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Home Crypto News Market Ripple CTO Criticized Bitcoin And Explains The Difference Between BTC and XRP...

Ripple CTO Criticized Bitcoin And Explains The Difference Between BTC and XRP Ledger

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Ripple CTO David Schwartz criticized the proof-of-work (PoW) algorithm used in Bitcoin and explained how the XRP Ledger is different from Bitcoin.

David Schwartz spoke to TechRadar Pro and explained why XRP Ledger works with a different system than Bitcoin. According to Ripple CTO, the PoW system used in Bitcoin does not coincide with the principles of decentralization.

In the Bitcoin network, the miner solves complex math problems in the shortest time receive transaction fees and block rewards. Positioning miners as intermediaries, Schwartz thinks that Bitcoin is no different from other third-party-focused systems.

“A CRYPTOCURRENCY should be a one-sided market; the users want a store of value and a means of exchange,” explained Schwartz. “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.”

In 2011, having identified the problems with PoW, Schwartz and former Ripple executive Jed McCaleb sought to found a new cryptocurrency on a different approach, with a greater focus on both speed and decentralization.

“At the time, the philosophy for most people was that PoW was Bitcoin’s secret sauce, but the very first cracks in the foundation were beginning to show,” said Schwartz. 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.”

Ripple, which moved away from the PoW system at the suggestion of Jed McCaleb, started using Proof-of-Stake (PoS). According to Schwartz, with this change, XRP Ledger has become a network that operates based on coordination, not competition.

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“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.”

He said further

“It’s the same thing that incentivizes people to run Bitcoin full nodes. With Bitcoin, only the miners are compensated; if you run a node for your customers your only compensation is that you have that node for your own use. There are enough people who want to use the [XRP] system. If there aren’t enough people willing to run the software because they find some value in using the network, the project has already failed.”

In the years to come, Schwartz predicts, cryptocurrency projects will preserve their roots in decentralization and disintermediation by providing a way for users to adhere to local regulation, but without mandating compliance.

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Mark Brennan
Mark is 27, holds a Master degree in Business Administration, and works as a content Creator at TheCryptoBasic mostly on Crypto Market Updates. Since 2014 he has been active in the crypto sector. Thanks to the Business College in which other than Business subjects, he was taught about the disruptive potential of Blockchain. His interests include Blockchain technology and Crypto Market innovations. He also founded a small startup in which he gives lectures on cryptocurrencies.


  1. “Ripple, which moved away from the PoW system at the suggestion of Jed McCaleb, started using Proof-of-Stake (PoS). ”

    This is incorrect. XRPL does not and had never used PoS. And the ledger was created before Ripple even existed.


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