The early days of blockchain were defined by visionaries who saw beyond the limitations of existing systems and dared to build something better. In a revealing conversation on the Block Stars podcast, David Schwartz—widely known by his online handle JoelKatz—and Stefan Thomas, former CTO of Ripple and current CEO of Coil, reflect on their shared journey through the evolution of decentralized technologies. From Bitcoin’s foundational roots to the creation of the XRP Ledger, Codius, and Interledger Protocol (ILP), their dialogue offers a rare glimpse into the minds that helped shape the future of digital value transfer.
The Genesis: From Bitcoin to XRP Ledger
Before their work at Ripple, both David and Stefan were deeply involved in the Bitcoin ecosystem. Stefan contributed to BitcoinJS, a JavaScript implementation of Bitcoin, while David engaged with Bitcoin Core as a C++ developer experienced in applied cryptography and distributed systems. They participated in early discussions on the Bitcoin forum, helping solve technical challenges and exploring ways to improve the network.
While inspired by Bitcoin’s decentralization, they quickly recognized its constraints—particularly around scalability and governance. Proposing changes in open-source protocols like Bitcoin requires broad consensus among developers and node operators. Major upgrades, especially hardforks, pose significant risks: failure to upgrade can result in invalid blocks and potential fund loss. As a result, hardforks are reserved for critical fixes, leaving many beneficial improvements stalled indefinitely.
In 2010, a "hardfork wishlist" outlined desired enhancements—features like multi-currency support and improved transaction speed—that many developers believed would elevate Bitcoin. However, progress was slow. As both David and Stefan recall, implementing these changes could take up to 30 years—or never happen at all.
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This stagnation became a catalyst. Alongside Jed McCaleb and Arthur Britto, David set out to create a new system: one designed from the ground up for performance, scalability, and flexibility. That system became the XRP Ledger—a reimagined blockchain built not as a fork of Bitcoin, but as its evolutionary successor.
For Stefan, joining what was then called Open Coin (later Ripple Labs) felt like stepping 30 years into the future. The XRP Ledger already supported features that were still dreams for Bitcoin—such as native multi-currency transactions—validating his belief in a faster, more adaptable financial infrastructure.
Smart Contracts and the Birth of Codius
As one of the first JavaScript developers in the blockchain space, Stefan earned recognition for bringing Bitcoin functionality directly into web browsers. His work on BitcoinJS even enabled browser-based mining—a bold step toward mainstream accessibility. He envisioned a "Netscape moment" for blockchain: a turning point where decentralized technology becomes seamlessly usable for everyone.
At Ripple, Stefan turned his attention to smart contracts—self-executing agreements coded directly into software. He prototyped a solution using Google’s Native Client, a sandbox environment designed to run native code securely in browsers. The idea was promising: developers could write smart contracts without learning new languages, leveraging existing tools.
However, a major flaw emerged: non-determinism. In consensus-driven blockchains like the XRP Ledger, every node must reach identical conclusions about transaction outcomes. If contract execution yields different results across nodes, trust breaks down. While some non-deterministic behaviors (like transaction arrival timing) are tolerable within XRP Ledger’s consensus mechanism, full unpredictability in contract logic is not.
David emphasized this point: “In a decentralized network, honest participants must agree bit-by-bit on what a contract does. Without determinism, you can’t tell who’s telling the truth.”
Another issue was architectural complexity. Embedding smart contract code alongside data sounded efficient but led to fragmented databases with poor interoperability—undermining core principles like determinism and security essential for payment systems.
These challenges led to a strategic pivot: instead of embedding complex logic into the ledger itself, why not separate concerns? The result was a three-tier architecture:
- A secure backend data store with minimal business logic.
- A stateless middleware layer handling services and inter-service communication.
- Flexible front-end applications built on top.
This modular design became the foundation of Codius, an open-source platform launched in 2013 for running stateless, distributed smart contracts. By decoupling execution from consensus, Codius preserved the integrity of underlying blockchains while enabling richer application logic.
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Interledger: Building a Universal Payment Layer
As Codius evolved, a new challenge arose: how to compensate hosts running code across a distributed network? A simple hosting model—where users pay service providers directly—made sense, but traditional methods like credit cards didn’t scale across decentralized infrastructures.
XRP offered fast, low-cost settlements, but the team wanted broader inclusivity. If Codius supported any blockchain or data store, shouldn’t payments work across any currency—fiat or crypto?
This question sparked the development of Interledger Protocol (ILP) in 2014. Led by Stefan Thomas and Evan Schwartz, the team aimed to create a neutral, open standard for payments with three key goals:
- Openness: Anyone can participate without permission.
- Scalability: Handle everything from large transfers to microtransactions worth fractions of a cent.
- Interoperability: Enable cross-currency transactions seamlessly.
ILP v1 was published in 2015. By ILP v4 in 2018, the protocol had matured into a robust solution capable of powering global payment networks—including integration with Codius.
Web Monetization and the Internet of Value
In 2018, Stefan founded Coil, a company built on Codius and ILP (its name is literally an acronym: Codius + Interledger). Coil leverages XRP for settlement and implements Web Monetization, a browser-based standard allowing creators to earn money directly from users without relying on ads or subscriptions.
To date, Coil has processed over 14 billion transactions, most valued at less than a penny—demonstrating ILP’s capacity for high-volume microtransactions. This achievement validates a decade-long vision: an open, interconnected Internet of Value where money flows as freely as information.
Frequently Asked Questions
Q: What is the XRP Ledger’s main advantage over Bitcoin?
A: The XRP Ledger offers faster transaction speeds (3-5 seconds), higher throughput (~1,500 TPS), and lower energy consumption due to its consensus mechanism, making it ideal for real-time payments.
Q: Why did Codius separate smart contract logic from the blockchain?
A: To maintain determinism and security in payment systems. Running complex contracts off-chain prevents performance degradation and consensus failures on the main ledger.
Q: How does Interledger enable cross-currency payments?
A: ILP routes payments across ledgers using connectors that exchange currencies in real time, similar to how routers move data across the internet—without requiring all parties to use the same currency.
Q: Can Interledger work with traditional banking systems?
A: Yes. ILP is currency-agnostic and can integrate with fiat rails, crypto networks, and central bank digital currencies (CBDCs), acting as a universal payment layer.
Q: Is Web Monetization widely adopted today?
A: Adoption is growing among independent creators and platforms. With browser-level support expanding, Web Monetization has the potential to transform digital content economics.
Q: What role does XRP play in Coil’s system?
A: XRP serves as the settlement asset due to its speed and low cost, enabling instant micropayments between users and content creators via ILP.
The journey from Bitcoin’s limitations to the creation of the XRP Ledger, Codius, and Interledger illustrates how thoughtful engineering and long-term vision can overcome technological inertia. These innovations aren’t just upgrades—they’re blueprints for a more open, efficient financial internet.
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Core Keywords: XRP Ledger, Interledger Protocol, smart contracts, blockchain scalability, Web Monetization, Codius, decentralized systems