Ripple CTO: Miner rewards undermine blockchain security

David Schwartz, Ripple’s chief technology officer emeritus, posted a recorded Stanford lecture on X explaining why block-production rewards can undermine blockchain security. The lecture outlines the reasoning behind the XRP Ledger’s decision in 2012 to operate without payments for producing ledger entries.

Schwartz said Proof-of-Work mining creates a security model in which honest participants must spend more than potential attackers to keep a network safe. He described competitive mining as a force that pushes operators to cut costs and seek additional revenue streams tied to block production.

The talk includes examples of validators who test, reorder or otherwise exploit transactions to capture profit before finalizing blocks. Schwartz presented those behaviors as incentives that divert operator priorities away from users, leaving network users to bear security costs through higher fees.

Schwartz described the XRPL approach as an alternative. Validators on the XRP Ledger do not receive block-production payments; instead they participate because they benefit from reliable consensus. On the ledger, validators choose between equally valid transaction orders and there is no obvious extractable value tied to block production.

“The best incentive is no incentive,” Schwartz said in the lecture, summarizing the design principle. He also warned that competitive pressure can reward opportunistic behavior, saying, “You have to be evil or you lose,” when describing systems where validators can extract extra value.

Ripple and Schwartz contend the no-reward model yields lower fees and faster confirmations and reduces opportunities for value extraction that have affected trading on some other chains. At the time Schwartz referenced market figures, XRP traded near $1.47 and Bitcoin near $81,220.

The lecture was delivered at Stanford and shared publicly on X. Schwartz noted the argument is part of ongoing industry debates as Ethereum remains in proof-of-stake operation and Bitcoin faces a future where transaction fees will play a larger role if block subsidies decline.

Schwartz suggested wider industry interest in no-reward designs may depend on how decentralized finance protocols and users respond to continuing losses tied to miner and validator value extraction in 2026.