Ripple Chief Technology Officer Emeritus David Schwartz has moved to address persistent misconceptions about how the XRP Ledger (XRPL) operates, clarifying in particular why the network's native token plays no part in securing the blockchain.
An X user challenged a previous statement by Schwartz in which he compared proof of work (PoW), proof of stake (PoS), and the XRPL's own approach. Schwartz had described the XRPL as relying on "stakeholder chosen scarcity" — a model distinct from PoW, which uses computing power, and PoS, which uses the value of a native token. The user asked whether XRP itself was the asset "chosen" to be scarce under this framework.
Schwartz was quick to push back, explaining that XRP plays no role in the consensus process and offering two key reasons why.
First, when the XRPL was being developed, proof of stake "hadn't been invented yet, and we weren't clever enough to think of it," Schwartz said. Second, and more fundamentally, using XRP to drive the consensus mechanism "would have left Ripple in control of the consensus mechanism whether people wanted that or not."
Instead, the XRPL relies on what Schwartz describes as "shareholder choice": network participants independently decide to reach consensus with validators they believe are performing reliably and in good faith.
Schwartz has also addressed the broader question of financial incentives in blockchain design. In a 2020 lecture, he argued that artificial financial rewards actually work against a network's genuine users. He noted that while "eventual consistency is needed for blockchains to be useful," paying steep fees to achieve it is inefficient.
He went further, characterizing built-in mining or staking rewards as a net negative: "artificial incentives are attacks on the natural stakeholders, and they represent friction left in the system."
By contrast, Schwartz argued that natural incentives are self-reinforcing: "natural incentives decentralize — the only reason to participate in the system is because you want the system to work reliably — there is nothing for you to take from the system."
Why it matters
The XRPL's consensus model means validators have no token-based reward to capture, which changes the incentive structure compared with PoW or PoS networks where block rewards or staking yields create economic motivations separate from network reliability.
Schwartz's explanation that using XRP for consensus "would have left Ripple in control" highlights a deliberate architectural choice to limit the founding company's ongoing influence over the network's operation — a distinction relevant to decentralization assessments.
