In a recent interview, David Schwartz, an architect of XRP Ledger (XRPL) and Ripple’s Chief Technology Officer (CTO), talked about the FinTech firm’s increasing level of interest in non-fungible tokens (NFTs).
The XRP Ledger was created in 2012 by David Schwartz, Jed McCaleb, and Arthur Britto, and $XRP is the native currency of the XRP Ledger.
The Evolution of he XRP Ledger
On 27 February 2020, during an episode of “The Ripple Drop” (Ripple’s web video series), Schwartz spoke with with producer/editor Reinhard Cate about the evolution of the XRP Ledger.
Cate started the interview by asking Schwartz how the XRP Ledger started and what its current status is.
“Well, I started working on what we now call the XRP Ledger at the end of 2011; so I’ve been at this for eight [or] nine years… but the changes have been drastic. I mean in the early days all we had was the ability to perform a transaction on a decentralized ledger in just a couple of seconds, and then we started to realize that the properties of the algorithms that we developed allowed us to do things like a decentralized exchange.
“And then we had this idea of allowing people to issue assets and ideas like community credit, and we put all that together into a functional system probably in mid 2012.”
Cate then wanted to know why the robustness of the XRP Ledger is so important.
“You have to realize that you’re talking about billions of dollars in a system that doesn’t have an administrator. There’s nobody that you can go to if it messes up, and so reliability is the number one property, and it means that these systems are very slow to develop and evolve.
“In the early days, before I was working on the XRP Ledger and I was looking at Bitcoin, and we sort of had this idea that if there was any new feature, Bitcoin would just adopt it.
“We now know that’s hopelessly naive because any change to a system like this imposes cost on everybody who uses the system. With any other piece of software, a company will release a new version of the software, say Oracle releases a new version, and they’ll say to people who have like mission critical deployments ‘don’t upgrade to the new version, just use the current version, give us a little bit of time, test it whatever’.
“You can’t really do that on a public blockchain — if the rules change, people have to run software with the new rules. You want to ask why these systems don’t move more quickly, why they don’t add features on a regular basis, that’s why.”
XRP Ledger and NFTs
Back in February, Wietse Wind, Founder of Ripple-backed XRPL Labs, came up with a proposal for implementing support for non-fungible tokens (NFTs) on the XRP Ledger (XRPL) that does not require changing the code for the XRPL. On February 26, Wind started a discussion for his proposed standard for working with NFTs on the XRP Ledger.
Wind started by explaining how NFTs are different from XRP tokens:
“A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable. This is in contrast to eg. the native asset on the XRPL,
XRP, where XRP can be sent and received without being uniquely (per token) identified.
“Where normal tokens and the native asset
XRP can be divided (eg. receive 1 XRP, send 0.5 XRP), NFT’s can only be used as one whole, unique token: they are indivisible.“
He gave some examples of use cases for NFTs:
“Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership, and the possibility of asset interoperability across multiple platforms. NFTs are used in several specific applications that require unique digital items like crypto art, digital collectibles, and online gaming.“
Wind then pointed out XRP Ledger already “supports issuing tokens… that can be issued, sent, transacted to other XPRL accounts, etc.”
Here is the basic idea behind Wind’s proposal:
“The XRP Ledger has an issued token precision of 15 significant figures. The smallest amount of an issued token the XRPL can handle is 1000000000000000e-96. The decimal value of this scientific notation is:
“Let’s assign the last (say) 11 figures to client side / user interface ‘NFT behaviour’…
“If the value of issued currency is in the range of 1000000000000000e-85 – 1000000000000000e-96, clients should handle (represent, mostly a user interface affair) the amount as NFT.“
The beauty of this proposal is that it “requires no amendment on the XRPL side, as all of this is possible today” and the modifications need on client side software (e.g. wallets) is pretty simple to implement.
Then, during the Apex XRPL Developer Summit (September 29-30), Ripple launched a $250 million fund aimed at supporting those who want to “create and monetize accessible and innovative non-fungible token (NFT) experiences on the XRP Ledger (XRPL).”
Ripple’ Creator Fund was launched on September 29 in collaboration with Mintable, mintNFT, and VSA Partners. According to Ripple, three categories of people and organizations can apply for funding:
- “All creators—from musicians and artists to performers and athletes—and global brand representatives who want to create innovative experiences for fans and open new revenue streams“
- “Creative and talent management agencies that are seeking to provide clients a low-risk way to experiment with and promote NFTs“
- “Innovators at digital marketplaces that are looking to integrate with the XRP Ledger, bring top talent to their platforms and deliver a seamless NFT experience for developers“
The three key features of this fund are:
- “Technical support to integrate with the XRPL and build best-in-class NFT experiences“
- “Co-marketing and creative agency support for NFT creation and promotion“
- “Access to XRPL marketplace partners that provide seamless NFT experiences for both creators and developers“
Schwartz’s Latest Thoughts on NFTs
Here are a few highlights of what Schwartz told Wolfson about the use of XRPL for NFTs:
“My talk at NFT NYC was mostly about carbon-neutral NFTs with the XRP Ledger and solving the energy consumption problem. Obviously, we aren’t going to solve climate change in the blockchain space, but the least we can do is not make it a lot worse. It’s not a technical problem — we know how to not consume that much energy, it’s just a matter of convincing people to adopt the technologies that are more climate-friendly…
“We were a little late to the party, but not too late. If NFTs are successful, then we are all still early. We initially started to look at how people wanted to use NFTs and realized that a lot of the challenges people were facing were due to the technology being very primitive...
“Part of Ethereum’s low transaction speed and cost is due to the fact that you can build more flexible technologies on the blockchain. Most people who build on the XRP Ledger are doing complex things, but for technical reasons they don’t need these to be right on the ledger…
“We don’t have those capabilities on the XRP Ledger today, but you can mint NFTs. The XRP Ledger also has a decentralized exchange (DEX), and you can issue new tokens. Payments are cheap and fast, so to some extent, it’s a fundamental engineering tradeoff.“
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.