In a groundbreaking move that underscores the growing acceptance of distributed ledger technologies (DLT) in traditional finance, the US Federal Reserve has added the Hedera Hashgraph (HBAR) based Dropp to its list of service providers for the FedNow service.
The FedNow Service, a recent initiative by the Federal Reserve launched in July 2023, aims to provide a robust infrastructure for instant payments, allowing financial institutions across the U.S. to offer real-time payment services. This service towards instantaneous financial transactions is a reaction to the evolving needs of the modern economy. As the announcement stated, “Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments in real time, around the clock, every day of the year.”
Hedera Based Dropp Gets Approval By Fed
Dropp’s inclusion in this list is particularly noteworthy. Dropp offers a dual functionality: processing customer credit transfers and handling incoming payments. This dual capability potentially places Hedera’s technology at a vantage point in the rapidly evolving landscape of real-time payments.
US Federal Reserve (Fed) adds #Hedera based @droppcc to service provider list of #FedNow, $HBAR is up 16% on the news. pic.twitter.com/5rHKXF6LdI
— Jake Simmons (@realJakeSimmons) August 14, 2023
Dropp’s CEO and Chairman, Sushil Prabhu, commented on the evolution of micropayments, stating, “The concept of micropayments has been around since the late ’90s but in the last couple of years, significant growth in the digital economy, consumer needs and technology maturity have made micropayments feasible both in terms of technology and economics.”
Central to understanding Dropp’s value proposition is its foundational role in the FedNow ecosystem. Specifically, “Dropp is a payment platform that will enable FedNow and Real Time Payment transactions through financial institutions.”
This means that Dropp isn’t merely a passive participant; it actively facilitates and streamlines real-time transactions by connecting the network through the financial institutions that onboard as Dropp customers. This strategic positioning could make Dropp an indispensable bridge between traditional banking systems and the cutting-edge capabilities offered by distributed ledger technologies.
Hedera Hashgraph, the underlying technology of Dropp, offers a unique combination of speed, security, and cost-effectiveness. With a transaction throughput exceeding 10k per second and a settlement time of just 3-5 seconds, Hedera stands out in the crowded DLT space. “Using Hedera as our distributed ledger reduces our technology footprint making us very cost-effective,” remarked Prabhu.
The predictable transaction fee below $0.001 USD for stablecoins and HBAR transactions on Hedera was probably a significant factor in Dropp’s decision to adopt the platform. This low-cost structure is pivotal for enabling true micropayments, especially for transactions of small value.
HBAR Price Skyrockets By 16%
Following the news, the HBAR price saw a swift uptrend by more than 16%. At press time, HBAR traded at $0.0644.
With this, the price has broken through the midline of the ascending trend channel and is approaching the resistance line at $0.067. If a breakout succeeds, the 50% Fibonacci retracement level at $0.06971 and the 61.8% Fibonacci at $0.07670 could be the next targets.
Featured image from iStock, chart from TradingView.com