Ripple's chief technology officer acknowledged in a social media exchange that cryptocurrency valuations remain largely detached from actual usage, instead reflecting layered expectations of future speculation—a reality he said applies even to XRP, the digital asset his company has championed for over a decade.
What to Know:
- David Schwartz, Ripple CTO, argues XRP derives value from being the only counterparty-free asset on the XRP Ledger, operable across all jurisdictions without freeze or clawback risks
- He admits most cryptocurrency value stems from "expected future speculation" rather than present utility, calling current pricing a bet on whether others will speculate at greater scale later
- XRPL was designed as a public good without protocol-level extraction mechanisms, distinguishing it from competitors that employ fee switches, burns, and staking to capture value
XRP's Technical Distinction on the Ledger
David Schwartz, who posts under the handle "JoelKatz," used an exchange on X to explain how XRP functions within the XRP Ledger's architecture. His explanation avoided promotional language about settlement speed or payment corridors. Instead, he focused on structural elements: intermediary elimination, censorship resistance, and the asset's unique technical status.
The XRP Ledger supports multiple currencies, but every asset except XRP represents an obligation from an issuer—a bank, gateway, or financial institution.
Those assets function as IOUs on the ledger. XRP exists differently. It has no issuer, no counterparty, and no entity with authority to freeze or reverse transactions. Schwartz stated this creates a specific use case: "Do you want to use a blockchain where people can be their own bank and no middlemen tax their transactions or do you want to be someone else's bank and tax their transactions? If you want the latter, there are dozens of blockchains for you. If you want the former, there's XRP."
He described XRP as "the only asset without a counterparty that can be accessed by every account in every jurisdiction with no risk of default, freeze, or clawback." That technical attribute, he argued, gives XRP a functional role other ledger assets cannot replicate. Whether institutions choose to use that function remains separate from whether the function exists.
Schwartz drew a comparison to eBay. When evaluating the platform, he said, users consider how effectively it connects buyers and sellers, not whether it enriches shareholders. He applied that framework to XRPL: "I think of XRPL as a public good that doesn't tax people who want to use its capabilities. I am not arguing that it is the best design or even that it's better than most other designs. But it is different. XRP really is about being your own bank and having no middlemen passively taxing your transactions."
That approach diverges from the dominant protocol design trend between 2020 and 2025. Most blockchains introduced explicit value extraction: fee switches, token burns, staking yields, MEV capture, sequencer fees. Schwartz said XRPL deliberately avoids those mechanisms. The ledger does not tax transactions at the protocol level. He views that absence as intentional, not a design oversight.
Speculation as the Primary Price Driver
The philosophical stance creates an economic question. If XRPL does not extract value from transaction flow, how does XRP benefit when ledger usage increases? Schwartz's answer was that XRP's status as the universal, non-freezable settlement asset on XRPL generates demand if the ledger becomes critical infrastructure. The ledger does not need to impose tolls for XRP to matter, he said. XRP matters if the ledger matters.
But Schwartz did not claim that mechanism drives current prices.
He said something few executives in the industry state publicly: "The funny thing is that I think that most of the value of most cryptocurrencies comes from expected future speculation. So if what you care about future price changes, what people think will happen is much more important than what has happened."
He cited Bitcoin as evidence.
The prevailing investment thesis, he said, resembles: "Imagine if most companies start storing 1% of their treasury in Bitcoin, what will that do to the price?" That thesis assumes future participants will speculate at greater volume than current participants. Schwartz extended the logic: "It's not even based on expected future utility, it's based on expected future speculation! I want to believe utility matters, I really do."
That last remark stood out. Schwartz did not argue XRP's price reflects measurable payment activity today. He argued no cryptocurrency is priced that way. The market operates reflexively—participants buy because they expect others will buy later, at higher scale and urgency.
A common objection follows: if value depends on an "explosion scenario," tokens should trade near zero until that scenario materializes. Schwartz rejected that reasoning. He said markets continuously reprice probability, not outcomes: "There may come a day when we look at today's cryptocurrency values as, in comparison, nothing. But the idea that values will be very low and then suddenly rise is just not how speculation works. As the probability of explosion or size of expected explosion grows, value follows."
Understanding Key Terms
The XRP Ledger functions as a decentralized exchange and payment network. Unlike Bitcoin, which supports only its native asset, XRPL allows users to issue and trade multiple currencies. Each issued currency represents a debt obligation—the issuer promises redemption. XRP does not carry that structure. It exists natively on the ledger without an issuing entity.
Counterparty risk refers to the possibility that one party in a transaction will default.
Assets issued on XRPL carry counterparty risk because they depend on an issuer's solvency and willingness to honor obligations. XRP eliminates that risk because no entity stands between the asset and its holder. Freeze authority, common in issued assets on XRPL, allows issuers to lock funds in certain accounts. XRP has no such mechanism.
Speculation, in Schwartz's usage, describes buying an asset based on expected price appreciation rather than income generation or consumption. He distinguished between speculation based on expected utility—buying because the asset will facilitate valuable activity—and speculation based on expected speculation, where buyers anticipate others will bid higher in the future for the same reason.
Closing Thoughts
Schwartz's remarks offered a rare public acknowledgment from a senior industry figure that cryptocurrency valuations reflect anticipated future demand more than current use. He argued XRP retains a structural advantage as the only universal settlement asset on XRPL, but said that advantage does not yet drive price independently. XRP traded at $2.48 at the time of his statements.