Ripple Labs, the company behind the world‘s 3rd-largest digital currency, has been on the defensive mode for quite some time, refuting the claims that the XRP token will be treated as a security by the US Securities and Exchange Commission (SEC). However, many within the crypto sphere seem to think otherwise due to the seemingly centralized nature of XRP.
David Schwartz, the Chief Technology Officer at Ripple, has taken upon himself to counteract such claims, with a lengthy blog post, labeled ‘The Inherently Decentralized Nature of XRP Ledger’. According to Mr. Schwartz, the power of blockchain is that “no single individual or minority group can dictate rules or rewrite transaction history“. Since bitcoin and ethereum ledgers are considered decentralized, “then by design, the XRP Ledger is also — if not more so — decentralized than both Bitcoin and Ethereum.“
The top executive of Ripple then goes on to divide his piece into smaller parts, each detailing XRP advantages over the two main virtual currencies. Firstly, Schwartz lays into the proof-of-work (PoW) algorithms of both BTC and ETH, claiming that, “This was a great starting point for a decentralized system […] 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.” On the contrary, the XRP ledger is built on a consensus protocol, which no one party can control, says Mr. Schwartz.
He then goes on to discuss the transaction cost, pointing out that, “miners for Bitcoin and Ethereum want the cost of transactions on the ledger to be high to increase the reward they receive.“ Meanwhile due to the absence of mining, plus built-in fee regulation system, XRP can boast lower costs and faster transaction times, which are essential when applying the technology in real-world cases.
Finally, perhaps the most significant advantage of XRP, according to its CTO, is the concentration of control. Schwartz claims that four mining groups currently control 58 percent of the BTC network and three miners account for 57 percent of ETH daily capacity. Furthermore, despite the total ban on digital assets, 80 percent of BTC mining is centralized in China. Therefore, “While Bitcoin and Ethereum are becoming more centralized over time, the XRP Ledger is getting more decentralized“, says Mr. Schwartz.
He concludes by claiming that, “the XRP Ledger is in many ways a more transactional, functional and decentralized ledger than either Bitcoin or Ethereum, which will only increase over time.“
Unsurprisingly, Ripple‘s CEO Brad Garlinghouse praised the report and even promised to shed more light on the topic in his upcoming AMA.
.@joelkatz speaks the TRUTH on XRP Ledger! Brilliantly designed to be inherently decentralized. More on this during my AMA with @CoryTV at 3pm (PT) today on https://t.co/OmzfxkPL6N https://t.co/IIcdA75bIt
— Brad Garlinghouse (@bgarlinghouse) August 22, 2018
However, perhaps even more unsurprisingly, the claims of Mr. Schwartz were bashed by numerous aficionados of the crypto Twitter.
$ETH obviously isn't decentralized at all, but "decentralization" is a new and complex concept with a lot of different aspects. So what $XRP is now trying to do is take 1 small aspect of decentralization (validating) and try to tell a fairy tale about how they're decentralized.
— WhalePanda (@WhalePanda) August 23, 2018
Mining distribution by pool is not what determines Bitcoin's decentrality.
How many bombs can take down the network?
How easily can a country isolate its citizens from the network?
How many laws would need to be made/changed to regulate it beyond its functionality?
— Stoppt (@StopAndDecrypt) August 22, 2018
I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.