David Schwartz, the CTO at Ripple, has stressed the reason why XRP did not adopt the proof-of-work (PoW) consensus algorithm that governs the operation of Bitcoin (BTC), the first and largest cryptocurrency by market capitalization.
Schwartz said this during a Zoom conversation with TechRadar Pro a couple of days ago. In the course of the discussion, the Ripple CTO averred that the influence of miners on the Bitcoin network makes its operation similar to the way payments work in the centralized banks.
According to Schwartz, XRP Ledger was designed back then to have a system that’s fast and fully decentralized after studying the operation of Bitcoin’s PoW consensus algorithm.
David Schwartz noted:
“A cryptocurrency should be a one-sided market; the users want a store of value and a means of exchange. But what Bitcoin did was turn it into a two-sided market…
“Miners have historically fought for high transaction fees because that’s their revenue. The reality is that you have another set of stakeholders who are trying to charge the highest fees they can get away with, and that’s not much different from the way payments work at a bank.
“What we were starting to think was that PoW wasn’t what was amazing about Bitcoin. It was the fact that all transaction data and transaction rules are public and that there is no central operator. What we did is radically trust-minimize the system, eliminating the incentive to attack the network.
“The way we designed the XRPL is that the consensus algorithm just puts transactions in order. There are no cryptocurrency rewards, so the process is cooperative as opposed to competitive.”