Ripple CTO: XRP Value Comes From Speculation, Not Utility

David Schwartz, known online as “JoelKatz,” reframed the fundamental purpose of XRP by emphasizing its role as the only asset on the XRP Ledger that exists without counterparty risk. In blunt terms, Schwartz presented users with a choice: “Do you want to use a blockchain where people can be their own bank and no middlemen tax their transactions or do you want to be someone else’s bank and tax their transactions? If you want the former, there’s XRP.” This positioning establishes XRP as fundamentally different from other assets on the ledger, which represent IOUs from issuers, banks, or gateways.

Schwartz made explicit what Ripple has long implied: “XRP is the only asset without a counterparty that can be accessed by every account in every jurisdiction with no risk of default, freeze, or clawback.” This universal accessibility and immunity from third-party intervention forms the core of XRP’s value proposition. Unlike tokens that represent promises from financial institutions, XRP exists natively on the ledger without an issuer, moving between accounts without requiring permission or facing the threat of seizure.

The economic significance of this special status cannot be overstated. Schwartz argued that “XRP’s special place on XRPL ensures that XRP will capture some of the value XRPL transactions generate.” This represents a departure from the explicit extraction mechanisms common in other blockchain protocols, where fee switches, burn mechanisms, and staking capture are designed to transfer value directly to token holders.

Schwartz drew a sharp distinction between the XRP Ledger’s design philosophy and the dominant 2020-2025 crypto playbook of explicit value extraction. While many modern protocols are built to tax users through various mechanisms, Schwartz described XRPL as a public good rather than a rent machine. He explained this using an eBay analogy: “When you ask what eBay is good for, you normally don’t think about it being a good way to enrich the people who invest in eBay. You think of it as a way of bringing buyers and sellers together with the buyers and sellers wanting the costs to be as low as possible.”

Applying this logic directly to XRPL, Schwartz stated: “I think of XRPL as a public good that doesn’t tax people who want to use its capabilities. I am not arguing that it is the best design or even that it’s better than most other designs. But it is different. XRP really is about being your own bank and having no middlemen passively taxing your transactions.” This philosophical stance creates what Schwartz acknowledges as an “economic tension” – if the ledger isn’t designed to skim value from users, how does XRP appreciate in value?

Schwartz’s resolution to this tension lies in XRP’s unique role as the universal settlement asset. He contends that XRP’s position as “the only universal, non-freezable settlement asset on XRPL is itself enough to force some level of demand if XRPL becomes important infrastructure.” In other words, the ledger doesn’t need to tax transaction flow for XRP to matter economically – XRP matters if the ledger matters.

In perhaps his most revealing comments, Schwartz admitted that the current market is pricing cryptocurrencies based on future expectations rather than present utility. He stated unequivocally: “The funny thing is that I think that most of the value of most cryptocurrencies comes from expected future speculation. So if what you care about future price changes, what people think will happen is much more important than what has happened.” This acknowledgment stands in stark contrast to the utility-focused narratives often promoted by cryptocurrency projects.

Schwartz pointed to Bitcoin to make his argument unavoidable: “Look at bitcoin. Most of the current investment thesis is something like, ‘Imagine if most companies start storing 1% of their treasury in bitcoin, what will that do to the price?’. What that’s saying is that in the future, more people will speculate on future price appreciation than speculate currently.” He went even further, noting that “It’s not even based on expected future utility, it’s based on expected future speculation! I want to believe utility matters, I really do.”

This creates what Schwartz describes as a reflexive market dynamic, where people buy because they believe other people will eventually buy for the same reason, creating a self-reinforcing cycle of expectation. Against the objection that tokens should be worthless until utility materializes at scale, Schwartz argued that “markets continuously reprice probability, not outcomes.” He explained: “There may come a day when we look at today’s cryptocurrency values as, in comparison, nothing. But the idea that values will be very low and then suddenly rise is just not how speculation works. As the probability of explosion or size of expected explosion grows, value follows.” At the time of his comments, XRP traded at $2.48, reflecting this speculative pricing mechanism in action.