Ripple’s CTO, David Schwartz took a public stand at the “Blockchain Beyond the Hype: The Ripple Effect” session at SXSW on 14 March 2019. The Chief Technical Officer of Ripple is blockchain enthusiast but at the same time a humble innovator.

According to Schwartz, “the internet was a powerful force for good in democratizing the flow of information and today control of the flow of funds” is used in the same way it was before the internet. Hence, there is a lot of space for growth in it.

He was “very optimistic with the technology,” nevertheless, accepted the fact that Ripple’s use case is currently focused only on enabling international payments.

How Is Ripple Different Than Bitcoin and SWIFT

According to Schwartz, Jed McCaleb’s idea of finding an alternative to Proof of Work (PoW) for avoiding double spent was the ‘secret sauce’ for Ripple. He envisioned establishing a new open ledger on Blockchain that would be more efficient than Bitcoin and could integrate with the existing financial system.

Schwartz made interesting comparisons of the current payment system provided by SWIFT with the RippleNet. With the SWIFT payment network the path of the transfer of funds cannot be determined, and so fees of sending transactions are high and variable. The cited that RippleNet and SWIFT Networks are fundamentally different.

According to him, Ripple is building the foundation of a “payment system” which connects the banks together. While xRapid with XRP will be used as a settlement layer on top of the system.

He cited that Paypal and Venmo are examples of “democratic payment systems, but they don’t interoperate.” Hence, they currently providing the database to banks and other financial institutions to make use of the payment system; the actual transfer of funds can occur at a later time.

On the success of the network he said “200 plus financial institutions have signed with us” and they see an “evolution to able to sell softwares to bank, bring traffic on our network, settle with a digital asset and growing the whole cryptocurrency through efforts like Forte and Xspring”

On Decentralization and XRP as a Security

Schwartz noted that an authentic decentralization “comes down to what determines the rules of the system” and if there is a central party “that coerces any other party” the system is not decentralized. The transactions that take place between two people must automated, like on the Blockchain.

He also noted that the XRP ledger was formed before Ripple’s inception.

“XRP originated when Arthur Britto, myself, Jed McCaleb, and Chris Larsen built the XRP ledger back in 2011, 2012. The original founders who built that system gifted a bunch of XRP to Ripple to have the company work and build an ecosystem around it.”

There are numerous banks on the RippleNet. The interoperability and transparency provided by Ripple would help the banks retain their customers; As they continue to offer their profit-making products like loans and insurance. Also, the value on the ledger is retained permanently irrespective of the specific bank, hence, provides credit protections.

Moreover, he said that “We’re outside of those payment flows like RippleNet and xRapid, we’ve just built the base….” Hence, until SEC designs a “black and white test.. we’re pretty comfortable that XRP isn’t a security.”

How will Ripple monetize their Efforts?

As a humble innovator, he noted that since the network works on its own, Ripple is currently not charging any transaction fees. Moreover, he noted as the technology is still in its early phases their primary concern now is building an efficient payment system for the world like Twitter and Facebook in the beginning. He is confident that if “Demand is there”, they would find a lot of avenues for monetization for Ripple.