David Schwartz says proof of work pays operators to act against the very users funding the network, calling the design crypto's deepest flaw.
Schwartz Targets Block Rewards
Ripple's chief technology officer emeritus on Tuesday urged the crypto industry to revisit a six-year-old Stanford lecture, BeInCrypto reported. He argues block production rewards weaken networks like Bitcoin (BTC) rather than secure them.
Schwartz posted the recording on X on May 12, 2026.
He called it the one video he wished every crypto participant would watch. The talk lays out why he designed the XRP (XRP) Ledger without block rewards in 2012, betting on participants who already benefit from reliable consensus rather than on operators paid to validate.
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Mining Incentives and Validator Conflicts
In the lecture, Schwartz says proof of work mining forces honest participants to spend more than attackers are willing to pay. He labels it possibly the worst imaginable security model. Competitive mining, he argued, pushes operators to cut costs and squeeze every available revenue stream.
He pointed to Ethereum (ETH) validators who game decentralized finance protocols by reordering transactions for profit before sealing blocks.
"You have to be evil or you lose," Schwartz said.
That dynamic leaves the people who actually use the network paying for security through fees while operators extract additional value during block production. Bitcoin miners and Ethereum stakers both fit the pattern, he contends, since the protocol pays them rather than aligning them with users.
XRP Ledger Design and Schwartz Context
Validators on the network only choose between equally valid ways to order transactions, leaving nothing material to extract and no financial incentive to attack the system. Schwartz summed up the thesis as "the best incentive is no incentive." He claims the result is lower fees, faster confirmations, and resistance to the value extraction that has hit Ethereum's decentralized exchanges.
XRP traded near $1.42 on Wednesday while Bitcoin held around $79,116.
Schwartz has dominated XRP headlines this month. On May 5, he disclosed selling 26 million XRP for Bitcoin years ago, saying the move helped him "sleep better at night." Days later, Ripple CEO Brad Garlinghouse told Consensus 2026 attendees he had "never been an XRP maxi," remarks that rattled long-term holders already bracing through months of price lows.
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