Discussion on XRP Utility
In a recent discussion regarding the utility of XRP and its underlying blockchain, Ripple’s Chief Technology Officer, David Schwartz, addressed concerns raised by Matthew Sigel, who leads digital assets research at VanEck. Sigel has been vocal about the perceived lack of returns for XRP holders, questioning if there is any actual function of the XRP Ledger, especially if it does not generate value for its users.
He provocatively asked, “If XRP holders aren’t earning anything from the ecosystem, and the protocol doesn’t accrue value, who’s the one collecting the tax?”
Response from David Schwartz
Responding to Sigel, Schwartz emphasized the fundamental principles of blockchain technology, questioning whether the ethos of such systems was to operate independently or simply to provide for passive income. He reiterated that while user returns might not fit the conventional mold, the XRP ecosystem does contain mechanisms for utility beyond earning revenue.
Taxation and Transaction Fees
Digging deeper into the concept of taxation related to XRP, Schwartz clarified that there is essentially no tax imposed on transactions within the XRP Ledger. Instead, the only charges are nominal transaction fees and reserves, primarily serving as an anti-spam measure.
He explained that these fees, which average less than $0.003 per transaction, contribute to a systematic burning of XRP, thus exerting deflationary pressure on the total supply capped at 100 billion XRP. As of now, over 14 million XRP have been burned altogether.
Community Resource and Ownership
Schwartz reaffirmed that the XRP Ledger is a communal resource devoid of exclusive rights for any XRP holder to levy fees or taxes. The nature of the ledger is such that it does not grant ownership or control over these assets to anyone, stating,
“Nobody has any special right to charge you for it. Holding XRP gives you XRP. Full stop.”
This exchange highlights ongoing debates within the cryptocurrency community regarding the practical value of blockchain protocols and the governance structures surrounding them, emphasizing a need for clarity in their operational frameworks.
