Ripple moves towards decentralisation to bolster security
Greater decentralisation and the release of "the Ripple Papers" are both responses to market needs.
Ripple says it's moving towards decentralisation of its network through protocol updates. This preliminary strategy was first announced in May 2017, and crystalised around a two step plan in October. The first step is already underway. It involves technical and infrastructure updates to lay the groundwork for a more decentralised network.
Specifically the publishing of a Unique Node List (UNL), which lays out the different nodes on the Ripple network. If a node isn't on this list, it's not considered legitimate.
Phase two will be commencing soon. This involves managed decentralisation, in the form of adding independent validators to the network. For every two independent validators added in the UNL, one Ripple-operated validator will be removed. This should have the effect of creating a much more diverse and resilient Ripple network.
What do validators and nodes do?
Nodes on a blockchain network are the systems that manage its security and process transactions. They're essentially the backbone of a blockchain network.
Validators are the consensus network. Their job is to independently, and automatically, keep their own ledger of transactions.
But if one party has too much control of the validator network, they might be able to take control of the network and all the cryptocurrency in it. This is why decentralisation is important. It reduces the chance of this happening.
"The end state will be a network with a varied set of validators, operated by multiple entities from different locations, all sharing one common goal: the long term health and stability of the XRP Ledger," said the Ripple announcement. "Maintaining our momentum towards further decentralization is critical for XRP Ledger to reach its full potential."
The Ripple papers
This move is also accompanied by the release of peer-reviewed academic papers. Developers for other blockchain systems, such as bitcoin and Ethereum, have frequently released these in an effort to document their tests and forward understanding of the field as a whole, but as a business Ripple hasn't dipped its toes into these waters before.
The two papers are each related to one of the upgrade phases. The first is Analysis of the XRP Ledger Consensus Protocol, which provides formal mathematical proof of ongoing efficacy of the Ripple network.
The second is Cobalt: BFT Governance in Open Networks, which described the phase two efforts to implement a more diverse range of validators to improve network security.
"This is the first time we're releasing peer-reviewed academic papers. Obviously, it opens the door for future research. After this, I expect you'll hear much more about us interacting with academia," said Ripple CTO Stefan Thomas to CoinDesk.
A matter of security
One of the main goals of these decentralising efforts is network security. Centralisation can take various forms, and many cryptocurrencies have different reasons to oppose specific types of centralisation.
In Ripple's case, it's specifically pursuing greater decentralisation of validators in order to better secure the network against outside attack.
"What we're trying to do here is add some defenses against some unlikely attack scenarios. Basically, it says you can't completely manipulate the entire network," Thomas explained.
Even without these systems you'd still need a lot of resources to disrupt the existing Ripple network, with Thomas saying the attacks would only be viable when carried out by a state actor, rather than an individual or smaller organisation. It might have sounded a bit paranoid a few years ago, but as cryptocurrencies move into the mainstream, and Ripple is taken up by national central banks, it might be a critical part of development.
As CoinDesk said, these changes are Ripple responding to market needs. Decentralisation in the form of validator diversity, and transparency in the form of the Ripple papers, might both be necessary steps for Ripple to grow.
As an added bonus, it might also help give regulators around the world more clarity and unity on Ripple's exact capabilities, which may help pave the way to quicker adoption of XRP as a settlement system.
- Why Ethereum’s London upgrade (EIP-1559) is going to make your ETH a lot more valuable
- Ethereum’s price rallied ahead of EIP-1559, but is a correction on the way?
- PayPal CEO claims Bitcoin has been highly profitable, and plans to expand crypto operations
- Ethereum may hit AU $19k if it is able to maintain its current path, expert suggests
- Bitcoin price analysis: Technical indicators suggest a new bull run is on the way
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, NANO, SALT, BTC