Ripple’s Chief Technology Officer, David “JoelKatz” Schwartz, said XRP is not meant to act as a “bank account” for Ripple; instead, it is a “strategic weapon” to achieve the company’s vision to make global payments faster and easier.
His earlier comments came back into focus on the Good Morning Crypto channel on August 14, 2024, sparking debate about XRP’s role and the flexibility of the XRP Ledger (XRPL).
The discussion started when a user noted that trustlines on XRPL let institutions transact without needing to hold large amounts of XRP. These trustlines are credit arrangements between accounts that enable the transfer of tokens with only a small amount of XRP needed to pay transaction fees.
“I really hope institutions do form trust relationships and leverage them,” Schwartz wrote in an x post, calling such setups “a huge win for everyone” when they fit better than using crypto for settlement.
Schwartz explained that the trustline concept goes back to 2004, stemming from Ryan Fugger’s early work that inspired XRPL and the Interledger Protocol (ILP).
He stressed that digital assets without counterparties and outside jurisdictions should only be used where those traits offer real advantages. He also said blockchains will grow in value as they integrate tools beyond what cryptocurrencies alone can provide.
To make the idea clear, Schwartz described two entities, stating:
“Imagine there are two entities that have some kind of trust relationship with each other. Maybe one already owes the other money. Maybe they extend credit to each other and settle every week. Maybe they have an open payment channel on XRPL. It doesn’t matter.
In theory, you could consider all the ways either party can receive money and all the ways either party can send money to be a payment network.
Say Alice and Bob extend credit to each other all the time and settle every week. Say Alice can accept bitcoin on the bitcoin blockchain and Bob can hand cash over the counter at his grocery store.
You could use XRPL or ILP to convert bitcoin to cash by paying bitcoin to Alice and getting cash from Bob. XRPL or ILP would facilitate the discovery, quoting, payment atomicity, and accounting.
Alice and Bob who trust each other, extend credit, and settle weekly. One can accept bitcoin, while the other can hand over cash. “
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