Having sold a company he had founded, Stefan was randomly browsing around for something to devote his time to next when he stumbled upon Bitcoin, a cryptocurrency that was promising to change the financial industry. Schwartz was working for a company that dealt in secure messaging and cloud storage when one day in 2011 he went to StumbleUpon, a discovery engine that recommends interests to its users. It recommended Bitcoin and after an hour, he was convinced that cryptocurrencies were the next big thing. These are the stories about how Ripple’s CTO, Stefan Thomas and chief cryptographer, David Schwartz respectively began their journey in the cryptocurrency world.
The two were speaking on a lighthearted fireside chat in Tokyo. They discussed light issues ranging from their peculiar Twitter handles to deeper topics such as the Interledger Protocol and what they would change about Bitcoin if they could go back in time. Turns out, Stefan’s Twitter handle has nothing to do with Ripple’s value ‘going to the moon’ and Schwartz’ handle was an alias he picked up in his younger days.
Bitcoin’s monopoly during the early days was a huge problem according to Stefan. While it had solved a lot of the problems that existed then in the financial services industry, people needed to be given alternatives. The rise of altcoins was therefore crucial in spurring Bitcoin to become more innovative and to better its network. The altcoins also helped the cryptocurrency revolution by serving different needs and different purposes.
Speaking about the difference between proof-of-work and consensus as well as their merits and demerits, the two executives explained how proof-of-work is ultimately a centralized approach. While ideally PoW should be decentralized, those miners that have the best ASICs and the cheapest electricity costs ultimately end up controlling the mining process. The block rewards earned by miners are also sapped out of the ecosystem by ASIC producers and electricity companies while they should be used in the ecosystem to aid in the improvement of the network.
Speaking on future developments for Ripple, ILP and XRP, Stefan outlined the application of ILP in the development of applications that seek to fix the business model of the web. It will give companies with web presences a new way to monetize their content without the use of intermediaries. Micropayments will be enabled on the ILP which will be fast and very affordable. The ILP will also enable other ledgers, blockchain or otherwise to get access to users who will then have the choice to choose whichever ledger they feel meets their need the best. While other blockchain projects seek to attract people into their ledgers and keep them there, Ripple paradoxically encourages competition through the ILP ledger which will give people the option to choose Ripple, not because it’s the only solutions provider but because it’s the best.