XRP News: Ripple CTO Defends Clawback Feature On The XRPL
October 06 2023 - 7:00AM
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Ripple’s Chief Technology Officer (CTO), David Schwartz, has always
been quick to come to the defense of the crypto firm and its
technology. This time, he has defended Ripple developers
implementing a newly proposed ‘Clawback’ feature on the XRP Ledger
(XRPL). Why The Clawback Feature Is Necessary In a tweet
shared on his X (formerly Twitter) platform, Schwartz mentioned
that while initially having reservations about the feature as he
felt it was “redundant,” he later realized its importance as it
differed from the existing freeze feature. The “clawback”
amendment is now eligible for voting. This allowers issuers of new
assets specifically created with this feature enabled to claw back
a specified quantity of the asset from a holder. Some thoughts: …
https://t.co/OmrerirRQz — David “JoelKatz” Schwartz (@JoelKatz)
October 2, 2023 As the name suggests, the Clawback feature allows a
token issuer to “claw back” tokens when there is fraudulent
activity or for recovery purposes, like when a user loses access to
their account. Related Reading: Bitcoin Investment Strategy:
Analyst Sets Hefty Exit Price He noted that the clawback feature
was primarily to be used to fulfill legal obligations, as in the
case of a stablecoin issue fulfilling their redemption obligations
or where a court order necessitates the need to use such a
feature. From this premise, he explained that this feature
ensures that this event is represented on the ledger, unlike the
freeze feature, which doesn’t highlight why an asset was frozen. As
such, this latest feature allows for better accountability and
makes audits less complex. Furthermore, he mentioned that the
freeze feature was more of a “nuclear” option, unlike the clawback
feature, which does less damage and can seen as a viable and
probably better alternative. Schwartz reiterated that this
clawback didn’t apply to XRP and suggested that it was an option
for stablecoin issuers, noting that other “blockchains that have
stablecoins on them have some version of this clawback feature” and
how it helped solved an accountability problem. Token price
retains $0.52 support | Source: XRPUSD on Tradingview.com XRP
Ledger Feature Receives Cold Reception Despite Schwartz’s
justification of the feature, many still showed displeasure with it
as it undermined the ethos of decentralization and users’ privacy.
One X user (@bigcjat) explained that a clawback feature seemed more
drastic, unlike the freeze feature, as the former stripped users of
their tokens, unlike the latter, where the user still maintained
control of his tokens. He went on to quiz whether this token was
simply proposed because of the ‘recent partnership’ considering
that the feature was never proposed before now. He then suggested
that the crypto firm and its blockchain may have been compromised
as he stated, “Money taints, even decentralized ledgers. In
response, Schwartz stated that, to the best of his knowledge, the
driving force behind this feature was to ensure accountability as
it would reflect the legal obligation of an issuer. He is not aware
of anyone stating that they will only partner with Ripple if the
XRPL supports clawback. Other users weighed in on the
conversation, with some showing support for the feature, stating
that stablecoin issuers needed to implement such a feature. On the
other hand, others argued that the clawback feature wasn’t
necessary, with a particular user stating that this risk is “akin
to being SIM swapped.” Another concern raised is that token
issuers could use this feature maliciously, especially when
experiencing financial difficulties. That particular user gave an
example of FTX being able to claw back their FTT tokens or a
stablecoin issuer like Tether clawing back their USDT tokens in the
event of financial difficulty. Related Reading: Analyst Who Put
Bitcoin Price At $130,000 Says You Should Buy BTC Now, Here’s Why
The X user @bigcjat once again came into the conversation and noted
that Schwartz’s talks about “legal obligation” only undermine the
essence of blockchain technology as there was no need for a ledger
if the “actual value” and “rules” were off the ledger. However,
Schwartz noted “several benefits” to putting these transactions on
the ledger. One of them is that a public blockchain ensures that
“the total legal obligations of the issuer can be completely public
in a verifiable way.” The clawback feature will still need to be
voted on by validators on the XRP Ledger before it becomes
implemented. Once implemented, stablecoin issuers must decide to
enable it before they can create their tokens on the network.
Featured image from Bitcoinist, chart from Tradingview.com
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