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Ripple Chief Technology Officer (CTO) David Schwartz has shared his take on whether it is easy to build a decentralized digital asset backed by gold.

Aside from being Ripple’s CTO, Schwartz was among those who created XRP Ledger and XRP tokens.

Decentralized gold-backed crypto? "It's really hard to do"

An X app user asked David Schwartz whether it is possible to create a digital asset backed by gold and make it not centralized. The Ripple CTO eagerly responded to that, saying that “it’s really hard to do.”

Schwartz believes that rather than backing a crypto with gold, it is rather possible making it pegged to gold. If this is the case, the crypto asset would be “backed with tokens but overcollateralized.” Therefore, it would be not really backed by gold but “more like an algorithmic stablecoin.” He gave a good example — DAI pegged to the value of gold.

In order to actually back a crypto asset with gold, Schwartz revealed, the creator would need to find a way to decentralize the backing, i.e., one of the partners has to hold the gold and the gold must be stored somewhere that would be “subject to some legal jurisdiction that could seize it.” Here, the Ripple CTO asked why it is so necessary in this case for the crypto asset makers to have gold at that point, but the “conversation partner” made no response, leaving the discussion suspended.

Ripple celebrates major victory against SEC

Earlier this week, the Ripple Chief Executive Brad Garlinghouse spread the word about another major victory of the company over the Securities and Exchange Commission in court. After the regulator asked for Ripple to pay them $2 billion in fines and penalties, the judge ruled that this large amount must be reduced by 94%.

Eventually, Ripple was ordered to pay $125 million instead of $2 billion. Initially, the Ripple team offered to pay $10 million but they agreed to the court’s decision.

Aside from Garlinghouse, Ripple co-founder Chris Larsen also commented on this vital event for the company. Larsen tweeted that “The SEC's unhinged campaign against us is finally over” and also expressed hope that the war of U.S. regulators initiated against the cryptocurrency space is finished too. Yesterday, XRP skyrocketed by 25% on the news.