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Ripple CTO Discusses the Feasibility of Gold-Backed Digital Assets

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Ripple CTO Unveils Current XRPL Capabilities and Future Plans

Ripple’s Chief Technology Officer, David Schwartz, recently addressed the complexities involved in building decentralized digital assets backed by gold. Known for co-creating the XRP Ledger and XRP tokens, Schwartz shared insights during a discussion on X, responded to a user’s query about the feasibility of creating such an asset without centralization. 

It’s Really Hard to Do

Schwartz was quick to respond, emphasizing the significant challenges in developing a decentralized, gold-backed cryptocurrency. According to him, it is more practical to create a crypto asset pegged to gold rather than backed by it. 

Related article: Ripple CTO’s Claim on Satoshi Nakamoto’s XRP Holdings

He explained that in this scenario, the crypto would be “backed with tokens but overcollateralized,” making it resemble an algorithmic stablecoin rather than being directly tied to physical gold. He cited DAI as an example of a crypto asset pegged to the value of gold.

To truly back a cryptocurrency with gold, Schwartz highlighted the need to decentralize the asset’s backing. This would involve a partner holding the gold, stored in a legally regulated location, which could lead to its seizure. He questioned the need for gold in this situation, leaving the conversation open-ended as the user didn’t reply.

In other developments, Ripple celebrated a significant legal victory against the Securities and Exchange Commission (SEC) this week. Ripple’s CEO, Brad Garlinghouse, announced that the court had drastically reduced the fines and penalties the SEC sought from $2 billion to $125 million. 

Related article: Ripple CTO Endorses RLUSD Stablecoin as Beneficial for XRP

Initially, Ripple offered to pay $10 million, but they accepted the court’s final ruling. Ripple’s co-founder, Chris Larsen, also commented on the win, stating that the SEC’s aggressive actions against Ripple are now over. 

He expressed hope that this marks the end of the regulatory crackdown on the cryptocurrency industry. Following this news, XRP surged by 25%, reflecting positive market sentiment.

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Cryptocurrencies have rapidly gained prominence in the global financial landscape, revolutionizing how we perceive and utilize currency. With the rise