Ripple CTO Talks About the Merits of Blockchain
David Schwartz, the Chief Technology Officer of Ripple Labs Inc, talked about the merits of blockchain in a debate in Money 20/20 USA.
According to a recent tweet by Ripple:
— Ripple (@Ripple) October 22, 2018
One can expect nothing less from the man who is one of the few in the crypto industry to be recognized by Forbes.
His opponent in this debate was the SVP of Product Strategy at FIS Payments, Esther Pigg. She defended the current approach of the financial industry to global payments, as well as the reliance of the industry on legacy infrastructure.
Schwartz has been quite vocal about the merits of the blockchain industry a very long time. Evenmoreso has he talked about Ripple and the benefits associated with it as well as its true nature. In his article titled “The Inherently Decentralized Nature of XRP Ledger”, he explained how the XRP ledger is not centralized.
He starts the blog by talking about Bitcoin and Ethereum:
“Bitcoin and Ethereum are currently viewed as the gold standard for decentralization — meaning they are architected in a way that no single individual or minority group can dictate rules or rewrite transaction history (the power of blockchain!). Since these blockchains are considered decentralized, then by design, the XRP Ledger is also — if not more so — decentralized than both Bitcoin and Ethereum.
To really understand if a network is truly decentralized, it’s important to first understand the underlying design.”
He then explained the algorithm used by Bitcoin and Ethereum:
“Bitcoin and Ethereum use proof-of-work algorithms. This system rewards individuals, known as “miners,” for validating transactions by paying a fee for their work. This was a great starting point for a decentralized system that incentivizes complete strangers to contribute to the greater good of a network and make forward progress. But as time has gone on, clear limitations have manifested. Blockchains that use proof-of-work can be subject to centralized control, where a few miners have significant control over the system.”
Following that, he explained how XRP is different from the two:
“The XRP Ledger uses a consensus protocol that relies on a majority of validators to record and verify transactions without incentivizing any one party (this is one of the main reasons why I began working on XRP Ledger more than six years ago). Validators are different from miners because they aren’t paid when they order and validate transactions. Today, these validators operate at locations across the globe and are run by a broad range of individuals, institutions, asset exchanges and more.”
He then talks about the transaction costs of Bitcoin and Ethereum:
“Inherently, miners for Bitcoin and Ethereum want the cost of transactions on the ledger to be high to increase the reward they receive. This behavior drives up the cost of each transaction, rendering the digital asset less attractive for real-world use cases like payments.”
Comparing the current situation to that of when Bitcoin had just started out, he said:
“This was not so apparent in the early days of Bitcoin because transaction fees were dwarfed by the block reward. However, as the block reward drops, the interests of miners and other users will likely continue to diverge. Users cannot ignore the desires of miners because a blockchain based on proof-of-work that cannot incentivize enough mining cannot remain secure.”
He then explains how XRP is better:
“The XRP Ledger encourages the opposite behavior. Those using XRP and the XRP Ledger are able to make progress without mining, saving significant compute power and time. Also, a built-in system, called fee escalation, is part of its consensus protocol and helps to regulate fees overall. This means lower costs and faster transaction times for XRP compared to other digital assets — the attributes that make it the most useful asset for settlement.”