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1/20 The Flare Network is great, and XRP HODLers are excited for it to bring Decentralized Finance (DeFi) to XRP, but why wasn't support for DeFi/smart contracts just coded directly into the XRPL?
(Video version @ )
A thread. (4 min read)
(Video version @ )
A thread. (4 min read)
2/20 It may seem odd that XRP/XRPL doesn't support smart contracts natively. Ripple invested in Flare, and David Schwartz (Ripple CTO) contributes to the XRPL codebase. So why not just add smart contract support into XRPL? That would be better than relying on Flare, right?
3/20 XRP was designed for payments, and only payments. That's its use-case and why it's so much faster, less expensive and more secure than Bitcoin and other POW crypto. Everything in the XRPL is designed to facilitate payments. That's why it's great for stablecoins and CBDCs.
4/20 As a software developer, I can tell you that every time you add additional functionality into any piece of software, you increase two things: resource requirements and complexity. Both of these are important, and sometimes acceptable, but not in this case.
5/20 The more resources software requires (memory, CPU cycles, hard drive space), the more powerful the computer required to achieve desired performance. If you're looking to make software extremely fast, you want it to use as little memory/CPU/disk space as possible.
6/20 Smart contracts require supporting a programming language (the human-readable instructions used to tell the computer what to do). That language also requires what's called a compiler, which converts the human-readable language into the 1s and 0s a computer understands.
7/20 Creating a full-blown programming language and compiler (or interpreter, which is different in a way that isn't important) adds some big resource requirements into the software, which means the software requires more powerful/expensive hardware to perform well.
8/20 Then there's the issue of complexity, which in the case of the XRPL is even more important. The more complex software gets, the more likely that bugs or issues arise in the code that are difficult to spot before they are released into production.
9/20 You can test software all day long, and have it tested by a bunch of other people, but until it's in production and the thousands (or millions) of real-world users are actually using the software, it's virtually impossible to anticipate everything that might go wrong.
10/20 Look at the hacks DeFi platforms have suffered. Half of crypto hacks in 2020 were from DeFi protocols/exchanges b/c DeFi uses complex software in the form of smart contracts. DeFi is only about $22.5 billion right now, yet $100 million was stolen. https://ciphertrace.com/half-of-2020-crypto-hacks-are-from-defi-protocols-and-exchanges/
11/20 XRPL is in use by hundreds of banks and financial institutions. Untold billions of dollars flow through it every day. The risk involved if an unanticipated bug is in the code that creates a security hole is astronomical. And those institutions are only the beginning.
12/20 XRP is now being tested in the ForEx market by SBI, a Ripple partner. ForEx is $6.6 trillion/day. The potential losses due to undiscovered bugs in complex software is enormous. The best way to secure the software is to keep it as simple as possible. https://twitter.com/xrpartisan/status/1349165337388965891
13/20 Another factor that has to be considered with XRPL that most software developers don't think about is power consumption. The more CPU cycles your software requires, the more power is required and the more heat is generated by the servers it runs on.
14/20 Power consumption is easy to overlook. Satoshi Nakamoto clearly wasn't thinking about power consumption when he designed proof of work to solve the double-spend problem. Bitcoin mining was estimated to use as much power as Switzerland in 2019. https://www.thebalance.com/how-much-power-does-the-bitcoin-network-use-391280
15/20 This power consumption is not only harmful for the environment, it's incredibly expensive. That's why Bitcoin fees are so high. Miners have to pay for all that hardware and power. When dealing with payments, you want low fees to preserve value.
16/20 Banks already have high fees for cross-border payments due to all the intermediary banks that handle the transaction. The goal is to keep fees low, and that means XRPL has to be super-efficient and use as little power as possible.
17/20 XRPL's Consensus is far more efficient than Bitcoin's POW. XRP is faster/cheaper, and fewer servers with less resources are required for the network to operate well. That's extremely important when your goal is millions/billions of transactions/day. https://twitter.com/xrpartisan/status/1347639009439318021
18/20 It's also better for the planet/environment, but don't kid yourself. That's good PR, but financial institutions aren't thinking about that. They want low costs so they can make more money, and we as consumers want low fees so we can save more of our money. Win/win.
19/20 It just so happens that the side effect is also very good for the environment, which is something we should praise (another win/win). XRPL has much lower energy consumption than BTC, ETH and cash, and that's important when it really gets scaled out. https://xrpl.org/carbon-calculator.html
20/20 SUMMARY: XRP/XRPL are designed for payments. DeFi is great, but introduces huge resource requirements and complexity. It also greatly increases costs through power consumption. Keeping XRP/XRPL focused on payments and only payments makes it fast, efficient and secure.
@xrp_mami @RuleXRP @MackAttackXRP @CryptoBull2020 @Kevin_Cage_ @XRP_OWL_ @XRPNews_ @2020Xrp @RoseXRP @CredibleCrypto @XRPcryptowolf @BankXRP @XRPNurse @DualityXrp @MoonLamboio @WorkingMoneyCH @BakkupBradley @sentosumosaba @Santiag78758327 @jungleincxrp
More XRP/crypto explainer threads. https://twitter.com/xrpartisan/status/1347653134504652801
