Cyber Capital Founder: Ripple is completely centralized, please remain vigilant

Justin Bons believes that XRP is not a cryptocurrency.

Author: Justin Bons, Founder of Cyber Capital

Compiled by: Luffy, Foresight News

Ripple (XRP) is a centralized and permissioned network, contrary to statements made by its executives. XRP misleads investors by falsely claiming its decentralization, when in reality the network is entirely controlled by the foundation.

XRP Consensus is based on UNL (Unique Node List), where trusted Nodes are decided by centralized entities (including foundations). XRP Consensus is not based on PoS or PoW, but on PoA (proof of authority), but they claim to be more decentralized than Bitcoin and Ethereum…

This is all supported by Ripple’s own documentation, and it’s hard to find any researchers outside of XRP who would call this design ‘Decentralization’, yet they are deceiving the public.

However, users can modify their UNL and choose whom to trust. The language expression here is very subtle. A truly decentralized cryptocurrency is ‘trustless’ because it doesn’t require any ‘trust,’ which is completely different from choosing whom to trust!

XRP is not trustless at all. What’s worse is that if your UNL does not overlap sufficiently with the rest of the network, you will face risks. According to Ripple’s documentation: 90% UNL overlap is needed to prevent fork.

This means that in practice, direct permission from the XRP Foundation is required to participate in Consensus, which is almost centralized in terms of blockchain design… Let’s take a closer look at these UNLs.

We have determined that the UNL is the trusted third party ultimately chosen by the XRP Foundation. Our further research on these UNLs has confirmed this: for a long time, there has been only one UNL, namely the dUNL managed by the XRP Foundation.

However, this list is not static but dynamic. The XRP Foundation can change the list of validators in a completely centralized manner without any notice and remove anyone who violates authority.

Over time, there are now two UNLs, namely dUNL and XRPLF, both of which are directly funded by the XRP Foundation. This adds another layer of effective control over the network; let me explain:

Blockchains allow mutually untrusted parties to coordinate, all thanks to the underlying incentive mechanism (PoS or PoW). However, XRP has no Block Reward and incentive, it is purely based on trust, so how do different UNLs coordinate with each other?

The XRP’s proposition is based on the belief that different parties can spontaneously organize around a new UNL list without the incentive mechanism mentioned earlier. Obviously, this is nonsense because it is exactly the problem that the blockchain aims to solve, and the new UNL cannot achieve coordination.

If the new UNL cannot be coordinated, it means that the foundation has de facto complete control, and control over validators is equivalent to control over the network, which is like a consortium chain.

In all other Blockchains, you cannot choose validators because they are trustless and permissionless, which is why validators can be anonymous. It is secured by encryption economics rather than trust, and that is the fundamental difference of XRP.

XRP is not a Cryptocurrency at all. Because it is neither PoS nor PoW, it is a PoA. Otherwise, what else could it be? Consensus Algorithm requires a verification mechanism, and trust is the foundation of this system, so: XRP is a PoA!

The PoA system always has a central authority to appoint validators. So, what about the fact that there are currently two ‘official’ UNL lists? This contradicts my assertion that different UNLs cannot coordinate. This is where things start to get really crazy:

After careful examination, I found that all UNLs are actually identical, using the same set of validators, further proving that the foundation effectively controls the XRP network!

This screenshot is from 2 years ago, but I confirm that the situation is still the same now. This proves that the new UNLs cannot coordinate with each other. As a result, the foundation’s list becomes the de facto list that all UNLs must adhere to, otherwise there is a risk of fork.

This also allows the foundation to conduct reviews in forced situations, as they have such a high degree of control. This is in stark contrast to the operation of Crypto Assets, and explains why only 20% of validators can stop the network…

Running trusted validators also has no rewards. Unlike PoW or PoS, where the cost of attack reflects the Block Reward to the Miner / Staker. That’s why Decentralization is highly correlated with the Block Reward. On XRP, this Decentralization metric is zero.

I’ve been studying XRP since the early days, and I clearly remember when people recognized the trade-offs of Decentralization. As the community and leadership became more extreme in their advocacy, this situation gradually changed. I say this not to belittle investors, but to empower them.

Help break the XRP echo chamber and stop being someone else’s exit Liquidity. XRP’s pre-mining rate is as high as 99.8%, making it one of the most unfair distributions in history, as no new XRP is created and all newly circulating XRP is purchased from the founders.

I have always been very interested in the early discussions about Ripple Decentralization, pretending that XRP does not require permission is not the correct answer, the real solution is to use PoS to replace the UNL list, and transform XRP into a more traditional Decentralization blockchain.

They can also admit the fact that the fact is the fact, and I will not object to it. However, it is wrong to attract ignorant retail investors with lies. This is where we as an industry need to draw the line and self-regulate!

XRP may be able to bribe or deceive the SEC at the moment, but they cannot deceive us, the natives of Crypto Assets. No matter how complex and in-depth the rebuttal is, it will not change some simple facts: XRP is now completely licensed and centralized.

If you really care about XRP, take it seriously. Because there is a solution in this critical post that can help XRP succeed: to admit its centralization, or to turn to Decentralization. The truth sets us free, and there is nothing that cannot be redeemed by leaving XRP or exerting pressure for change.