When There Is No Pebble Tossed — the Murky Origins of the XRP Protocol
I saw Jerry Garcia and the Grateful Dead for the first time in April of 1989. I was in the 8th grade and it was the coolest thing I’d ever done and it didn’t even matter that I went with my mom. Robert Hunter’s words in the song Ripple have since been a comfort and an inspiration for most of my life.
There is a road, no simple highway
Between the dawn and the dark of night
And if you go, no one may follow
That path is for your steps alone
Ripple in still water
When there is no pebble tossed
Nor wind to blow
To this day the song has a magic that few works ever achieve.
Given I have tied my fate to that of the cryptocurrency industry I also cannot help but think of the only corporate cryptocurrency to ever gain any real traction, the R̶i̶p̶p̶l̶e XRP protocol.
But what pebble caused this Ripple? The closer one gets, the weirder it becomes.
Author’s Note: this piece distills a massive amount of research done by several dedicate folks in the cryptocurrency space over the last seven years. Not all of it is mine. Prior to writing this piece I asked if they wanted credit for their contributions and they politely declined.
The Party Line
The Ripple website is woefully sparse on details. The protocol was apparently spawned fully formed from the bosom of Athena to bless the world with the iNtErNeT oF vAluE (a phrase which was coined by Andreas Antonopoulos to describe Bitcoin).
This is simply ridiculous. The company was founded in 2012 and nothing else has a date?
SBI Ripple Asia was founded in 2016… four years later.
The ODL product shown in the screenshot above is a function of another product called xRapid, which was announced in October of 2018.
That’s six years.
Here’s the full timeline as shown on their website.
The “story” in “Our Story” seems to be that Silicon Valley narrative spinning that most empty value investments love to use because it leaves out all of the actual meaningful bits. Let’s dive a bit deeper and see what sort of rabbit hole is created in this professional distortion of reality.
Start in the Middle
The rabbit hole starts almost immediately.
In April of 2013 A16Z dumped a bunch of money into a startup less than a year old called OpenCoin, Inc. They were making this fantastic new protocol that was touted as being the next Bitcoin; not a “killer” but a compliment. When one clicks through the press release to opencoin.com, one finds the open source electronic cash project called OpenCoin.
But this isn’t the R̶i̶p̶p̶l̶e XRP protocol. This is a completely different project run by completely different people that have no association with Ripple or XRP at all except that Jed McCaleb appropriated the name to raise money from Marc Andreessen. A look at the opencoin.org website reveals that after OpenCoin, Inc. got millions to “expand the Ripple protocol” that OpenCoin, Inc. surrendered the opencoin.com domain name and rebranded to Ripple, Inc.
Behind Closed Doors
When A16Z & friends made their initial investment in “expanding” the R̶i̶p̶p̶l̶e XRP protocol it was closed source. OpenCoin, Inc. announce their rebranding to Ripple, Inc. at the same time they announced that the R̶i̶p̶p̶l̶e XRP protocol was to be open source. Note that it took almost 8 months for Ripple, Inc. to surrender the opencoin.com domain name to the open source project OpenCoin after the rebranding.
“Expanding the … protocol” really meant re-engineering. If you’ve any legitimate experience as a base protocol developer in the cryptocurrency space you know this is what actually happened. The engineering concerns of a closed source protocol are vastly different from that of an open source protocol.
Here’s a quick lesson in financial network engineering.
The applied cryptography employed by cryptocurrencies allows for the removal of trusted entities in three key areas which are present in all digital settlement networks:
- Emission of inflation (new tokens)
- Transaction validation
- Transaction ordering
Consensus is a function of each participant in the network agreeing with other participants as to how those three things happen and what they should look like at any given moment. Cryptocurrencies like Bitcoin and Ethereum 1.0 use “proof of work” as a means to achieve these three goals without a trusted middleman. Ethereum 2.0, Tao, and TomoChain use variations on another consensus methodology called “proof of stake”. These two methods of achieving consensus are slow, bulky, and somewhat wasteful but do so in order to achieve the goals of an “unmanaged” or decentralized network: it simply works because people use it as intended.
If the engineering goals for your network don’t include the trust-less emission of new tokens, transaction validation, or transaction ordering then there are other ways of establishing consensus. The L̵i̵b̵r̵̵a Diem Project by Facebook uses what is known as DiemBFT which is a modification of the HotStuff Byzantine Fault Tolerant algorithm which means absolutely nothing to anyone that isn’t a cryptocurrency geek. However it does illustrate how the goals of consensus determine which consensus methodology one would elect to use. Diem operates on a network of trusted nodes which then feed information to a peer-to-peer network which validates the data as being accurate.
.. and now we can talk about Ripple.
Engineering Glasnost: the Unique Node List
We have no idea what the closed source version of the R̶i̶p̶p̶l̶e XRP protocol looked like — obviously — but we can guess that it probably looked a bit like works very similarly to DiemBFT. The key to the “bootstrapping” of the protocol is what is known as the Unique Node List, or “UNL”. The UNL is the default list of servers to which one connects to obtain reliable initial ledger consensus. How does one get added to the UNL?
People ask from time to time but nobody knows. Obviously it is a github pull request to add your server to the appropriate file. Except it’s not. It’s managed directly by Ripple, Inc. and there’s even a warning in the code not to use other validator lists.
On the one hand Ripple says you can run your own UNL, but then adds a warning in the code not to trust UNLs that people run themselves. If you’re any sort of business considering implementing this protocol you’re not going to implement it in a way that incurs any additional risk.
You’ll use the default just like the code warned you to do and this is how Ripple, Inc. overcomes the “bulky” consensus engineering which one finds implemented in nearly every other true cryptocurrency on the market.
The R̶i̶p̶p̶l̶e XRP protocol has been and still is engineered as a centrally managed network. It’s the centralized management which enables them to sell tokens forever as a form of inflation. Full stop.
The Pebble Tossed
But where did the R̶i̶p̶p̶l̶e XRP protocol come from?
Wikipedia notes that it was invented by Ryan Fugger, Arthur Britto, and David Schwartz (“Cryptographer-1” in the SEC lawsuit). The closed source implementation was operated by Ryan Fugger via the RipplePay.com website.
There’s tons of information available in the Wayback Machine on the earliest implementations of Ripple as a protocol.
It’s worth noting that the RipplePay project has since rebranded as “RumplePay”… a stablecoin… but it does make one wonder what was actually purchased from Fugger since he was allowed to continue his own enterprise for the last seven years.
This sort of arrangement certainly isn’t impossible but it certainly isn’t typical. One typically doesn’t buy out the underlying technology and then allow the existing business to openly compete.
Who tf is using RumblePay, anyway? There’s no MSB license stated or implied.
Nobody knows how much Fugger made from this deal, but the Wikipedia page we can see is woefully inaccurate.
XRPL is not Ripple <wink>
There’s another website run by Ripple Labs (xrpl.com) which is intended to serve as a distinct home for the protocol, divorced from Ripple corporate. However since we know that such a divorce is impossible, this can be regarded as corporate propaganda.
Ryan Fugger has been omitted from the official storyline of R̶i̶p̶p̶l̶e XRP protocol development and Jed McCaleb (who sold an already insolvent Bitcoin exchange called MtGOX to Mark Karpeles) has been added. Jed was actually one of the founders of OpenCoin, Inc. with Chris Larsen. Jed isn’t a programmer or engineer… he’s a money guy.
It’s worth noting that the engineering decisions to omit protocol-based token emissions are mentioned on the XRPL site, but without any real perspective as to what that then demands from trusted entities or that it is this single feature of the R̶i̶p̶p̶l̶e XRP protocol — the lack of trustless inflation — is what allows Ripple Labs to sell tokens on the open market: it replaces the financial incentives of proof of work/stake with a trusted for profit corporation.
Questions Answered, Questions Unanswered
It should be clear at this point that the SEC’s claims as to XRP itself being a security due to the ongoing conduct of Ripple are completely legitimate. It’s apparent both in public statements on their own websites. as well as the code, as well as the timeline of events we now know as history.
But there’s still one question which remains…
Who actually created the R̶i̶p̶p̶l̶e XRP protocol?
It’s almost as big a mystery as the identity of Satoshi Nakamoto.