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According to David Schwartz, CTO of Ripple, an achievement on the "secret sauce" of Bitcoin led to the creation of XRP. At SXSW in Austin, Texas, Schwartz developed what had brought him to the world of blockchain and cryptocurrency.
"When I saw Bitcoin for the first time, it was one of those things where you could almost call it love at first sight. I saw the technology and I thought wow, there is really something here. And I wanted to learn everything I could about it, and I found the communities, looked at the source code.
And I was lucky that there was a problem at the time. It was just around the rise of mining pools and the software was never designed to manage mining pools. So, many people complained about software performance issues, and I especially specialized in improving software performance. And I saw these bonuses. The mining pools were of the type "I will pay 10 Bitcoins if anyone can solve this problem. I will launch 15 Bitcoins if anyone can solve this problem. "And they were worth about $ 15 a unit, so that was real money …
I have therefore explored ways to solve this problem of mining pools. So I solved the problem and they paid the premiums. And it's quite funny: when I went to buy a house in Oakland, I used the bonuses as a deposit. And it was the first time Wells Fargo had to do the provenance of the funds. He actually went to posts on Bitcoin forums, where people had offered the bonuses and I claimed them. "
According to Schwartz, the epiphany that led to the creation of the book XRP Ledger was centered on the idea that the public book was the key innovation that makes Bitcoin revolutionary.
"When we looked at Bitcoin, I think a lot of community members thought the proof of the work was the secret sauce, or the magic element of Bitcoin. And what myself and a few other people – Jed McCaleb understood first – and this is the key piece of information that led to the formation of the XRP ledger and finally to Ripple – was his belief that the evidence of the work was not the secret recipe.
The secret recipe of Bitcoin is that all state information is public. The big book is completely public. You can see each transaction, each balance. Everything is public. And what it means is that you will not have to speak to anyone for nothing. If someone submits a transaction, you can check if it is valid. You can understand what it does on its own.
And that was the kind of magic of decentralization, and this proof of work was just the way it solved the problem of double spending, the idea that if I had a Bitcoin, if I tried to send it to two different people? And this led to the idea that there could be other ways to solve the problem of double spending that might have different characteristics of Bitcoin. "
Regarding the most important use cases for blockchain and cryptocurrency, Schwartz says that cross-border payments are clearly an application that kills.
"Use case fit? We have this in payments. Do not get me wrong, these solutions work especially for international or cross-border payments, as national payments work pretty well in most parts of the world.
Although there are exceptions. I'm sure most of you have heard of PayPal or Venmo. They belong to the same company – they are not interoperable. Clearly, this is an example of domestic payments that do not work. But I think that the cases where they do not work are the exception. International payments are the areas in which we actually have a market suited to our products. "
On additional uses of the blockchain and crypto, Schwartz says it may take a minute before companies realize the true benefits of technology.
"Centralized databases are expensive. I was talking to pharmaceutical companies looking for a database application to track the movement of their goods. And they have been quoted several million dollars by companies whose job is to provide centralized databases. Well, you can create a private Ethereum node if you wish. A couple of them. It's a lot cheaper and the reliability is greater.
And I also think about the difference in security: users will say that there are applications for which security is not very critical. But what they miss, in my opinion, is the fact that certain types of attacks are fundamentally impossible with blockchains. Any attack involving the injection of false data is absolutely impossible on a blockchain, while it is possible on a database. "
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