David Schwartz (데이비드 슈워츠), a former chief technology officer at Ripple, criticised the block production reward structures of Bitcoin (BTC) and Ethereum (ETH), saying they create distorted incentives rather than strengthening network security. He argued that both proof-of-work (PoW) and proof-of-stake (PoS) systems lead participants to prioritise "profit maximisation", which can clash with users' interests.

BeInCrypto, a blockchain media outlet, reported on May 13 that Schwartz recently re-shared a video of a past Stanford University lecture and again highlighted problems with blockchain reward structures. He described the lecture as "something everyone in the crypto industry should watch" and introduced it as key material explaining the early design philosophy of the XRP Ledger (XRPL).

Schwartz's main criticism centres on the proof-of-work mining structure. He said Bitcoin's mining system forces honest participants to spend more than attackers. He described that structure as "possibly the worst security model imaginable".

He said block production rewards fuel excessive competition between miners and validators. He argued that network participants try to survive by cutting operating costs to extremes and maximising additional revenue available in the block creation process. He said this gradually separates the interests of users and block producers.

He cited the behaviour of Ethereum validators as an example. Schwartz said a structure has formed in which some validators gain additional revenue by testing transactions in advance or rearranging their order before blocks are finalised. He pointed to the so-called MEV (Maximal Extractable Value) problem.

He said, "If you don't become evil, you lose," arguing that in reward-focused systems, participant behaviour can be driven toward profit maximisation rather than honest operation. He said network users end up bearing security costs through high fees, while block producers extract additional value in the process.

Schwartz said this structure applies to both Bitcoin miners and Ethereum stakers. He said both systems are sustained because there are protocol-level economic rewards, and they do not necessarily align with user interests such as low fees and fair transaction processing.

As an alternative, Schwartz presented the principle that "the best incentive is no incentive." He said that when the XRP Ledger was designed in 2012, it intentionally did not include block production rewards. Instead, it chose a structure in which participants who directly benefit from stable network operations voluntarily take part in validation.

According to Schwartz, XRP Ledger validators merely choose one of several equally valid transaction orders and cannot extract separate material gains from the block creation process. He said this reduces financial incentives for network attacks or validator collusion and, as a result, enables lower fees and faster transaction confirmation speeds.

He also said it can be relatively resistant to value extraction structures that have repeatedly been flagged as problems on Ethereum decentralised exchanges (DEXs).

The debate also coincides with a time when Bitcoin, over the long term, must increase its reliance on transaction fees after block subsidies decline. Ethereum is also seeing a deepening validator-centred structure after its transition to proof of stake.

The market sees Schwartz's remarks as likely to re-ignite discussion over how major blockchain networks will adjust block production rewards and value extraction issues in the future. It said a key point to watch is how much the decentralised finance (DeFi) ecosystem can ease the MEV problem.