additional selling points for financial institutions.
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Source: https://protos.com/ripples-privacy-problem-why-banks-still-wont-touch-xrp/
