Non-fungible tokens or NFTs have dominated the crypto market this year. With sales exceeding $ 2.5 billion in the first half of 2021, it’s no surprise that both the crypto community and mainstream creators are starting NFT in hopes of increasing sales and levels of interactivity increase. The rise of Metaverse has also fueled the adoption of NFTs and demonstrated the value of non-fungible products to major brands and social media platforms.

As NFT sales skyrocket, the Ethereum blockchain continues to dominate the space. For example, a recent report from Cointelegraph Research shows that Ethereum accounts for at least 97% of all NFT market sectors, including games, collectibles, and markets. It’s also interesting to note that blockchain analytics firm Moonstream found that around 17% of addresses control more than 80% of all NFTs on Ethereum, showing that massive inequality persists in the NFT market.

While that’s true, it’s important to note that unusable tokens are still a very new and primitive concept. Although Ethereum is currently dominating the market, there are still significant competitors.

For example, blockchain payments company Ripple recently announced an investment in the NFT Mintable marketplace, which allows the platform to integrate with the XRP Ledger (XRPL) so developers can sell their NFTs safely and efficiently. In addition, in September this year, Ripple raised a $ 250 million

Given Ripple’s recent entry into the NFT space, Cointelegraph spoke to David Schwartz, Ripple’s chief technology officer, at NFT NYC to learn about the company’s growing interest in crypto tokens. Schwarz also discussed other topics, including the rise of central bank digital currencies or CBDCs, the goals behind the wrapped XRP (wXRP) token, and Ripple’s upcoming roadmap.

Cointelegraph: Thank you for joining me, David. First, what did you discuss during your presentation at NFT NYC?

David Schwartz: My talk at NFT NYC is mostly about carbon-free NFT and energy consumption. Of course, we’re not going to tackle climate change in the blockchain space, but the least we can do is not make it much worse. It’s not about technology – we know how not to use so much energy, but simply how to convince people to use more climate-friendly technologies.

Cointelegraph: Ripple now allows anyone to create NFTs on the XRP ledger. Can you discuss this in detail?

DS: We were a little late for the party, but not too late. If NFTs are successful, we are all still early. We first started looking at how people were going to use NFT, and we found that a lot of the challenges people were facing was that the technology was still in its infancy.

“Any company that wants to get into this area needs a lot of specific know-how, which is not a good way to grow. So we’re focusing on building this stuff. In addition, money is sometimes an obstacle. “

Sometimes when someone has a good idea with the right tools and the right team, they just need more money to scale. We can help them master this to prove that the technology works the way they want it to.

Cointelegraph: You also mentioned that the XRP Ledger is energy efficient. Can you explain why that is?

DS: Well the reason proof-of-work or PoW systems like Bitcoin (BTC) and Ethereum (ETH) consume energy is because they are specifically designed to create artificial scarcity. You’re going to want artificial scarcity when trying to capitalize on something that needs to be in short supply. You also need artificial scarcity for something to have value, and you need to convince customers that the scarcity is not artificial.

So PoW creates artificial scarcity by using something scarce, namely energy. However, when energy is used entirely to create artificial scarcity, it increases costs. The only reason you’d want to do this is when you are low on cash. Only those who receive these fees promote this technology.

Nobody receives transaction fees in the XRP Ledger, so nobody wants high fees. The fees actually include the transaction processing costs. The fact is, the XRP Ledger works fine without artificial scarcity.

Cointelegraph: Are There Other Benefits Of Using XRP Ledger For NFT Compared To Ethereum?

DS: Well, one of them is scalability, or the number of transactions per second. There are things you can do on Ethereum, although you can’t do it on the XRP ledger. Because of this, a lot of decentralized finance (DeFi) activities are taking place on Ethereum today. You can do almost anything you can think of, for example with loans or TradeFi or mortgages and betting. We don’t have these features on XRP Ledger today, but you can mine NFT.

We don’t have these features on XRP Ledger today, but you can mine NFT. We also have a decentralized exchange (DEX) and you can issue new tokens. Paying is cheap and fast, so to some extent it is a fundamental technical compromise.

“If you want to do everything, then you cannot be good at anything. The XRP Ledger has a list of things that it does really well. If you need any of these, that’s great. But if one isn’t what you need, you’ll have to move on to something more general. “

Part of the speed and low transaction costs of Ethereum is that you can build more resilient technologies on top of the blockchain. Most people building on the XRP ledger do complicated things, but for technical reasons they don’t need those things to be right on the ledger.

Cointelegraph: What are the best use cases for someone looking to build an NFT on the XRP ledger?

DS: Nowadays the use cases are mostly collectibles. With the XRP ledger, the cost is much lower. So if you are building an NFT on Ethereum it must be worth at least $ 500 and even then the fees will be close to $ 100. The fees for the XRP ledger are much lower and that allows for more use cases.

I think most of the use cases today are generally collectibles, like works of art, things related to digital art, things related to musicians. But I think over time we will see the NFT market grow.

Cointelegraph: I’d also like to talk about packaged XRP. Can you elaborate on that?

DS: Wrapped XRP is an asset designed to track the price of XRP. For every packaged XRP, there is an XRP somewhere tied to an ecosystem that keeps that XRP locked until the XRP is packaged for free. The idea here is that you should keep a close eye on the price. Wrapped XRP behaves similarly to XRP. For example, if you are only using XRP for movement in value and you have something of equal value, these will act as a substitute in the market.

“The disadvantage of wrapped XRP is that you can’t move it cheaply and quickly to the XRP ledger like XRP. The advantage, however, is that you can use it in a DEX on Ethereum. “

For example, if you have 500 XRP to use in a DEX and you can’t do it at any cost today, Wrapped XRP can help you get the tokens of XRP and the semantics of Ethereum. This will prevent XRP from being locked by functions. We can expect Wrapped XRP to launch in December.

Cointelegraph: What’s Next for Ripple?

DS: We did our best for CBDCs. What is interesting is that there are a lot of people in this field who really don’t know what CBDCs are capable of. Our vision is to envision that every financial institution in the world can pay for every fiat currency with every other financial institution in seconds. It’s huge, but it takes interoperability and security.

“If you want to build such a large payment system, you need a security model that is not easy to use and blockchain has practically no security problems.”

Another feature is interoperability. For example, the United States cannot build such a system because Saudi Arabia will not use it. But if Saudi Arabia builds a system and the US builds a system, then there has to be a standard of interoperability. Otherwise, banks in the US cannot pay euros with banks in Europe.

Another thing we’re working on is linked side chains that allow assets to move freely between blockchains. Wrapped XRP is an example of this as it allows XRP to move between the XRP ledger and etherem, but these are key solutions to certain problems. The advantage of solutions to a specific problem is that they enable some type of innovation that is currently not possible.

Related: Beyond the NFT hype: Creating sustainable business models for artists

If you want Ethereum Smart Contracts today, you have to build on a blockchain with Ethereum Smart Contracts. You also need to follow rules such as: B. how big a smart contact should be. Therefore, you cannot be innovative to the extent that these rules are changed. What federated sidechains do is that you can innovate at the lowest level so that users can build a blockchain with whatever fees and assets they want. It can be public or private, and it can be short-lived for real money.

This is ideal for developers who …

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