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Only the third party issued tokens have counterparty risk i.e you trust the issuer to redeem them somehow. Is that different than an ethereum ERC20 token? The n
by sethgecko 9y ago
Only the third party issued tokens have counterparty risk i.e you trust the issuer to redeem them somehow. Is that different than an ethereum ERC20 token? The native asset itself (XLM) has no counterparty risk.
> The only networks capable of providing fast, cheap, worldwide payments are decentralized protocols without trusted third party intermediaries, like Bitcoin (Bitcoin Cash) and Ethereum.
IMO it is a trade off between degree of trust and scalability. Bitcoin requires no trust but has a costly PoW consensus algorithm which does not allow instant transactions and has a very low tps limit. You can't have both (unless someone comes up with a better consensus mechanism)
- CryptoPunk 9y agoXLM and everything else on a ledger like Stellar's has counterparty risk, because consensus on these types of ledgers is established by a set of trusted third parties. The TTPs are counterparties, and if they fail, the ledger fails. >>IMO it is a trade off between degree of trust and scalability. In my opinion, the right approach to managing this trade-off is to build more centralized platforms on top of the decentralized base layer. That way they have a highly immutable/trustworthy base layer they can all interact on. An example of this approach is the POA Network, which uses a set of US public notaries to run high throughput validator nodes for a permissioned instance of Ethereum. This permissioned ledger is a side chain of the Ethereum main chain, which can interoperate with it, and has the advantage of being able to scale to 1000s of transactions per second. One could envision multiple trusted or semi-trusted ledgers operating on top of a decentralized ledger that acts as the settlement layer.