David Schwartz Explains Why XRP Didn’t Adopt Bitcoin’s PoW Consensus Algorithm
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David Schwartz, the Ripple CTO debated with Luke Martin, the founder of Venture Coinist, over the use cases of the fourth-largest cryptocurrency by market cap, XRP.

XRP Could Serve As a Digital Bridge Currency for Stablecoins

In a series of tweets, Martin questions the use of XRP as fuel for payments, claiming that stablecoins such as Tether (USDT) pegged against traditional assets have the required liquidity to move money. His main point is that the purpose served by those stablecoins makes XRP unnecessary.

“I asked David Schwartz what XRP is useful for because it did not make sense to me and his response didn’t make sense to me either.

Read Also: David Schwartz Says XRP Community Could Force Ripple To Burn Its Over 50 Billion XRP

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If it’s for payments, stablecoins are better. Even if you think it’s better for payments, there’s no incentive to hold (not store of value or income-generating).”

In response, Ripple CTO says he’s not sure of the wide adoption of any stablecoin based on a global scale.

To exchange one stablecoin for another, Schwartz believes that a digital bridge currency, like XRP, will be needed in such a scenario.

David Schwartz noted:

“If the whole world settled on one stablecoin, I’d agree with you. But stablecoins are always going to be tied to jurisdictions and counter-parties too. So it is unlikely one winner will emerge.

Today, one of the roles of the dollar is acting as an intermediary or bridge between currencies. For that role, its tie to the US jurisdiction is both an advantage and a disadvantage. Better US than a worse jurisdiction, but a pure digital asset is better still.”

Read Also: Flare to Integrate Litecoin (LTC) Following SEC’s Lawsuit against Ripple

Bitcoin (BTC) As an Ideal Basement Layer

According to Martin in the thread of tweets, Bitcoin (BTC) has already proven to be an ideal settlement layer, despite its slow transaction speed compared to the digital token XRP:

“We already have a perfect case study for the world you describe! We have thousands of obscure tokenized assets here in crypto. What is the best bridge currency in the crypto universe? Bitcoin (most liquid, survived reg attacks better than any other bridge, decentralized).

I imagine some are thinking – yeah but it’s too slow and throughput is not high enough…. Transactions on exchange (or liquidity pools) don’t have to settle on-chain. All that matters is the liquidity pool/matching engine and using the asset with characteristics you describe.”

Read Also: David Schwartz Describes How Banks Can Issue Stablecoins on XRPL as OCC Allows Banks to Support Stablecoins

Regulatory Uncertainty of XRP

Martin also referenced the current regulatory questions in relation to XRP, believing that alone places the digital currency below Bitcoin and stablecoins.

But Schwartz’s vision is focused on what is possible once XRP reaches deep liquidity on a global scale;

“My personal vision for XRP, since 2013 or so, was this idea of deep, open, public pools of liquidity that anyone, anywhere could contribute to and draw off of – a global market for assets that someone happens to already have exactly where someone else happens to need them to be.”

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Solomon Odunayo

By Solomon Odunayo

Solomon Odunayo is an accomplished blockchain and cryptocurrency expert at Herald Sheets, known for his in-depth analysis and engaging articles that cater to both beginners and experienced readers. With a degree in Computer Science from the University of Lagos, Solomon leverages his technical background and keen understanding of the crypto space to provide readers with valuable insights and up-to-date news. His passion for innovation and commitment to staying current with industry developments make him a trusted voice in the digital currency community.