Ripple Labs, Inc. has long been defensive against claims by cryptocurrency experts and investors who believe their native token, XRP, will be seen as a security by the US Securities and Exchange Commission (SEC) due to of its apparent centrally designated.
However, David Schwartz, Ripple's Chief Technology Officer, intends to make things clear about the "inherently decentralized nature" of XRP.
Ripple's CTO plunges into the theme of decentralization
Decentralization by definition is the "dispersion or distribution of functions and powers", according to the Merriam-Webster dictionary.
However, in the cryptocurrency space, what it means to be decentralized is less clear, and as David Schwartz says in the opening of his new relationship, "it is wildly blurred, misunderstood and, frankly, evolving." In the report, titled "The Inherently Decentralized Nature of XRP Ledger," Schwartz attempts to clarify some of the confusion surrounding XRP decentralization.
Unlike Bitcoin and Ethereum using proof of work algorithms, thus rewarding miners for transaction validation, XRP uses a consent protocol that requires validators to record and verify transactions without any incentive. Schwartz says that these validators are widespread throughout the world and include a series of exchanges of individuals, institutions and cryptocurrencies.
"Put simply, the XRP is based on an inherently decentralized democratic consensus mechanism – that no one can control."
Leading him to Twitter today, Brad Garlinghouse, Ripple CEO, showed his approval for the post of Schwartz and promised more on the issue during his session Ask Me Anything.
. @joelkatz talks about TRUTH on Ledger XRP! Designed brilliantly to be intrinsically decentralized. More information on this during my AMA with @CoryTV at 3 pm (PT) today on https://t.co/OmzfxkPL6N https://t.co/IIcdA75bIt
– Brad Garlinghouse (@bgarlinghouse) 22 August 2018
XRP is more decentralized than Bitcoin or Ethereum
Schwartz cites the fact that the four largest mining basins control up to 58% of the Bitcoin network, while three miners control the 57 % of Ethereum, as a reason why these competing cryptocurrencies are even less decentralized than XRP.
This is despite the contrarian attitude of the SEC that Bitcoin and Ethereum are not titles due to the lack of a central government organization that controls them.
The report also warns of almost 80% of the Bitcoin mines coming from only one country, China, underlining the risk that Bitcoin could be manipulated by a "single sovereign government". Worse, Schwartz warns of a potential 51% attack on the blockchain of the two main cryptocurrencies by market capitalization, a situation that opens the door to potentially fraudulent transactions.
XRP, on the other hand, requires 80% of its validators across the network to continuously support a proposed change for a two week period before it is ever applied.
The report states that Ripple only operates 10 of the 150 validators that currently verify transactions on the protocol today, and that each validator receives only one vote to support any changes. The data suggest that Ripple has much less control of the XRP cryptocurrency than the stronghold that China has compared to the Bitcoin blockchain.
The most important reason why XRP is "decentralized in nature", according to Schwartz, is the fact that users on the XRP register select a Unique Node List (UNL) – a list of trusted validators chosen by the user . Because users are free to choose and even modify their own UNLs, the XRP registry "is and has always been intrinsically decentralized."
Close-up image of Shutterstock.