In a recent interview, David Schwartz, CTO of Ripple, spoke about the advantages of XRP Ledger’s consensus mechanism over Bitcoin’s PoW (proof-of-work) consensus mechanisms.
The Ripple CTO’s comments on Bitcoin and XRP came during one Zoom call with TechRadar Pro A few days earlier.
Schwartz said that the miners’ involvement in Bitcoin’s PoW consensus process means you have a payments network that is not as decentralized and disintermediated as some people like to believe:
“A cryptocurrency should be a one-sided market. Users want a store of value and a medium of exchange. But Bitcoin turned it into a two-sided market …
“Miners have struggled for high transaction fees in the past because that’s their revenue. The reality is that you have a different set of stakeholders trying to get the highest fees they can get away with, and that’s not much different from the way payments work at a bank.“
After Schwartz and the former colleague understood the problems with PoW in 2011 Jed McCaleb decided to try something else that could improve speed and decentralization:
“What we started to think was that PoW wasn’t the amazing thing about Bitcoin. It was the fact that all transaction data and transaction rules are public and there is no central operator...
“We have radically minimized confidence in the system and removed the incentive to attack the network.
“The way we designed the XRPL is that the consensus algorithm only gets transactions in order. There are no rewards for cryptocurrencies, so the process is collaborative and not competitive.“