On Wednesday (July 13), David Schwartz, an architect of XRP Ledger (XRPL) and Ripple’s Chief Technology Officer (CTO), talked about transaction costs on XRPL.
XRPL was created in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto, and its native digital asset is XRP.
It all started when the Ripple CTO kindly took the time to explain to a member of the XRP community that what some people who fail to see XRP’s potential fail to understand is that “the more useful (fast, cheap, liquid, connected) a token is for payments, the more people (who might need to make a payment or might want to get paid to facilitate other people’s payments) will want to hold it.”
Schwartz then went on to point out that even if the XRP price reaches $10K, it will still be practical to do transactions on XRPL since even without a change in the fee mechanism, the minimum transaction fee is only 10 drops — where one drop is 0.000001 XRP — and so the minimum transaction fee under that scenario would become 0.00001 x $10,000, i.e. $0.1 or 10 cents.
On the same day, Aanchal Malhotra, Head of Research at RippleX, published a blog post in which she said that RippleX would like “the developer community to provide feedback on its proposal for Automated Market Maker functionality on the XRP Ledger.”
She started by noting that XRPL, which was one of the world’s first established decentralized exchanges (DEXes), “enables anyone on the ledger to directly and efficiently buy, sell, or trade any tokenized asset—without the need for a central intermediary.”
She then went on to add that the XRPL DEX had “a first-mover advantage in 2012 as a peer-to-peer exchange.” It used “a central limit order book (CLOB) model that matches bids and offers based on price and time priority.” Although “this is a valuable exchange mechanism in its own right,” the RippleX team believes that “there is an opportunity to expand upon this feature set to unlock greater functionality and utility via an automated market maker (AMM).”
Dr. Mahorta finished her blog post by saying that she and her colleagues are “incredibly excited” about the potential of their proposed AM protocol. In particular, she mentioned that “with speeds of up to 1500 transactions per second (TPS) and transaction finality of less than 4 seconds, this AMM protocol differs from others in class.”
On 27 February 2020, during an episode of “The Ripple Drop” (Ripple’s web video series), Schwartz spoke with with producer/editor Reinhard Cate about the evolution of the XRP Ledger.
Cate started the interview by asking Schwartz how the XRP Ledger started and what its current status is.
Schwartz replied:
“Well, I started working on what we now call the XRP Ledger at the end of 2011; so I’ve been at this for eight [or] nine years… but the changes have been drastic. I mean in the early days all we had was the ability to perform a transaction on a decentralized ledger in just a couple of seconds, and then we started to realize that the properties of the algorithms that we developed allowed us to do things like a decentralized exchange.
“And then we had this idea of allowing people to issue assets and ideas like community credit, and we put all that together into a functional system probably in mid 2012.”
Cate then wanted to know why the robustness of the XRP Ledger is so important.
Schwartz said:
“You have to realize that you’re talking about billions of dollars in a system that doesn’t have an administrator. There’s nobody that you can go to if it messes up, and so reliability is the number one property, and it means that these systems are very slow to develop and evolve.
“In the early days, before I was working on the XRP Ledger and I was looking at Bitcoin, and we sort of had this idea that if there was any new feature, Bitcoin would just adopt it.
“We now know that’s hopelessly naive because any change to a system like this imposes cost on everybody who uses the system. With any other piece of software, a company will release a new version of the software, say Oracle releases a new version, and they’ll say to people who have like mission critical deployments ‘don’t upgrade to the new version, just use the current version, give us a little bit of time, test it whatever’.
“You can’t really do that on a public blockchain — if the rules change, people have to run software with the new rules. You want to ask why these systems don’t move more quickly, why they don’t add features on a regular basis, that’s why.”
Image Credit
Featured Image by “vjkombajn” via Pixabay.com
