XRP Ledger is more decentralized than both Bitcoin and Ethereum says Ripple’s David Schwartz

On 22nd August, David Schwartz, the CTO of Ripple posted a blog on Twitter, explaining the nuances of decentralization with respect to the XRP Ledger. According to Schwartz, the XRP Ledger is far more decentralized in nature as compared to Bitcoin and Ethereum, the two biggest networks that are held as a golden standard for decentralization.

Schwartz, in Ripple’s official blog, stated that for a network to be termed as fully decentralized, no single administration or entity can make the rules or redraft transaction history and that is the “power of blockchain”. The inherent nature of the XRP Ledger, therefore, is such that it runs on a blockchain system that is decentralized.

The Ripple architect believes that one has to understand the underlying design of a truly decentralized network to genuinely grasp its concept.

Bitcoin and Ethereum’s PoW [Proof of Work] versus the XRP Ledger Consensus

The Proof of Work algorithm that Bitcoin and Ethereum use rewards miners for validating transactions on the blockchain. Because it promoted a decentralized network system, the algorithm worked well when it first started out, but recent developments have shown problems, said Schwartz. Additionally, Proof of Work could lead to a centralized control if a handful of miners have substantial control over the network.

In contrast, the XRP Ledger which uses a consensus protocol is dependent on a large section of validators who record and verify transactions, the rewards of which are not meted out to any specific party. Schwartz further explains that it is because of this consensus, that the XRP Ledger is inherently decentralized and democratic as not one specific party is in control.

Transaction costs

Schwartz argues that since Bitcoin and Ethereum miners have always wanted an increase in the cost of transactions on the ledger as that would lead to an increase in rewards. This, according to Schwartz, would lead to digital assets unfit for ‘’real-world use cases’’ such as for making payments. But the opposite is true for the XRP Ledger. He says:

“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. “

He added:

“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.”

Research indicates that only a small portion of miners are sufficient to disrupt a Bitcoin or Ethereum system. As per the Ripple website, “four mining groups currently control 58% of the Bitcoin network and 3 miners account for 57% of Ethereum’s daily capacity”. The networks are at a risk of being manipulated by government organizations. Schwartz says:

“In contrast, the XRP Ledger requires 80 percent of validators on the entire network, over a two-week period, to continuously support a change before it is applied.”

He concluded by saying:

“In conclusion, 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.”

Twitterati, BTCDayTrade commented:

“Attempting to pass off $XRP as not a security. However during the years 2013 until I don’t know, last year as you claim, it most certainly was.”

Another Twitter user, @SJCrypto added:

“If it so decentralized – why does almost everyone in the cryptocurrency space say otherwise ?”

Devang11222, another Twitter user said:

 “Doesn’t make sense. How is mining pools in POW centralised? Miners can switch pools anytime. Secondly why does ripple hold such a huge amount of XRP? Ripple donates XRP to charity as and when they need the market to rise. XRP is scam coin.”