In September last year, shortly after David Schwartz became Ripple Labs’ CTO, Forbes ran a flattering piece about him, titled “Ripple’s Trillion-Dollar Man”. A transparent attempt at promoting Ripple, XRP, and David Schwartz himself, this article gave un a rare insight into David’s story, and involvement in Ripple.

David Schwartz’ Involvement In Ripple

David’s affair with Ripple Labs began even before the company was born. He was at the origin of XRP (the coin), in the sense that he wrote most of the code for it. It’s unclear how many XRP David Schwartz currently owns. He was left out of the original XRP distribution, which gave 80 billion coins to the company, and 20 billion to the official founders: 9.5 billion coins to Chris Larsen and Jed McCaleb each, and 1 billion coins to Arthur Britto. If David owns any XRP at all, he acquired it later on.

Either David Schwartz didn’t believe in XRP after he almost single-handedly created it, or he was screwed out of his share by people more business-savvy than himself.

Despite not being treated as a founder (as per the initial coin giveaway), and only owning 2% of Ripple Labs’ stock, David was instrumental to the company’s rise. He’s a prolific contributor on forums like and above all Twitter, where he’s adulated by the notorious XRP Army, notably its “generals”, Dr. T and Tiffany Hayden:

Forbes’ piece tries to paint an image of David Schwartz as a great communicator, stating:

His widely read JoelKatz blog is subtitled “Democracy is vulnerable to a 51% attack,” an allusion to the tipping point at which one party could gain majority control of a cryptocurrency, no longer making it decentralized.

In reality, David only managed to publish a grand total of 15 posts over the course of two and a half years, starting with an apology for writing so little:

Twice before I tried to start a blog. Each time, there was some specific thing I felt I needed to comment on publicly and none of the existing channels I had were really suitable. Each of the two previous times, the post count never got above three before I got bored and forgot I had a blog.

… and including among them such amazing pieces as

or even a post by his wife (or so I understood):

In reality, David Schwartz is everything but the great communicator Forbes describes him to be. He’s extremely camera-shy (watch this cringeworthy promotional video of Asheesh Birla, Ripple’s Product SVP, trying to harvest words out of David’s mouth in an attempt to promote the newly appointed CTO). The few times he ventured to talk about Ripple’s business, he dropped the biggest bomb ever about its inner workings, that’ll haunt the company to its last days:

“After all, the reason we’re doing this is to increase demand for XRP to increase the value we can extract from our stash of XRP”.

David Schwartz, Ripple’s CTO

(Yes, this was David blurping out Ripple’s real business model: pumping and dumping XRP coins on clueless bagholders.)

Yet, David is very confortable in the role of a supporting character, writing tech-oriented answers to other people’s posts and tweets. This made him a central character in Ripple’s communication strategy.

Ripple’s PR strategy: talk about anything but our business

Ripple is purposefully vague about its business plan or the adoption of it’s tech. The reason is simple: its grand idea of revolutionising cross-border settlement doesn’t work, won’t work, and can’t work.

Forbes’ article quotes David saying:

“We want to create a payment network like SWIFT. But one where the settlement, the actual movement of money, the actual plumbing underneath the surface, would be a decentralized, open network,” Schwartz says. “The endgame is just money moving invisibly, as easily as information.”

David Schwartz for Forbes

This is revealing of how little David really knows about banking and payments. SWIFT isn’t a payment network, it’s a messaging service. As per Wikipedia:

SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other.

Nonetheless, Ripple claims that XRP coins will be used by banks for fast and cheap transfers, in a scheme where everyone will buy XRP, transfer, and then sell these XRPs for whatever currency they want to get on the other end, using market makers.

Ripple’s dreamt-up “solution” solves nothing, however, because the bottlenecks in cross-border transactions are not at the transaction level. Money transfers are expensive because banks have to perform KYC (know your client) and AML (anti-money laundering) obligations, which are time-consuming and require a lot of manual work.

For this reason, Santander’s widely publicised iPhone app, One Pay FX, which uses Ripple’s technology, only works for transfers of less than £1,000, and only from and to Santander-based accounts.

Ripple, and David Schwartz, are very well aware of the true state of things. David wrote multiple times about the “war on cash”, stating that:

Well, yeah, but these are the rules, right David? You wouldn’t start a plane startup trying to avoid the rule of gravity, would you?

For these reasons, Ripple’s can’t communicate about its business model, or adoption, because it has none.

Enter David Schwartz.

Passionate about coding and the inner workings of a technology he himself invented, he doesn’t care that this technology serves no practical purpose. Like all programmers, he likes to write code for the sake of it, and talk about the code he wrote. Just watch this video of him talking about tech stuff, see how confident he is, and compare it with the previous interview of him as the new CTO or Ripple.

David creates tons of tech-oriented content on Twitter that can’t be criticised, because it’s objectively true (although useless). He looks like a nice person, never attacking anyone, so he’s a perfect anchor for the XRP Army’s attack hounds.

Thanks to David, Ripple always seems to be very active, despite reaching no measurable milestones in terms of usage or adoption of its technology for anything more than trial runs and proofs-of-concept.

What’s in it for David?

David Schwartz didn’t get any XRP coins at the founders’ giveaway. He probably didn’t believe the coins would ever be worth anything. He wasn’t alone. Ripple’s last founding round, as recently as in September 2016, valued the company at “only” $400 million, as XRP’s market cap stood at around $250 million. It took a lot of PR efforts, and an unexpected blow-out bubble in everything crypto, to pull XRP and Ripple from under the radar.

The Forbes piece points out that when one values Ripple on the basis of its XRP holdings, David Schwartz’ 2% stake is worth around $90 million. It pales in comparison to what the other founders got out of this winning lottery ticket. For instance, Jeb McCaleb, who left the company shortly after XRP was released, and to which he had contributed close to nothing, was recently raking in $150,000 per day from his XRP holdings.

I don’t think David is in it for the money. His passion for everything technical, for the unnecessary complexity of his creation, shows that he truly enjoys the intellectual challenge he has created for himself.

However, seeing all the others piggybacking on his own work (not only does Jeb McCaleb take in millions every month selling coins David has created, he has also created Stellar, a competing startup using David’s technology), must take a toll. In my opinion, promoting him to CTO was a way of rewarding his efforts, and acknowledging his online influence and contribution to Ripple’s brand.

Ironically, had David created something much less complex and much more functional, Ripple would never had been able to shroud itself in sophistication and crypto wizardry, and keep dumping billions of essentially worthless XRP coins onto naive investors, which has become its newfound and sole source of revenue.

One way or the other, without David Schwartz, Ripple would be nothing.

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  1. That ended up being a nice tip of the hat to David Schwartz, who by all accounts does seem like a decent chap stuck working at a spin factory. The fact that he was honest about XRP’s goal (which, to be fair, seems to be the goal of every project in crypto) underscores that.

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