As someone deeply rooted in the software development community for 20 years, I have found that misinformation drives hearsay like nothing else. There are a number of falsehoods circling the XRP Ledger (XRPL) that I regularly come across, including the misconception that it is centralized, that there are hidden fees, that it is private and only used by banks – and it is time to put things right. If you’re a developer interested in building on the XRP ledger or just want to learn more about the network, read on. I break down the facts and expose the biggest misconceptions about XRPL.
MYTH: The XRP ledger is centralized. Based on my experience as a developer and my conversations with fellow developers, this is perhaps the most widely spread untruth – and here is why. In a centralized blockchain, a single authority governs the entire network, controls validation, controls updates to the ledger, and creates a single point of failure (which in theory leaves the entire network vulnerable to attack).
TRUTH: The XRP ledger is decentralized. The XRPL offers developers a powerful service on a public, decentralized blockchain. Validation takes place via a consensus process in which independent nodes are managed by a large number of participants – not by a single supervisory authority. Changes to the XRPL can be proposed by any participant and require 80 percent approval of the quorum for two consecutive weeks by the validator community. And once confirmed, transactions cannot be reversed or changed.
These are all characteristics of decentralized ledgers. If you want to remember a takeaway, it’s this one: Ripple is a contributor to the network, but just one of many. At the time of writing, Ripple is running approximately 5% of the approximately 900 nodes in the XRP Ledger and six of the approximately 150 Validator nodes. Ripple follows the same protocols and their rights are the same as any other contributor.
Debunking final myths
MYTH: New XRP can be added to the ledger. According to this myth, a single authority can make unilateral changes to the basic, underlying code, leaving the ledger open to hackers who could create new XRPs.
TRUTH: Even if an evil actor has tried to add unauthorized XRP to the ledger, the consensus protocol ensures that no single agency can do it. More than 66 million ledgers have been successfully closed since the XRP ledger was first conceptualized with 100 billion XRPs created at the beginning of the ledger and no additional XRPs have ever been added to the system.
MYTH: XRPL has hidden fees. Fees, including transaction costs and reserve fees, are reimbursed to Ripple after implementation in the ledger or reimbursed to the validators after implementation in the XRP ledger.
TRUTH: Just like other public blockchains, the XRP ledger has transaction fees, although they are far lower than most others (only a fraction of a cent on XRPL). Unlike other blockchains, however, the fee is neither reimbursed to a central authority nor paid to validators or other parties as a reward. It is actually irreversibly destroyed. Since charges increase as the network loads, this protects the network from spam, malicious behavior, and DDoS attacks. Additionally, XRP transactions are processed almost instantly on the ledger (just 3-5 seconds to confirm the deal versus 10+ minutes for other blockchains or several days for banks to send cross-border fiat funds to other banks). The XRPL consensus protocol closes the gap and saves significant time and transaction costs.
MYTH: Blockchains cannot be decentralized, scalable and secure. An improvement in one of these aspects must negatively affect one of the other two. We have to sacrifice one to optimize the other, right? Not so fast – here is the truth.
TRUTH: The blockchain trilemma is a model for conceptualizing the challenges that all blockchains face, and states that the platforms cannot be truly decentralized, scalable and secure at the same time. The truth is that the XRP Ledger was the first and is one of only a few blockchains capable of performing a decentralized, on-chain limit order book exchange in near real time. It can maintain a maximum throughput of up to 1,500 transactions per second (scalable), is managed by a number of different participants who collectively confirm transactions and approve proposed changes (decentralized) and uses a consensus protocol that protects against attacks and failure modes (security) . And all of this makes XRPL very sustainable. In fact, it is the world’s first large, global, carbon-neutral blockchain.
Developers need to find the best blockchain for their project needs. Any misunderstanding about how the technology works hinders this process.
By delving into the basics of how XRPL works, we were able to debunk several myths and misconceptions about the ledger and review some of the benefits that make it ideal for a wide variety of projects. Hopefully this overview will help you look beyond the unfounded myths floating around about the XRPL to discover another workable tool for your needs.
For more information, visit XRPL.org, where you will find a lot of background documentation, updates on ongoing projects and an extensive FAQ. If you’re scrolling through twitter right now, feel free to ask me @HammerToe.