Apr 15, 2019 07:00 UTC
Apr 15, 2019 at 07:00 UTC
Is Ripple A Federated Blockchain?
Blockchain technology has been at the forefront for quite some time now, and it all began with the introduction of Bitcoin white paper back in 2009. Bitcoin is an open source project which makes use of distributed ledger technology to distribute the authoritarian power among the peers, and thus decentralization plays a major part.
The definition of true cryptocurrency became a little vague later as thousands of new project made a foray into the cryptocurrency space. Currently, there are at least a thousand crypto tokens listed on the trade market, but only Bitcoin and Ethereum are considered to be true cryptocurrencies.
However, the biggest debate is over the status of Ripple, a top 5 cryptocurrency whose banking solutions are being adopted and implemented all across the world by major financial institutions as well as central banks of various countries. While it is making great strides towards a world-wide adoption many critics believed that its native token XRP is heavily centralized where the company owns the majority rights over the distribution.
There have been lawsuits against Ripple as well, where they have called for considering Ripple as a security. However, the lawsuit is still in its early stages but the debate over its federated blockchain tag does not seem to die down. We will try to analyze and look at various aspects of Ripple Blockchain and then decide whether it is federated or not.
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What is a Federated Blockchain?
Blockchain technology works on the principles of DLT, where there is no specific focal point of authoritarian power. However, as the technology got wider acceptance, people realized that distribution of power is good, but creates a big hurdle for scalability. Thus, the new crypto blockchains started to adopt a federated version of the blockchain to help them in the long run.
Federated Blockchain is one which works on the basic principle of Blockchain technology, but have a certain level of authority with itself to help it scale better and make necessary changes to the consensus whenever necessary.
Ripple is a prime example of what federated blockchain should be, as it has maintained decentralization in its database to ensure transparency but have a ceratin level of centralization in its consensus to ensure high efficiency. This is the reason, despite the controversy that it has been a part of, there is no stopping in its progress and adoption.
Recently, Ripple got an honorary mention by World Bank as well as won several awards for its two major banking solutions X rapid and Xcurrent which has been appreciated and adopted by a number of banks around the globe.
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2019 Could be the Year of Federated Blockchains
Blockchain propelled the idea of equality through decentralization, however, the consumers really don’t care about ethics and only care about efficiency and better products. The pioneer’s Bitcoin is the perfect example of how complete decentralization is proving to be a roadblock. Bitcoin is currently betting big on an off-chain solution The Lightning network(LN) to help it scale its network to the competitors.
While Bitcoin is still faster than traditional payment portals like MasterCard and Visa which takes days to finalize big transactions, while Bitcoin takes around 4860 seconds. On the other hand, Ripple can complete the same transaction in a mere 4 seconds. Another factor that plays in favor of federated blockchain is the transaction fee, while MasterCard can burn a hole in your pocket, charging anywhere from 3-10 percent, Ripple charges a negligible fee of few cents.
Bitcoin is currently struggling to scale in accordance with the decentralized space, despite major names of the space endorsing the LN. On the contrary Ripple despite the debate over the control of the ciculating supply of XRP is making waves through a long list of partnership with major banks around the world.
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Ripple does have a certain level of centralization in its consensus, but the aim behind that is to provide a payment system which is crazy fast and costs you nothing. As a consumer, I would always prefer something like Ripple over Bitcoin since it suits my need.
The aim behind creating Bitcoin was not to start a cult of the sort where once get an entry only through decentralization, but the ultimate aim was to provide a cheap and fast payment system to the developing nations. However, Bitcoin is currently stuck whether to make changes into the original protocol to help the network scale better or keep the original protocol untouched. If Bitcoin could not find a true solution, it would only become a store of value.
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