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New Use Case for XRP as a hedging instrument in Futures Markets


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3 hours ago, Dario_o said:

XRP and XLM ruled out because they don't support privacy? what does it mean?

Would be great if somebody could explain what it means the whole thing and how it works?
Eri said (I am not native speaker so I might misunderstand something) : "Sumitumo is going to make future transactions with FxCoin to hedge price movement by selling the XRP back to FxCoin on a specific date what that does is it allows Sumitumo to lock in a future price which is so important and revolutionary for trade finance. This is really genious"

Why is it so revolutionary? Is it only a "plain" future trade, isn't it? 

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37 minutes ago, thinlyspread said:

Exactly, its the same every time there's a new proposed use case. Takes about 2-3 years before we get an actual explanation step by step of what the hell is going on!

my understanding they have done ne of these transactions and proven it works.  If this is so it seems to me a huge (really huge!) market has been tapped open that has the potential to  suck up available XRP on the open market.  I am wondering if that XRP is then held in storage in smart contracts.  Just my first thoughts having listened to the video once.  

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This explanation from DailyHodl seems relatively easy to understand:

https://dailyhodl.com/2020/12/01/sbi-holdings-testing-xrp-based-payments-platform-and-use-of-digital-asset-in-trillion-dollar-fx-market/

Cryptocurrency startup FXcoin Ltd. and Japanese financial giant SBI Holdings have begun testing the use of XRP to settle corporate debts and credits.

FXcoin is conducting the experiment, which involves the Sumitomo Corporation, a Japanese general trading firm, settling debts and credits to other Sumitomo Group companies with XRP.

Sumitomo Corporation will also “make a future transaction with [FXcoin] to hedge the price movement of XRP and sell XRP to [FXcoin] on a specific date,” according to a translated press release from the cryptocurrency startup.

Says FXcoin,

“This is expected to lead to the expansion of XRP-denominated transactions in the future in the activities of globally expanding operating companies.”

FXcoin also believes the experiment will lead to the establishment of a swap market of cryptocurrencies listed by the company.

SBI is also teaming up with FXcoin to test the use of XRP in the $6.6 trillion foreign exchange (FX) market. The test is designed to determine whether the speed of XRP can be used as a bridge asset to lower the risk of price fluctuations that can occur as one currency is traded for another, as well as determine potential savings on fees associated with the transfer.

Ripple and SBI are longtime partners, and SBI invested in the San Francisco-based payments company back in 2016.

That same year, the pair launched SBI Ripple Asia in an effort to bring payments powered by distributed ledger technology to financial institutions and remittance transfer providers in the region.

This is the translated press release from 

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They have already done a demonstration experiment.  

 

This is the text of the official press release: 

 

Demonstration Experiment of Trading of Crypto Assets XRP

2020-11-30

On November 27, 2020, FXcoin Co., Ltd. (Head Office: Minato-ku, Tokyo, President and CEO: Tomoo Onishi, hereinafter the "Company") announced that its debts and obligations between Sumitomo Corporation Group companies will be related to the crypto-asset XRP (including post-date transactions of XRP). We conducted a demonstration experiment to settle using . This is the first attempt in Japan for a major operating company to trade on a post-date basis using crypto assets.
 

1. Outline of this demonstration experiment

Sumitomo Corporation will settle debts and obligations with group companies on a trial-based trial with XRP.

Sumitomo Corporation will make a post-date transaction with the Company to hedge XRP price movements and sell XRP to the Company on a specific date.

 

2. Significance of this demonstration experiment

Crypto assets are currently considered to have a strong speculative aspect due to the size of their price movements, but the future-to-date trading of XRP provided by the Company is a means of hedging the risk of price fluctuations related to XRP-denominated debt obligations at operating companies. This is expected to lead to an expansion of XRP-denominated transactions in the future in the activities of global operating companies.
 

3. Aiming to expand real demand transactions

In the recent demonstration experiment, we are confident that it will not only show the usefulness and future-future of post-date transactions using crypto assets for the first time in Japan, but will also lead to the creation of the Sap market for crypto assets listed by the Company. By expanding the Sap market, we will contribute to the expansion of transactions based on crypto assets.


In addition to Sumitomo Corporation, Sumitomo Corporation Global Metals Co., Ltd. and the SBI Group also participated in this demonstration
experiment.


* XRP is a native crypto asset of the international payment

Edited by Julian_Williams
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On 12/1/2020 at 12:34 PM, jlr said:

Would be great if somebody could explain what it means the whole thing and how it works?
Eri said (I am not native speaker so I might misunderstand something) : "Sumitumo is going to make future transactions with FxCoin to hedge price movement by selling the XRP back to FxCoin on a specific date what that does is it allows Sumitumo to lock in a future price which is so important and revolutionary for trade finance. This is really genious"

Why is it so revolutionary? Is it only a "plain" future trade, isn't it? 

yeah but it's crypto so it automatically becomes genious :) Joking here. Have no idea.

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1 hour ago, Camerpl79 said:

It means More Liquidity for XRP.  More Liquidity = More Demand.  More Demand = Higher Price.

Ok. It is no doubt good for XRP. But why is it chosen? What is the exact advantage against other solutions?

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