In a recent interview, Ripple CTO David Schwartz talked about the advantages of XRP Ledger’s consensus mechanism over Bitcoin’s Proof-of-Work (PoW) consensus mechanisms.
The Ripple CTO’s comments about Bitcoin and XRP came during a Zoom call with TechRadar Pro a few days ago.
Schwartz said that miners’ involvement in Bitcoin’s PoW consensus process means that you have a payment network that is not as decentralized and disintermediated as some people like to believe:
“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.“
After understanding the problems with PoW in 2011, Schwartz and former colleague Jed McCaleb decided to try something different that could improve on speed and decentralization:
“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.“