On 21 August 2018, David Schwartz, Ripple’s Chief Technology Officer (CTO), answered questions from internet users in a live session organized by The Next Web (TNW). Here are some of the main highlights:

David, Your Thoughts on XRP Being Labeled a Security… Should We Expect a Decision From SEC Soon?

“Ultimately, this will be up to the SEC to decide. We believe that XRP should not be classified as a security. XRP does not give ownership shares in Ripple or any other entity. XRP exists independently of Ripple. If Ripple went away tomorrow, XRP would continue to exist and have the same utility it does today. Neither Ripple nor any single entity can exert unilateral control over the XRP ledger.”

When Does xRapid Go Live?

“Our goal is to have xRapid out of beta by the end of the year. We're really excited about the recent pilot results showing 40% to 70% savings compared to what financial institutions normally pay expensive foreign exchange providers.”

Is There a Reason That the Range Is So Large Re Savings?

“It has to do with a lot of factors. A Big one is just how efficient the alternatives are. The less efficient the alternatives, the greater the savings with xRapid. Some companies have spent absurd amounts of money optimizing their current liquidity sourcing. They won't see as big a savings with xRapid as a smaller company that hasn't invested so heavily in optimizing their current liquidity sourcing. In a way, xRapid helps level the playing field and might even make it possible for new competitors to enter the market without a huge disadvantage relative to the existing players who have invested more.”

Do You Maintain Brad Garlinghouse’s View That Bitcoin Is Just a Scam?

“I've never heard Brad say that. I definitely don't think bitcoin is a scam and defended bitcoin publicly continuously since 2011 when I first learned about it. I think it's the first example of an exciting new technology and still the market leader, at least by market cap. The technology is genuinely a breakthrough and I too hold some BTC. If nothing else, the current market mechanics are telling us that we're all in this together and I don't think one crypto project can become successful by pulling others down.

That said, I do think we should be objective about bitcoin's weaknesses and limitations. Proof of work is expensive, has no clear response to a majority attack, and has not delivered on its promise of decentralization. It makes miners forced stakeholders, because the system is not secure without them, and miner's interests can diverge from the interest of other users.

I genuinely believe that the XRP Ledger design significantly improves on bitcoin's design.”

Can XRapid Function Without XRP, or Is It Required?

“The purpose of xRapid is to provide liquidity on demand through XRP. With xRapid, a cross-currency payment can, in just a minute or two, buy XRP with USD and then sell the XRP for MXN on existing digital asset exchanges. Within the RippleNet network, xRapid can provide rapid settlement through existing XRP liquidity for payments initiated elsewhere on the network.”

Where Will Ripple and XRP Stand 5 Years From Now?

“I'm always hesitant to try to predict the future and particularly committing to specific timelines. My hope for that time frame is that exchanging value becomes as easy as sending an email. You shouldn't have to care about what assets or systems the people you're paying, or who are paying you, prefer to use. It should all just work. This takes a lot of pieces, and I expect ILP to be the enabler that lets these work together.”

“I think we'll see open global pools of liquidity that anyone can contribute to and draw off. Perhaps not in five years, but around that timeframe we should have ubiquitous micropayments allowing machines to pay other machines as transparently as other types of information requests occur today. I expect that to be transformational in ways we can't foresee today and I look forwarding to seeing what the internet of value equivalent of things like Twitter and Uber are.”

Do You Plan on Further Decentralizing the XRP Ledger Even After Ripple Now Runs Less Than 50% of the Validators in Ripple’s Suggested UNL? 

“The XRP Ledger is inherently decentralized because its ultimate governance is the code people choose to run. Anyone who runs a node in any decentralized network is the ultimate arbiter of their node's behavior, subject only to the limitation that they can only interoperate with nodes with compatible rules.

We are definitely planning on continuing to improve aspects associated with decentralization. While PoW has seemed to be a technological dead end and networks using it are either stagnating or abandoning it, there's lots of further progress on Byzantine agreement algorithms. Ripple recently proposed adding code for censorship detection to the XRP Ledger software to provide certainty that censorship is not actually occurring. We've also published a paper on a new agreement algorithm, Cobalt, that can reduce confirmation latency and also provide provable assurance of correct behavior under a broader set of conditions than the current algorithm.”

Are There Any Limitations to the XRP Ledger?

“We believe that XRP is the best digital asset for payments. There are, however, use cases beyond payments. We expect that this will not be a winner take all outcome but instead a number of digital assets can survive for specific use cases. Today, for example, ethereum provides a “programmable money” function that the XRP Ledger cannot. Adding this capability to the XRP Ledger would have huge costs that reduce XRP's suitability for payments. You can't have everything.

While you can issue IPOs on the XRP Ledger, you only get payment functionality for those assets. While you do get very sophisticated and powerful payment features such as a built in decentralized exchange and the ability to have payments use multiple paths for reduced cost, you can't get programmable behavior. So I don't see XRP being the only digital asset any time soon, if ever.

Technology that we're working on (like ILP) unbundles the payment functionality from other functions. We believe that if the technology allows people free choice of payment assets, they'll pick the one that works best.”

Can You Tell Us in Regards to the New Xrapid Partners/Users That Were Announced This Last Week, (Bittrex, Bitso and Coins.ph), How Much of the XRP Token Is Needed by Each to Provide the Maximum Benefit of Liquidity for Their Transactions?

“For xRapid to work, there has to be sufficient liquidity between XRP and the local fiat currency to permit fiat currency to be bought and sold as needed. A lot of this liquidity is already being provided organically by market makers. xRapid will just mean that instead of (probably) trading almost exclusively with speculators, market makers will increasing trade with market takers trying to source liquidity through XRP. If needed, Ripple would consider employing third party market makers to provide additional liquidity were existing market making insufficient.”

Will It Ever Be Technically Feasible to Source Liquidity From Multiple Pools (Like Two or More Exchanges) and Recombine Them Into a Single Atomic Payment That’s Settled at a Destination Exchange?

“Congratulations on asking the most technical question today! I believe it is actually possible to do this with ILP, however I don't know if anyone will ever go to the trouble of building the infrastructure necessary to do it. The philosophy of most of those working on ILP is that it makes more sense to “stream” payments in multiple directions, see which direction is giving you the best rate, and increase the payments you stream in that direction. This is cheap, fast, efficient, and simple to implement, however, it doesn't guarantee that you will be able to make the entire payment. The hope is that we can design systems that fix that problem at higher levels and keep the money flow layers as simple as possible — kind of the opposite of lightning's approach.”

If There Is a Huge Spike in Consistent XRP Volume and If the Burn Rate Were to Significantly Go Up, Is There a Possibility of Burning All of XRP or Is There a Point Where We Stop Burning?

“The fees are automatically set by supply and demand. One would expect a decrease in supply of XRP due to destruction to reduce what people are willing to pay in fees, which would result in the fees dropping. But it's very unlikely that this will be a significant effect even in the next several decades. Stakeholders can always agree to change system rules as necessary in any decentralized system, but I think worrying about this now is like turning your car's steering wheel ten miles before a curve.”

Featured Image Credit: Image Courtesy of Ripple