Ever since taking the helm as Chief Technology Officer at Ripple, David Schwartz has continued to embody what it means to love blockchain technology and XRP. Mr. Schwartz can be found on twitter responding to queries about the Ripple technology as well as the future direction of the project.
It is no wonder Cory Johnson (Chief Market Strategist at Ripple), during a a recent Ask Me Anything session with Brad Garlginhouse, described his activities on twitter as warranting a new title of Chief Tweeter. David Schwartz has also gone ahead and published a post on the Ripple website showcasing the inherent decentralization of the XRP ledger.
XRP Ledger More Decentralized than BTC or ETH
In the post, Mr. Schwartz explains that:
Bitcoin and Ethereum are currently viewed as the gold standard for decentralization…
Since these blockchains are considered decentralized, then by design, the XRP Ledger is also — if not more so — decentralized than both Bitcoin and Ethereum.
He would go on to describe that Bitcoin’s and Ethereum’s Proof-of-Work, is a great starting point for a decentralized system by giving miners incentives to validate transactions. But as time goes by, blockchains on the proof-of-work system can be subject to centralized control where a few miners have a significant control over the system.
He goes on to explain that the XRP ledger does the opposite. He explains that:
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.
He goes on to conclude the above argument by stating:
Put simply, the XRP Ledger is based on an inherently decentralized, democratic, consensus mechanism — which no one party can control.
With respect to transaction costs, miners on the BTC and ETH networks want them to go up so they can get more in terms of rewards for validating transactions. According to Schwartz, this behavior drives up the cost of each transaction making the digital asset less attractive to real-world use cases such as payments.
He explains how the XRP ledger is different as follows:
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.
Concentration of Control
In the final portion of his post, he states that with Bitcoin and Ethereum, a small number of miners can conspire to disrupt the system. This is due to the fact that 4 mining groups control 58% of the Bitcoin network and 3 miners account for 57% of Ethereum’s capacity. He also pointed out that 80% of all Bitcoin mining is located in China: a country that banned cryptocurrencies. All these factors put BTC and ETH at risk of manipulation and disruption by a government (in the case of BTC).
Schwartz went on to point out that 80% of all validators on the XRP ledger are required on the entire network over a 2 week period to continuously support a change before it is applied. Of the approximately 150 validators, Ripple only runs 10: a far lesser percentage to impose a change on the network.
In conclusion, David Schwartz has proven that the XRP ledger is indeed more decentralized that those of Bitcoin and Ethereum. Perhaps with time, the crypto-community will realize that XRP is on eof the fastest and most reliable digital assets out there. Evidence of this can be seen with the Weiss Ratings announcing XRP is the best digital asset to use when transferring funds across exchanges.
Disclaimer: This article is not meant to give financial advice. Any opinion herein should be taken as is. Please carry out your own research before investing in any of the numerous cryptocurrencies available.