Bitcoin Forum

So it looks like a P2P Ripple Exchange will be upon us shortly.  The founder of Mt. Gox, jed, has built a team and they are working on a global, p2p currency exchange that is minerless with "instant" confirmations.  The project will be open-source too.  How could this be a bitcoin killer?  From what I know about Ripple you can create/use any type of currency, so they could create their own cryptocoins.  They could distribute these coins by mathematically creating them and selling them in the exchange (instead of mining them.)  The benefits of this would be savings in electricity.  This is of course speculation by me, but since this project is opensource they have to make their money back somehow.  They would of course have to compete with Bitcoin, Litecoin, whatever-coin, etc...

How could this complement bitcoin?  Well, bitcoin could be used in the exchange as well as USD, Yen, or whatever currency.   You could use bitcoin to buy ripplecoins or vice versa.  Or you could use USD to buy bitcoins.

If someone here could explain how Ripple intends to have minerless instant confirmations it would be great.  Maybe Bitcoin can use this concept in the future.

From Ryan Fugger, the founder of Ripple:

A: Yes.

complementer

@OP: Ripple's instant confirmations are easy with a "central" server. Ripple is not a competitor of Bitcoin at all but a very very precious addition. Via Ripple you can exchange all currencies, gold, work-hours, bitcoin, etc. by building a web of trust with credit lines between nodes.

If now somebody wants to buy some bitcoins, I could send them to him instantly, stating in ripple that he owes them to me. Much closer peers in the network (aka my friends) now owe me back these bitcoins and I know they will give them to me some day because they again have friends that now owe them bitcoins all the way to the person that now has my bitcoins. If my friends give me some CLP, USD and a beer, I mark the debt as settled at my end.

As my credit lines are not unlimited, we still need to settle debts outside of ripple. Bitcoins will be one way to settle debts.

This getting big would be the greatest thing that could happen to get decentralized exchanges flying!!11

Edit: Ripple has many tricky aspects to tackle and I'm eager to see how they intend to solve them. Critical mass, exchange rates, fees, …
On the other hand it exists since a long time as a concept and I'm sure many smart people discussed it. I'm confident that if they are hiring people, they know what they are doing and wish them all luck.

Well we all know devs always think they are working on something awesome (else why would they do it?) ... but so far there is only rumours, i.e. vapourware at this stage.

Until we see some code and a working app. it's hard to know if it is either killer or complement of course. The chain of credit aspect always bothered me with the Ripple concept, a systemic insolvency would not necessarily become immediately obvious until the whole system collapsed in a cascading chain of defaults (much like the present financial collapse  :D) ... unless there was some kind of central or public ledger that was keeping a track of systemic solvency (like the BIS).

https://github.com/rippleFoundation
:)

Great to see this idea being worked on!

@ Killer vs. Complementer: It really comes down to how the concept is implemented. Could be both ways, although I think its more likely that it will complement bitcoin (e.g. by making it one commodity to pledge as security for credit lines)


You cant abolish fractional reserve banking with this. Neither with Bitcoin. At least I dont see a way how to.

It's a complement. Bitcoin is a very secure decentralized store of value, but Bitcoin transactions aren't perfect: they're fairly expensive, you need to wait for confirmations, being a full node is expensive, etc. Ripple is less safe (it's based on trusting people), but it doesn't have Bitcoin's transaction-related shortcomings. Combining the two systems might work pretty well.

jgarzik has mentioned using a Ripple-like system to exchange between fiat and BTC without using a centralized exchange. That sounds pretty cool.

I believe Ripple to be a type of self-issued credit, here is a good overview from Money as Debt 3 (~10 min segment) (https://www.youtube.com/watch?v=f6uuAupT4AQ&t=48m26s).

Bitcoin solves the honest money probolem. Ripple solves the exchange problem.

Now we will be able to exchange honest money with less chance of getting ripped off. Although owing money to your friends and family isnt conducive to healthy relationships   :D

Our scheme has a public ledger that is somewhat analogous to the Bitcoin blockchain.

What do you mean by: "honest money"??

The beauty of ripple (as I understand it) is, that you can decide with who you wanna have a financial relation (i.e. who you want to grant/receive credit (from)). If you dont want to burden your friendships, dont grant them credit. Go to a bank.

Ripple is not a currency in the same sense as Bitcoin is so it's not even competing exactly in the same space. Ripple and Bitcoin can complement each other possibly in a magnificent way. It is a system based on credit and web of trust. The credit that is extended using Ripple can be ANY currency essentially. Bitcoin is a great currency so there is a lot of potential here. With Ripple it would be possible to create a superb credit market for Bitcoin.

I think Bitcoin + Ripple could be very big. If the Ripple p2p implementation works, that is.

Agreed.  I would add that ripple (and I'm speaking of the original ripplepay.com concept...I'm not entirely sure what this new thing is yet) is two things:

a) a payment network
b) a method for keeping track of debt

Bitcoin does (a) very well already, but what is needed is (b) (as well as a "ripple like" peer to peer trading network).  If the method of keeping track of debt incorporated some of the concepts from Open Transactions (the way it uses signatures to prove balances without needing to maintain history), it would be super awesome.

Ripple and Open Transactions are more probably competitors :)

Maybe somebody can explain it to me in term of security? Assume I have build that awesome web of trust and I have an infinite amount of credit. What happens if my account gets hacked? Can the hacker leave me and my friends with an infinite amount of "debt"?

If it's all open source, then like a fine wine you can create a wonderful blend. ;)

Since i remember the kind of POS abortion mtgox was until Jed unloaded it on Marc before the 6/11 crash, i am not a fan of jed development. :D (...particularly, because his view was that those with a lot of Bitcoin to trade should be protected from the market forces within dark pools of  mtgox back then...)
 
I did like his idea of a minerless p2p cryptocurrency when he first brought it up (https://bitcointalk.org/index.php?topic=10193.msg146250#msg146250). It's great to hear that it's being morphed into a much-needed and long-awaited p2p implimentation of the promising project that Ripple is!

I think the ultimate would be Bitcoin+Ripple + OpenTransactionServer (https://bitcointalk.org/index.php?topic=53329.0) + whatever this guy meant by "perfect cryptocurrency" (http://teodesian.net/index.php?nav=7&post=projects/blog/14-Bitcoin:%20Hologram%20of%20Cryptocurrency.post), but 1-step at a time, i guess...

Anyhow, good luck, jed! Please put security first this time! 8)

Ripple is a higher-level framework to be placed on top of a more generic, lower-level framework like Open Transactions. Here's how you could implement Ripple on top of Open-Transactions:

https://github.com/FellowTraveler/Open-Transactions/issues/50 (https://github.com/FellowTraveler/Open-Transactions/issues/50)

Then I hope to see it early! ;D

I think Bitcoin is a Ripple killer. Ripple is an exchange network, based on a network of trust. I think Bitcoin has shown rather conclusively that trust just doesn't work. Thus, I think Ripple will become rather chaotic, and may fall apart, when large trust "nodes" (people with a lot of connections that ripple payments go through) decide to take the money and "exit the network," filling the web with holes.

I don't think we'll know if it can work until it is tried; it does seem to me that the incentives point the wrong way (if my doctor tells me I have six months to live maybe I decide I deserve to run up my Ripple credit to the max....) but maybe I'm just cynical (maybe there will be an equal or greater number of people who decide to give away all their money through Ripple instead of leave it to their deadbeat children).

Good luck to Joel and Jed and the rest of the Ripple team!

Bitcoin is scarce-money, Ripple is credit-money. They serve very different purposes.

I don't agree. Nothing like Ripple has been used anywhere before, including Bitcoin. It's not your run of the mill web of trust network. With Ripple it starts with your closest friends and you can clearly define the amount of trust, or credit in this case, that you trust them with. With Bitcoin there has been no good way of doing anything like that.

For example, I would trust some of my closest relatives and family, and some of my closest friends pretty much. I would give them, let's say, 20 bitcoins worth of credit. I trust you, Rassah, somewhat, and I might give you 2 bitcoins worth of credit. To total strangers I would give no credit but through the Ripple network they could benefit from my credit through the people that I give credit to, if there is a connection. The bigger the network, the better it works.

It's a really interesting system because you can set the limits very easily. It's smart to start with very small amounts at first and find out about the risks. Settling the debts can happen in any currency, Bitcoin for example, which is actually well suited for it.

I remember that thread...shortly after I happened upon Bitcoin I had similar thoughts.  Is it possible to design a Bitcoin like currency without the mining?  My conclusion was no, but maybe I'm wrong.  

As a recipient of a transaction, the fundamental question you are asking when deciding whether to accept it is whether that transaction is marketable.  In Bitcoin, you make that decision based on the transaction history in the block chain.  And, you make an assumption that Bitcoins are fungible (see taint analysis for more debate on the importance of fungibility).  If the fungibility aspect of a Bitcoin ever broke down, then you would be checking in with this or that miner or merchant to decide whether you'd accept a transaction.  If they don't accept the transaction, then you wouldn't.  So, if a powerful entity like Amazon.com decided to accept Bitcoin and then started employing some kind of analysis to selectively accept or reject a Bitcoin transaction, it's conceivable that it could destroy the decentralized nature of Bitcoin because so many people would want to check with Amazon.com before accepting a transaction...thus morphing Bitcoin into AmazonCoin.  Mining helps ensure this doesn't happen because there is a clear and simple protocol that people can use to validate a transaction that ultimately works better than a single entity, no matter how influential, from dominating Bitcoin.  Holders of Bitcoin, interested in preserving their wealth, would actively work to foil any taint analysis...they could spread tiny amounts of bitcoin around to random addresses...they could employ and encourage others to use mixers...etc.  And miners, seeing that the threat of AmazonCoin would render themselves irrelevant (why do you need mining if you just need to clear transactions through AmazonCoin?) would also take active measures to counteract AmazonCoin.  Amazon would be left with a choice, go off on a fork, or follow the Bitcoin protocol rules.

In the absence of mining, all you can do is check in with others as to the marketability of a transaction.  I don't see how that ends up being anything other than a completely centralized system or a balkanization with many different coins in different jurisdictions (AmazonCoin, AlipayCoin, UncleSamCoin, etc).

People also shouldn't worry about the energy consumption associated with mining.  I believe as the reward tapers off, we'll enter into a phase where many entities buy mining hardware for the express purpose of sitting idle until and unless needed to thwart an attempted attack on the network.  There will also be miners that get paid a subsidy from other businesses to ensure Bitcoin transactions remain free or very cheap (ensuring that mining without subsidy is a money losing endeavor).  There may even be treaties involved to negotiate how much mining power different entities apply and keep in reserve in order to simultaneously protect the integrity of the network and not needlessly waste energy.

I see ripple work for small amounts. I wouldn't trust many people with 100$ yet I might want to trade 100Ƀ. Or much more at times. The easier it gets to trade, the smaller the trades may get though.

@Gavin:
If I trust a friend with 20$ and I hear he will not be able to pay back his debt because his terminal cancer treatment is too expensive, I will not complain. I do trust him with this amount cause this is the amount I am willing to loose to him. If he came to me to ask for a much larger sum, I might be willing to give him more after careful consideration but the ripple credit lines are amounts I generally trust to get back but that don't kill me if I don't get them back.

Ironically, three years ago a local who frequently visited a restaurant I use to visit also, asked to borrow twenty dollars from me. I knew he was very sick and didn't have long to live, but loaned him the cash because I trusted him to pay it back, never taking into consideration at the time that he may be dead in few days, of said time frame he did succumb. Now, everytime somebody mentions Jimmy, I remark that the SOB still owes me twenty bucks. We have a quick laugh knowing that Jimmy wouldn't mind us making fun of this debt. In hindsight, I earned a many a mileage on that twenty buck loan, and expect to still collect dividends. In fact, that loan allowed be to add to this conversation. Only if I knew who ended up with his handsome antique gun collection.

~Bruno K~

I agree. I don't think Ripple will really work as a currency in itself. But I think it will work very well for more short-term debt, like instant transfers of small amounts of BTC, USD, gold, etc. that are actually settled later through the trust network.

That being the case, Ripple would bring further awareness to Bitcoin, and versa visa.

Don't give me no hippie currency.  If someone could run up a "friend's" credit this is going to be so much fail.

related: https://bitcointalk.org/index.php?topic=127604

While there is where the name "Ripple" came from, this is just one of the things you can do with Ripple. I personally think that, at least long-term, it's going to be what makes Ripple great, but you don't actually have to extend credit limits to your friends to use Ripple. And short-term, I don't think that's how people will primarily use Ripple. I wish I could give more details, but I can quote our public blurb:


Notice it doesn't mention anything about extending credit to friends, or credit at all for that matter.

Awww, c'mon Joel you're killing us with the suspense ... could it be used for business-to-business transactions for example?

i can already see what will happen. i see alot of people creating 5 usernames on ripple, then trade small amounts to themselves to get some rep rating. and then ask for large amounts from strangers.

then delete that username keeping the winnings.

i seen it happen alot on OTC people buying rep or just trading with themselves with small amounts just to then beg for large amounts.

hopefully ripple will atleast ask for real life information and ACTUALLY check it out through government databases and other verifiable means to ensure its all valid. eg sending a letter to someone's house with a verification code as a minimum.

but wait that wont happen, even BTCJAM has scam artists even with its so called verification process.

What is stopping you from giving more details?  I'm really curious how you've created a decentralized currency to compete with Bitcoin without the use of mining.  The use of proof of work to achieve distributed synchronization is an amazing innovation...I believe it will be adapted to many other contexts where distributed synchronization is required (database vendors are you listening???).  It's hard to imagine an alternative that doesn't quickly degenerate and become either centralized or balkanized.

What are you talking about? What rep? In Ripple (as I know it) there is no rep, there are only credit lines. If you are going to give credit lines to strangers that's your problem, not Ripple's. You are expected to only give loans to people you know.

That's the bad way to extend trust to strangers. There is a good way to extend trust to strangers though:

1) You see that these strangers have engaged in numerous real transactions such that the cost to create a fake set of transactions is more than $1.

2) You extend them about $1 of trust.

3) If you lose, you lose $1. No big deal.

4) As soon as this trust has made you more than $1, you increase your trust to $2.

5) Repeat, ratcheting up the trust such that at any time, if they default, your maximum loss is very, very small, way less than their cost to fake such an arrangement. Very quickly you'll reach the point where even the maximum loss they can impose on you is just a small dent in the benefits you've gotten.

However, again, if you don't find this convincing or this is not for you, don't extend trust to strangers. Unless the stranger is well-connected and liquid, there's no benefit anyway. And if they are, it's unlikely they'll abandon that just to rip off a few people for a few dollars. Personally, I believe that people will wind up extending significant trust to strangers and benefiting from it sufficiently that the occasional small loss will be well worth it. But not everyone agrees with me, and I recognize I may be wrong.

But loans are just one type of use.  If I am selling a used mobile phone and I accept Ripple for payment (e.g., I price it at 20 units) and you pay with Ripple credits (which you got in lieu of cash for fixing a neighbor's PC), then there is no lending at all in this scenario.

Now the lending concept comes in with regard to how fiat money is created.    But Ripple isn't fiat.  That's obviously the secret sauce that makes or breaks the concept so I guess we'll just have to wait to learn how Ripple.com intends to solve that.   Maybe Ripple's currency is something as simple as being shares that earn future dividends that come from transaction fees.   Who knows.  [Edit: Since this post it has been clearly described as being money created by debt -- loans extended by trusted parties.]

My curiosity is piqued though.

edit. too much speculation of what ripple is/isnt on this thread.

So, from what little I've seen of it, I'm guessing it basically functions the same as Bitcoin + OTC, except the users can't really tell the difference between money and credit, and whenever a loan defaults it just gets quietly converted into inflation.

http://ripple-project.org/Main/FAQ

http://www.hulu.com/watch/61320

Check out https://ripplepay.com
Same whois as ripple.com, so I guess that is their public site.

Could that be something?

The web content on ripplepay.com does not relate to the new Ripple system. It's still describing Ryan's system.

Ripple sounds like a great idea in theory, however knowing my friends and the relationships people have with their internet friends, I know that I wouldn't get involved in this sort of dealing.  People are unreliable, sometimes I have been broke as shit and unable to pay money I really should pay people.   Not because I'm not honest, not because I'm not their friend, but because I'm broke and a bit useless. If this sort of thing can disrupt a whole "ripple" of credit then the whole idea is doomed.  I love bitcoin because it takes ALL of the human element out of the currency.  I do not trust the stock market, I do not trust big business, and I do not trust the government to help me or to protect me from businesses out to scam me. I trust SHA256 encryption and I trust that bitcoin holders will protect their currency aggressively should any outsiders try to affect its value.

Issuing loans tends to cause price inflation. Repaying the loans tends to cause price deflation. Defaulting on a loan has the same effect as repaying it except faster.

That seems pretty clear. The impression I get is that of a decentralised clearinghouse/exchange.

If it's possible to answer, is Ripple still going to support any form of money, or will it have its own numeraire?

I don't think I can answer that question. On another note, what do you think of our logo?

http://www.ripple.com/img/ripple.png

your hulu link is for US viewers only. any other sources of accurate info on what ripple will actually consist of for us foreigners?

That was a link to an old Saturday Night Live fake commercial for "Shimmer", a product that's both a floor polish and a dessert topping.

Scherzkeks. The Logo lacks a Ƀ

Very interesting concept.

My answer is that Ripple is completely complementary to bitcoin. Ripple is *not* a currency; it is really just a sort of decentralized ledger that tracks debts between pairs of individuals. Ripple does not create fungible tokens that can be shifted trivially from one person to another. It could be complementary if a lot of people used Ripple to track bitcoin debts.

This is purely an accounting mechanism which makes it easier to track debt obligations than a Lending forum post; no need for everyone to post their lists of delinquent loans. Instead, if someone asks you for a loan, you could look at their ripple loan history. If they already have 500BTC in debt owed to 100 different individuals, then you would know they are either in over their head or are dishonest.

While you could argue that ripple works like bank notes, the difference is that there is no bank or central bank to make all debts equivalent. Example:

1. Bob asks John for a 10BTC loan.
2. Bob could send a 10btc "note" to John through Ripple while John sends Bob 10btc through the block chain.
3. John wants to buy a flashlight from ABC for 5btc. ABC accepts ripple notes *or* btc. He could either:
  a) Send 5btc to ABC. Now he is out 15btc, assuming he has the cash.
  b) Send 5btc ripple note to ABC, since he already has 10btc in notes from Bob. This puts more risk on ABC, who has to figure out if John's IOU is nearly as valuable as btc cash itself.
4. Bob pays back 10btc to John, then John sends the 10btc "note" back to Bob, thus zeroing their account with each other.
5. Now Bob has the cash to pay ABC when needed. However, if ABC really trusts Bob, they might treat his debt as good-as-cash. Thus, they might leverage this debt for their own transactions, and so the debt could get passed around to yet other individuals.

In theory, if you had a large number of lenders and borrowers with a high degree of trust, then you could have have people lending to dozens of counterparties and rarely demanding actual cash (btc). Then ripple notes for btc would be equivalent to USD loans, or even dollars themselves, which is debt owed by the government. It could be cheaper or more convenient to just trade debts rather than swapping raw bitcoins, and ripple would presumably allow you to easily sum up all your notes to know if you are a net borrower or lender.

While ripple might eventually be a great alternative to bank loans, it is still a debt system. Any debt system could collapse when there is a "run on the bank." With ripple, a run on the bank would happen when everyone decided they wanted to call in all their debts from a large borrower. Only then would you know if there was actually enough BTC currency to back the debt. Chances are the answer would be no; debt systems lend themselves to fractional reserves.

I believe Shakespeare said, "Neither a lender nor a borrower be." It seems that the spirit of bitcoin is to create an inflation-resistant currency and to shun debt-backed money systems which could fail. Decentralized debt systems could fail just like centralized ones, though the risk is more distributed. Ripple could be useful for digital distributed debt tracking, but it would not hurt bitcoin anymore than a collapsed bank would hurt the value of gold.

Intriguing :)

Bitcoin mining energy consumption is miniscule compared to the loss of human life and loss of productivity caused by existing national currencies and their management teams of killers, thieves and kidnappers. If bitcoin would replace this bankster money the quality of human life would flourish to a level never before seen and the gain in productivity would dwarf its energy cost. it can't come soon enough.

For me there is no doubt both networks will be complementary. Ripple is obviously influenced by the fact that most of the team members come from a Bitcoin background. Bitcoin-related use cases are very much a priority. That's all I wanna say lest I get in trouble. ;)

What I can tell you is that this project is the most fun I've had at any startup. The team is absolutely amazing and working on something like this and getting paid for it is a dream come true. :D

(Speaking of which - if you've got the skills, we're hiring (https://bitcointalk.org/index.php?topic=108782).)

As far as the client is concerned, it's already open-sourced, so if you're bored waiting for more details to come out, feel free to check in on our progress: https://github.com/rippleFoundation/ripple-client/commits/master

If there's a run on the bank, you may be unable to meet immediate demands for called in debt. But you can simply issue notes worth more than the called in amount. This will bankrupt *you*, but that's the risk you take when you implement a fractional reserve. Those who loaned you money won't suffer.

For example, say I have $10,000 in deposits, all of which I've loaned out. I have a $3,000 reserve. Now, I get $8,000 called in, which I can't pay. What I do is I issue $8,000 in interest-bearing notes at double the prevailing interest rates and use them to pay back my customers. My customers will be happy because they can sell these notes for more than the $8,000 they're asking for. As the loans get paid off, and using my reserve, I can pay off the notes. Nobody gets hurt but me.

Runs aren't really a problem. Of course, such systems can still collapse due to bad loans or insufficient capitalization. Generally, a bank has an equity crisis that ends with a run and people think it's the run that killed the bank. But that's just not true. A run can destroy a healthy bank but it can't hurt those who loaned the bank money.

This probably has nothing to do with Ripple though.

A JS only client sounds like a novel approach.. although I wonder why you require c++ guru's.. must be something not published yet.

The JavaScript client is only a client, it does not act as a node in the peer-to-peer network. The peer-to-peer network is implemented in C++.

I really need to shut up now though. :-X

Just wait until is completely out, then we will complain if needed ;)

This is my analysis as well, with the exception that I think it would probably work the other way around, with borrowers defaulting and basically the entire system becoming insolvent.  Regardless, I expect it to be regulated straight into oblivion, for exactly this reason.  Finally, those who have been calling for a regulated crypto-currency will get what they've asked for.

When reading the Wiki I just substitute the names of all the 'friends' in the ripple Network with the names of big banks and credit card companies. And instead of "Credit" I just substitute the word "Mortgage".

And then I see how it works.  ;)

From the wiki:

"What stops someone from giving their friend a billion dollars credit?

Nothing. In fact, two people who have a high level of trust in each other could easily grant each other infinite credit. This does not in any way undermine the Ripple system. To understand this point, you must understand that in Ripple, credit with a friend is only useful if you want to buy something directly from that friend, or if other people have granted that friend credit in the same amount.

An example: Suppose I grant you a million dollars credit, and you want to use it to buy a yacht from Elsa, who happens to be connected to me on Ripple. However, for you to pay Elsa one million dollars through me, I would have to have one million dollars of credit with Elsa, and the decision to grant that credit is hers alone. As it turns out, Elsa has only decided to grant me $100 credit, and I have already used $50 of it. That means you ability to pay Elsa through me is limited my $50 remaining credit, regardless of how much credit I offer you.

You might be able to find other paths to Elsa in the Ripple network other than through me, but to make a payment of $1,000,000, you would need to be granted a total of a million dollars by your other Ripple connections, and Elsa would have to have granted her connections a million dollars in total. Not only that, but there would have to be an enormous amount of available credit at each step of each payment chain. To make a payment along a chain of intermediaries, every link in the chain must have already granted at least the amount of the payment in credit to the previous link."

I think Ripple will work better as a tool of issuing securities, like bond, future, option or stock. Money? Nope, I would use either fiat money or bitcoin, some people told me his IOU are money? it is IOU, it will not be money. Money should be widely accepted, that's how fiat money is money, and how bitcoin will be more and more moneyly. There will be several kinds of Ripples:


1) Securities issued by someone. It represents certain right or interest, it is a contract, with the hope for the holder to earn more money. It will work, as the free stock market will work.

2) Ripple USD: you can use one unit of certain Ripple to exchange one unit of USD, with no interest. then I would ask, why would someone issuing such ripple if he is not intended to scam you? how will you trust the guy? So it must be issued by a huge name. But it will meet the same obstacle as bitcoin met: AML, KYC and other things.

3) RippleXXXcoin: nothing, just coin, if somebody wanna buy, then it will have value. (Yes, if you wanna one HorseRidercoin, I will issue 100000000000000000 HorseRidercoin for you.( you only need to give me 1 bitcoin to me.)

yea, these three are western fiat currencies. why not use western fiat, gold, bitcoin?

The logo is very cool but I'm disappointed that Bitcoin is not represented. :)

Interesting to see Chris Larsen involved with this.  Ever since I first heard about Bitcoin I thought it would be something that would be right up his alley.  Gavin and I were also both very early adopters of his Prosper.com platform as well.

My issue was specifically large central ripple lenders taking themselves out of the system.
Say there's a bug trusted borrower/lender who is Person Z. Then we have two people who are not friends, but both trust Z. They get used to exchanging transactions through Z, since Z is big, wealthy, and has a well established trust (maybe one of those two people is a merchant, depending on Z to process sales). Then, suddenly, for whatever reason, Z decides to take their wealth and leave. Maybe they had a midlife crisis, maybe they died, or maybe they just collected so much wealth by borrowing from others using their trust that they think their time would be better spent on some hard to find tropical island. We already know people will trust others who are not their friends (e.g. pirateat40), so someone like Person Z can exist. Wouldn't the end result be that the ripple network will experience a sizeable default with people losing money, AND that the two people who used to trade through Z will no longer be able to so so, since they don't trust each other directly? (Or the shop will not be able to process a lot of sales)

Right. My issue with internet is that a provider going offline takes all its users offline. Doesn't seem to bother anyone, does it? If the economic incentives for large robust nodes are there, the network will work beautifully.

And to incentivise the node operation, people must pay transaction fees to the intermediate nodes. Is that supported by the current protocol?

Which protocol are you asking about, Ripple or Bitcoin? (It is in Bitcoin protocol, somewhat - miners/pools)

Ripple, obviously. The people providing connectivity (giving you loans by taking them from others) must be paid for their service somehow. I don't know whether this problem is addressed by the existing (?) Ripple protocol.

I'd like to see BTC in there as well, but the target audience isn't familiar with cryptocurrencies yet. The dollar, euro, and yen are widely recognised, and the linkage is easily understood.

A wise decision from a marketing standpoint.

Since some big names with entrepreneurial background are involved: How are you guys planning on licensing the source code?

Will there be an open source protocol like Bitcoin, that is free to use for everyone, but still offers the opportunity for businesses to flourish around it?

*1: Do you assume "you" are a central bank in this case?

*2: (not up there;) The problem with bank runs and fractional reserve is that banks loan out 10 times or more of what they actually own. When there is a bank run and people demand their deposits back the bank can only return 10% of everybodies funds, thus hurting the lenders alot. Banks in such situations find it quite hard to issue the interest-bearing notes you were talking of, because other banks have the same problems and are trying to find buyers for their own notes as well.

The problem of a large lender going insolvent or disappearing is no different than with traditional banks and lending. It happens all the time.

You could look at Ripple as a new way to do lending with large organizations. This could be much more convenient with better-than-banking hours; as long as the organization is large enough and trustworthy enough, it could work.

*Or* you could look at Ripple as a way to facilitate lots of small loans between individuals. For smaller person to person loans, it would seem to be much better than using an Internet forum to track debt. Still, I have a hard time believing that a web of trust can make these loans worth the risk.. just look at the Lending forum!

Philosophically, I wonder if lending will ever really make sense without very large entities who are being audited by the government. Banks are all about trust, after all. I know that banks won't steal my money because they have decades of history, boards overseeing activities, etc. And the idea of lending to friends might seem appealing, but I think it's bad for friendships.

You're afraid of OTC members building a reputation, then absconding with funds once the payoff is large enough? Why are you not afraid of government-approved banks, some of which have spent a century building strong reputations, stealing client funds and joking about doing so while in the elevator?

Same difference, except in regard to scale (both time and population affected). Exchange with Ripple would be able to grow as large as major banks or remain as small as P2P, trust becomes more transparently assessed than it is now, and recovery to a baseline could occur much more quickly than in the obfuscated financial arena that exists today.

Multiple, dynamic layers exist in finance. At the base is a numeraire, which acts as the foundation of a monetary system. Next comes a network system, big or small, to make use of the numeraire by moving it around. Then there are higher level services that fill various niche demands, built upon the prior two.

Here's how I see Bitcoin, Open Transactions, and Ripple:

• Bitcoin (just like gold, the USD, Euro, Yen, etc.) acts as numeraire.
• Ripple provides a method of moving the numeraire - any numeraire. Incidentally, Bitcoin also provides a transaction system, but exclusively for its own units; dollars and euros cannot be moved within the Bitcoin network.
• Open Transactions is sort of an umbrella service that affords interaction between various different types of networks, both legacy and modern. By encompassing the contemporary as well as the new, it builds a bridge from the traditional financial system to that found with Bitcoin and Ripple.

For comparison:

System:	Comparable To:	Tier (primary in bold):
Bitcoin	Gold, USD (Visa, MC)	1,2
Ripple	Visa, MasterCard	2,3
OT	Basic & complex banking services	2,3

With all three, adapted methods of gaming the system will eventually arise, just as the current ones have been abused. Still, the trio offer massive advancements over contemporary solutions and provide immense opportunities.

* I am speculating to a large degree on Ripple's latest incarnation, and to a lesser extent with regard to Open Transactions; my information could be mistaken.

Great to hear that someone is actually attempting this. I'm pretty interested in seeing what comes of it.

My only two thoughts are (1) I sure hope someone's TOTAL NET DEBT (but not net credit) is shown clearly... if a friend of mine is asking for a $1000 bump in his credit with me, and I'm aware he's recently had serious medical issues, I'd like to know if he's racking up a bunch of debt from others too, before deciding whether or not to loan him the credit. And (2) I would think for this to work, and not to have a total systemic collapse at some point down the road, there must be either a gradual erosion of all debts to zero, or a periodic debt jubilee of some form or fashion (one widely broadcast well in advance across the entire network.)

Definitely watching how this turns out.

I used a ripple type system a few years ago, and it was a bust. Basically its an attempt to get trust to scale.

IMHO, the main use case for ripple is short-term loans, particularly for businesses.

One of the biggest flaws I see is the way that credit has to be extended. Each person has to figure out how much credit to extend to each person they are connected to, and modify that amount every so often. Its way too much work for most people to bother with. Perhaps if there were some sort of smart agents that could be used to automatically track and modify your crefit settings, it might work.

The "you" is whoever is running a fractional reserve system.

Even if that's true, provided the bank has assets significantly greater than its obligations, it can still pay everyone back eventually with significant interest. People may be inconvenienced by not having the liquidity they expected, but they can't lose their savings. If a bank doesn't have assets that are significantly greater than its obligations, then it's undercapitalized, and the run just exposes that problem.

My point is simply that a run cannot cause depositors to lose their deposits if the bank was healthy prior to the run. Bank runs are a solved problem for everyone but banks -- a run can bankrupt the bank.

watching

I like the idea of Ripple. It is a Proof-of-IOU system that can complement B2B networks as barter. I wouldn't try to scale it as a B2C economy, but business reputation is easier to verify.

From Google Groups (https://groups.google.com/d/msg/rippleusers/IVin3Qwrp7k/rmazNRSNtjcJ):

Which coins are the "more private" type I wonder?

Unless they are one and the same, neither will be private.

So, there's your answer:  Ripple is a Bitcoin-degrader.

Basically, a digital version of the existing, failed credit-money system, brought to you by the same idiots who have been trying to turn Bitcoin into a more Orwellian, digital version of the existing, failed monetary system over the past two years.

Ive been doing a lot of thinking about this.  I think the way they are implementing ripple is to create trust relationships that determine which block chain is the valid one, even against attackers.  If this is indeed what they are planning then validation is purely on trust.  Imagine the byzantine generals problem where all the generals must attack at the same time.  A messenger must talk to all of the generals and tell the time to attack or lose.  Some messengers or generals could be liars and relay false information and they could attack at the wrong time and fail.  So what ripple does as the way jed is implementing is that some of the generals and messengers trust each other (whereas in bitcoin no one trusts each other.). So jeds solution is not a solution to the byzantine generals problem but a different problem entirely.  Perhaps the group with the most trusting generals is the vaild blockchain which would not require mining.

Bitcoin killer?  Maybe.  

I actually like the idea of the miners, in a way it gives those without upfront cash and a means to mine to earn money. 

Why would a professional lender not do fractional reserve lending? Once ripple btc or usd become almost equivalent to btc/usd due to level of trust, it's easy. You will never have all customers demand their cash at the same time unless they think the lender is going under; FDIC solves that problem. I would never say that a lender is unhealthy just because they have a fractional reserve, and ripple would facilitate it.

Yes, I think lending 100BTC to some Internet user with no identity details beyond a web of trust is far riskier than depositing money with a bank.
1. US bank deposits are FDIC insured up to $250,000. So if the bank goes under or is robbed by someone from the inside, the government will cover my loss.
2. Even investing in the stock of a public company through a broker is pretty safe, putting aside the performance of the stock itself. My understanding is that most securities fraud occurs in hedge funds that manage your portfolio for you. There will always be people like Bernie Madoff promising unrealistic returns and printing out fake "statements" with a fictitious value while they invest in mysterious instruments that you're unaware of.

There are a variety of possible reasons. One would be if that's not what the market wants. There's no point in offering a product nobody's buying. Another is that it's risky for the lender. If they make unwise loans, they can lose everything. And even if they do everything right, a run can bankrupt them.

On the other hand, if the market demands a fractional reserve (say because people insist on being paid interest and aren't willing to pay storage fees), then a bank or asset holder will have not choice but to do fractional reserve lending.

I agree that a lender is not unhealthy just because they have a fractional reserve. A lender is unhealthy if their assets (including loans) don't significantly exceed their obligations (including deposits). A lender is also unhealthy if the value of its assets are overstated, for example, if many of the loans are shaky.

That remains to be seen. I think it's very dangerous to assume any particular model will win out. You're trying to do the equivalent of predicting how people will use the Internet 20 years from now, and Ripple makes other models possible.

For one thing, with interest rates as low as they are now, it's not clear a fractional reserve actually makes sense. Of course, interest rates probably won't be this low forever.

It's commonly accepted to consider loans to be assets for the purposes of determining solvency, but I believe this to be an error (and one of the causes of the ongoing financial difficulties since 2008).

A loan itself is not an asset - the collateral (if it exists) is an asset.

If you really want to determine the financial stability of a fractional lending institution (http://market-ticker.org/akcs-www?post=209282) no credit at all should be given for unsecured loans.

Wow, how much things changed since my last visit.

We we could not have Ripple layer OVER bitcoin protocol just like this - https://bitcointalk.org/index.php?topic=118616.0

Come on guys, give me a hand and validate this idea...

I'm curious what would happen, in a world which used Ripple widespread...

Because "money" is created in Ripple via debt/credit issuance, and because there is no hard limit to the debt/credit issuance, it means that there is no hard limit to the money supply.

Example:
Bob wants to buy widget from Tom
Tom trusts Bob to repay in future, so extends him $100 credit
Bob pays for the widget with his credit

Money in this case is created by the debt (not altogether different than our current system of fractional reserve banking).  

So, if this was used all over the world, the money supply could shift very dramatically. In theory, the money supply could double overnight, then double again, then double again, all in a week. Upon bad debts not paying, the supply could similarly fall to a fraction of its former self the next week (actually the money supply could/would shrink just based on the genuine repayment of debts as well).

Interest rates are what prevent such fluctuations to be too wild... but I wonder in a world where the average joe can offer massive credit at the push of a button, or in other words the average joe can create a theoretically unlimited amount of money, how would things play out?

What is concerning here, is that in Ripple when you extend, say, $100 USD of credit to someone, you have created one hundred potential US dollars, in effect. Even with the soft discipline provided by interest rates, I worry about the usefulness of money itself under such a system.

Usually a monetary system has a base money supply plus a credit supply on top and these together equal the effective money supply. In Ripple, there is no base money supply, is there? Or at least, in the current world there is a notable relationship between base money and credit that can be built on top of it... in Ripple I'm not sure such a dynamic exists. It seems that the potential credit has no necessary relationship with any base money.

Would love to hear anyone's thoughts on this?

Another concern I have is the following...

The pricing of risk is a specialized industry. It is difficult to do. It requires work, focus, skill, and experience and like any competitive industry many/most people will fail at it.

And yet what Ripple is asking every average Joe to do, is to price risk efficiently with the people they know. Joe may know that his sister Susan is trustworthy, and is thus willing to extend credit on Ripple... but how much credit? Is he not likely to extend far too much, or too little? Why should we expect him to be able to price risk efficiently?

Just as we don't all grow our own food, or make our own shoes, because it is extremely inefficient, why should we all be pricing risk on a daily basis among multiple contacts?

I don't think that you should be so "specialized" when you give credit to people that you know day by day.
You aren't forced to give credit to anyone.

Yes correct, and that's good.

But to the extent that Ripple users abstain from credit issuance to others, what is the use of the system?
And to the extent that Ripple users proceed with credit issuance to others, can/will it be done in a profitable/efficient manner?

I have to say that I think the problem isn't that people are forced or not to issue credit. It's that they will feel obligated. Loans between friends and family can cause a lot of tension as it is. Adding a system such that formalize this system of spreading ill will is probably going to lead to a lot of pissed off people.

"You can lend to me, Ripple's going to keep me honest."

"It's been a whole extra year Bob, don't make me mark this debt as unfulfilled in Ripple."

If you connect lender and borrower through mutual social connections I can only imagine it getting messier.

A lot of why bitcoin works is that the permanence of transactions keeps people cautious. Reputation is everything and people who reliably maintain their end of the bargain get noticed and get business. When build credit into a system while putting forward social proximity as a substitute for demonstrated reliability people's already shitty risk calculations are going to take them to dark places.

I don't see what sense this ripple doohickey makes either.

You can issue credit only to reliable financial institutions with which you have a "withdraw on demand" agreement. Your Ripple balance then becomes the equivalent of a bank account balance.

I think that over the long term, this will be what makes Ripple awesome. But it does require people to evaluate risk more rationally and not be so risk averse. I may be fighting human nature here. Theoretically, a rational business person should be equally happy taking credit cards at 2% or having 1 in 50 of their customers defaulting. But the former seems much more acceptable than the latter.

The core of Ripple is somewhat analogous to a bank account. When you have dollars, or any other normal currency, someone owes them to you. If you say "I have $5,000 in the bank", what you mean is that your bank owes you $5,000. Now, imagine if instead of having a regular bank account, you had something more analogous to a Bitcoin transaction output, and the bank agreed to pay the money to any customer of theirs that could prove they owned that transaction output. Now, you can transact in dollars just like you do in Bitcoins. You can send that balance to someone, split it up, join it, whatever. And that output has value because any customer of that bank can redeem it for cash.

There's a lot more, but that's the basic answer to what sense it makes -- it lets people transact in national currencies much like they currently transact in Bitcoins. One key difference, however, is that someone has to hold the actual currency and you have to decide who you will trust to do that.

Thanks for your posts, Joel, you always speak wisdom.

However, when you say "The core of Ripple is somewhat analogous to a bank account. When you have dollars, or any other normal currency, someone owes them to you. If you say "I have $5,000 in the bank", what you mean is that your bank owes you $5,000. "  There is a very important difference here. In the case of the bank, you know the bank is good for the money. When it's other people holding the money, there is far less certainty as to its payability.

So the issue here is that the money is not as fungible as otherwise. Paying someone $100 in cash is "money good" But paying someone with an IOU for $100 cash is less valuable. In other words, a $100 IOU is not worth $100. I worry that this fundamental issue is going to cause problems.

You say,
" it lets people transact in national currencies much like they currently transact in Bitcoins."

But it doesn't, really, enable this. It lets people transact in IOU's for national currencies. When I send someone a Bitcoin, they actually get the Bitcoin. When I send someone $100 USD via Ripple, the recipient only gets an IOU. With Bitcoin, money is actually moving. With Ripple, money is not moving. The brilliance of Bitcoin is creating a way to actually move money without a central party. Ripple may not have a central party, but it is also not actually moving money.

I agree. That's why I say "much like".

Functionally, there is little difference between an IOU from a reputable institution and money. If you have $100 in your bank account, what you have is a $100 IOU from a bank. That's how people have dollars.

But I agree, the existence of counter-party risk will be a disadvantage that national currencies will always have over crypto-currencies like Bitcoin. Ripple doesn't change that. We're trying to remove some of the other disadvantages, and add a few new capabilities as well.

So that I don't come across as a Negative Nancy, let me say that I'm really excited about the team you guys have put together. All-star cast for sure. The software I've seen, and the branding, is all beautifully done.

I'm very interested to see how people start using this as it launches.

It's important to add that the FDIC is what makes this really possible.  People would discount a bank deposit to a much greater degree than they do today were it not for the existence of the FDIC.  Washington Mutual was a reputable institution...until it wasn't.

We're in 2010's, and the "new" music genre is Dubstep. Now, thanks to Erik's post, I imagining that Ripple will be the dubstep of currency, with its total supply going Wob-wob-wob-wob  ;D

I agree. The ideal organization to hold your funds would either be a regulated financial institution that is insured by a government or a private organization with other assets that provides a provable 100% reserve that is insured by a private insurance company. Otherwise, you don't want to use dollars as a store of value. Arguably, you don't want to anyway because of inflation. For transactions, it doesn't matter so much because the window in which you are vulnerable is so small, and even a risk of default much higher than would actually arise, say .5%, is tolerable. (People pay 2% to take credit cards.)

In Ripple's favor: your own family and close work colleagues are probably the people best positioned to judge how much of a flake (or not) you might be.  Certainly, they'd be more likely to be realistic wrt. your repayment prospects as opposed the typical loan officers at banks living in a universe of bailouts and asymmetric risk/reward compensation packages (see: housing bubble).

Against Ripple: as someone else mentioned, money and friends/family don't mix well.  It's not clear that it's a good social idea to encourage friends and family to borrow money from each other, as opposed to 3rd parties where emotions are not involved.  Getting credit requests could become similar to getting friend requests on Facebook, potentially annoying and/or awkward.  People whom you haven't heard from in a long time or whom you don't trust, and now you have to explicitly explain to them why you don't want to extend them credit.

If people are going to use a social credit model, then social expectations and customs will have to evolve that we don't currently have. Personally, I think that's one of the best things about Ripple, but it works well without it. Short term, I think payments, particularly cross-currency, will be the bigger use case. But I truly believe that social credit is a long-term killer app in the crypto-currency world.

Say I extend you $50 in credit. If you use that credit up, you no longer have access to my credit network but I still have access to yours. And any time I use your credit network, that $50 balance will decrease. So long as at least one of us transacts regularly and the other has a reasonable network of connections, the balance will fluctuate. So unless someone abandons the Ripple network entirely, abandons their account, or abandons the currency, there should be no urge to settle small balances. You can just set their credit limit to zero and you will prohibit transactions that increase the balance and favor those that decrease it.

I'm open minded, I know that everything I said is just a half-arsed guess given that your app is a brand new paradigm and unreleased.  The skeptical glass-half-empty viewpoint I have at the moment comes from the unfulfilled promise and corruption of social apps introduced the past decade, thus the fear that facilitating and explicitly recording personal credit relationships might be dangerous both to privacy and to friend/family stability.  Stuff like Facebook, which could've been a fantastically great service in theory (and kinda was, in the early days), has unfortunately devolved into a hideous mess that discourages use and often drives people apart.  Hopefully you guys will have a great privacy model where individuals have fine-grained control of what other people can see, and where it will be difficult for people to spam others with awkward/unsolicited requests.  And certainly, if your service helps mitigate some of Bitcoin's unsolved problems (e.g. excessively centralized currency exchangers), I think myself and everyone here will be extremely happy.  I sincerely wish you the best of luck with your efforts.

(Don't get me wrong, afaik ripple is a very promising idea. I'm just not sure of the appli/implications yet.)

Does this mean before accepting $100 in "value" from someone (basically that would be debt of some "bank"), I'd have to evaluate the amount of trust I have into the entity that initially issued the $100? That seems indeed to be a destructor of fungibility.

What about the issue that brought down bank in 2008, where they all trusted the guy they were dealing with, but had no idea that guy was trusting someone untrustworthy (the insurance company that turned out not to have the money to cover CDSs in this case)? Can't the same issue happen here, where someone may trust a friend for $100, but that friend trusts someone else he really shouldn't, and when that someone else defaults on their debt, he takes down the friend and all his contacts as well?

Ripple could be the solution to this problem. As it stands now, when you loan someone $100, you don't know who his creditors are. But with ripple, a 'taint analysis' shows that this guy's credit is all with someone named 'pirate' who owes a bunch of people money. From this point, you can make a better decision on credit and interest rates. You may extend credit, but charge a higher interest rate. This will force him to pay you before others.

This is price discovery. As a bonus, the person requesting credit may discover his problems before its too late. He can now mark his debt to market, rather than mark it to some imaginary number.

Excited to see the project.

Pirate 101.

We work hard. We follow the rules. We feel we are responsible citizens. Should we also feel entitled to more debt than others less responsible? It makes sense to think so. Ripple seems to follow this conclusion. Fraudsters count on this fallacy. Past performance does not predict guarantee future results.

Another alt-chain with some social-credit-network built on it, and this alt-chain has no miners ? Interesting.
IMO, the credit part is too complex(human,you know), and can't be designed centrally, but only designed by the market.
And the money part(alt-chain) is nothing new.
Bitcoin is not going to replace the financial system(ripple is trying to), it frees the financial system.
Good luck.

Concerning the family and friends issue over social pressure to potentially allow extensive delinquency, a simple solution would be to require a definite time for satisfaction of the debt. That way it's the Ripple system, not the person, putting a black mark on the debtor's credit/WoT rating. Having the ability to roll the debt or opt out may still be important, though.

OMG it's the 666.  :o
No one buys or sells without the money of the beast! (http://en.wikipedia.org/wiki/Number_of_the_Beast)  :o

Wow, never noticed that.  Ya, some people are going to get a lot of mileage out of that.

joel, are you guys taking beta-testers anytime soon?

That's not up to me. All I can suggest is that you send an email and include some information about why we'd want you to beta test.

Front page is getting clearer, I like what I see so far!!

https://ripple.com/

tl;dr

I must admit, I haven't read the entire thread, so I don't know if the following is new information.

I have watched all of Paul Grignons Money as Debt series and stumbled upon a video that could explain Ripple in detail. If BitCoins are to be the "perpetuals" within the Ripple system, I take my hat off to everyone involved for providing the world with a better monetary system. Watch the following video to understand what Ripple is most likely trying to build on the back of BitCoins:

https://www.youtube.com/watch?v=dkXclJr1Z4U

terrible animations, but whoa.

Sorry, but your customers won't be happy because, as soon as you are bankrupt,  your notes are worth nothing, regardless of the interest rate you attach to it.
They wouldn't be able to sell them to anyone.
It would be so easy, in the event of a bankruptcy, to be able to issue more debt. In real life, it does not work that way. Only a central bank can do that ;o))

I was addressing *only* the issue of a run on a bank, not a bankruptcy. Runs are a solved problem, bad loans are not.

question about privacy on ripple:

you have a public ledger. okay, so is there something analogous to the receiving address quasi-anonymity feature in bitcoin? how about for sending addresses or "wallets", do i have as many of those as i want?

generally it would be interesting to have comments about how privacy works or doesn't in ripple.

Anyone else get into the latest beta?

Oh the same Jed who let his computer get compromised and gave up his illegal highly immoral back door access to MTGOX, which in turn resulted in the first big mtgox hack?

What can go wrong!?

QFT

Watch your back, the natives going to be restless.

On March 6th, 2011
https://en.bitcoin.it/wiki/MtGox#History

Sorry I'm a bit late to the party on this thread but I couldn't walk without passing comment on this logo.

I apologize for my frankness, but it is truly disgusting. It is very, very poorly designed.

Here is why: The most jarring thing about it is the foul gradient. It's offensively cheesy. Gradients are not your friend.

The typography is nothing short of an abomination. The font was extremely poorly chosen. Just a ghastly font altogether, really. The kerning (the space in between the letters) is very uneven. It does not look good.

The little pictogram at the side is flawed. I'm not 100% against the idea or even the 3d perspective thing, but it is very poorly executed. The perspective effect is wrong. Look closely at it. It is broken.

Again we have ghastly gradients. Even worse this time than the text, and that is saying something. Also in my opinion you should stick with two colors. Using more than two colors in a logo is a tricky pro's move that the designer of this monstrosity has no business trying to attempt.

All the proportions are wrong. It is just totally out of proportion, in every sense. Everything it can get wrong, it does.

I feel like the whole thing was designed by someone with absolutely no design skill, talent or expertise. The person who created this wasn't a designer - he/she was a software operator. And not a very good one.

I'm guessing it cost maybe $10 max. If it cost more you got ripped off.

But, how do you really feel Charlie?

Thanks. I knew there was something wrong with this design but I could not tell what.

Ripple is an idea that is both way too ahead of its time and obsolete simultaneously. It depends on trusting people to be honest about competing for limited resources. Ripple is like the old charge plates from the 1940s. It will work better when people are not competing for scarce capital.

well im not sure what this ripple reloaded will be like, but the original was about creating money where / when it's needed and by the two parties who need it. In this sense it is not the old competition over scarce capital as fiat and bitcoin are. 

I think many people when talking about extending trust completely miss one important point, specifically concept of money velocity and circulation. One does not really need to have a lot of trust obtained or extended to effectively transact in a ripple network. One would need, basically just one month or one week turnover worth of "well connected" trust, that can be easily bought using collateral such as bitcoins or gold, for example. Whether it is a week or a month or a year worth of trust depends mostly on ones income/expense cycle.

You do not need to drown the wheels of commerce in oil to make it work, just a few drops of the oil in the right place will do the trick.

I like the logo.  ???

1) Is this steaming turd still in beta?

2) Where the hell are the technical specifications and protocol descriptions?

This is the worst food I've ever eaten and the portion sizes are way too small.

Or, if you prefer: This soup is awful. Can I have the recipe?

Cavemen were afraid of fire too ya know ;).

It's how people react in the face of life-changing innovations.

I wish it was. I think there are a few ENORMOUS barriers to it becoming mainstream, and doubt it will  ever become a "life-changing innovation." Please prove people like me wrong.

Unlike Bitcoin, which had Satoshi's wonderful and inspiring paper to read - the available literature for Ripple is almost worthless.

I accessed the beta wiki and read every word of what was published, and there is practically no concrete information. Certainly not enough information to make a piece of software that can interoperate with the existing beta nodes.

Almost everywhere in the sparse Ripple technical docs, important details are glossed over with no description given to algorithms or procedures.

This is garbage.

I'm not saying that documentation isn't important, but this seems just a bit excessive.

Password isn't asked anymore, but it is still in beta.

Ripple does seem to have lots of good ideas embedded in it, therefore it's not garbage, but the problem is that Ripple's documentation ( at least so far ) doesn't seem to be converging into anything that any programmer wanting to implement an interoperable implementation would call a spec. Such a convergence might eventually be achieved, however in the meantime, the lack of ( even informal ) spec creates suspicion that the system may ultimately be unsound.

Cheers

P.S. I am personally routing for Ripple to become the "credit coin" to Bitcoin's "permanent coin"

I haven't checked out Ripple, but one thing I know is that mining was a bad idea. Also, capping currency growth was another bad idea. Whatever the Bitcoin replacement is will have a built in mechanism for increasing the currency volume in proportion to usage. Bitcoin will be like the Mosaic browser and the bitcoin killer will be Netscape.

I won't use it, then.

It is the only way to have a decentralized system that no one can control

I won't use it too. Bitcoin is digital gold, and you can't "increase" gold at will!

You're in the wrong part of the forum:

https://bitcointalk.org/index.php?board=67.0 (https://bitcointalk.org/index.php?board=67.0)

Money is merely information. That's all it is. Who owes what to whom. Information should not be scarce.

I mow your lawn, you wash my car. That's it. No need for any of us to go to a gold mine.

Ripple is ideal money in this regard. It's merely information.

It's the control of this information that has always been the problem. Money has always been a trust issue.

The reason why some folks love gold, silver and other commodities is because those store and transport this information without the need for an authority like a state.

Bitcoin tries to solve the trust problem by emulating such commodities. The disadvantage of commodity currencies is that they're scarce and become target of speculation. Loans become unnecessarily expensive, perpetuating inequality.

Ripple's approach is to decentralize trust into a peer-to-peer social network. Loans are cheap, propably largely free, because it is credit-based money after all. Its disadvantage is that it's reputation-based and can't offer the privacy that Bitcoin does.

So the perfect money doesn't exist. Every form has advantages and disadvantages. If people learn these differences and how to apply them property, we may have a rich ecosystem of different moneys in the future. Bitcoin with Ripple may very well become the yin/yang of commodity/credit.

I may very well be too tired, but it's not open yet right?

for instance I have this wallet: rwz16xpq7e6DxpguH849fkvVNDP9psrh9i
I pressume, a XRP wallet. What next?

Right!  I'll just give you 2.3 lawn mows for 1.7 car washes.


I find scarcity (finiteness) to be an advantage in money, not a disadvantage.  And the same for speculation.


This I like and can get behind!

Let's be a bit more specific... https://bitcointalk.org/index.php?topic=38453.0 (https://bitcointalk.org/index.php?topic=38453.0)

This one continues its currency growth even as it is completely abandoned and unused.

The common unit of accounting can be anything such a barter network would agree upon. It can very well be immaterial.


Again, a commodity is just a tool. A tool to store and transport the information of value. It is not money itself. And this tool is slowly becoming anachronistic in this information age.

I hear what you are saying and I think are mostly right, however you also seem to be saying there is some kind of monetary information tool that can function without a common denominator of value (i.e. a unit of account)?

After looking at the available information, it appears that the consensus approach taken by Ripple is like Whack-A-Mole (http://en.wikipedia.org/wiki/Whac-A-Mole) - that's a good thing. It looks as if the network will be a self-contained and resilient entity once it reaches an early-stage critical mass, most likely by riding Bitcoin's coattails; the two do work in a highly synergistic fashion.

One aspect that I haven't yet had the opportunity to explore fully is use of the XRP currency/token. It looks as though it could easily gain its own monetary function within the Ripple network above and beyond providing transaction fees. That could be a potential weak point, unless my current understanding is mistaken.

Gateway services seem to essentially tag an external currency transaction with XRP to facilitate movement. What happens after the transaction has completed is disbursal of the transaction fee among XRP accounts in proportion to their holdings. I have not seen exactly how this disbursement occurs, but proportional distribution sounds dangerous.

Other than that, I think the structure is strong. Hopefully we'll start seeing numerous Ripple nodes in the immediate future.

I sort of agree, but I don't see how it would make me not desire scarcity.

Someone send me some Ripples!!

rLbxMnoSK2RS3nw6d2YQvgmH3PtpK2SVTf

Not quite. Fundamentally, a gateway is an entity that has "withdraw on demand" agreements with a significant number of people. Any of those people who hold the gateway's IOUs can redeem them for something nearly equivalent to the value of the IOU. This effectively "backs" those IOUs and gives them value, making them akin to a check made out to "cash".

The disbursement occurs simply by destroying the XRP. The total amount of XRP in existence is always stored in the ledger header. So you can, if desired, "normalize" your XRP holdings to provide a number that's the same fraction of the XRP in existence.

Ok - that sounds more like message-passing. The way I had suggested tagging, there'd might have to be hooks for every type of currency.


So the 100,000,000,000 XRP actually decrease in number? Interesting - if true, it would make the value of remaining units naturally increase in proportion to the total remaining. That provides the incentive to run server nodes, as facilitating network growth means more transactions are executed, and wealth increases - not to mention naturally minimizing transfers due to the accrual of value. However, XRP may need to be infinitely divisible, or the unit supply could become exhausted even if the cost of transactions decline.

Keep it backed up at all times and have it encrypted with the "key" only in the possession of your friends.

Alternative currencies are a form of increasing the volume.

Yes and no, because alternative currencies don't exchange on par with bitcoin to start.

OK, please bear with me here I've sort-of read quite a lot but still don't feel I 'get it' so I'll put forward what I think I understand from it and I'd appreciate someone putting me right if I'm wrong.  Bear with me whilst I think aloud with this...

So Ripple is a credit network.  So if I want to start a network with my friends/family I go to each and say: "We need to agree an amount you would be happy to lend me about which you'd be confident I'd pay you back even if I lend it to someone else and I never get paid back.  Also vice versa, an amount I would be happy to lend you confident if you lent it to someone else and they failed to repay you'd still pay me back out of your own pocket."

So although most of the time the lending would happen in principle with no money actually exchanging hands each in the chain is taking the risk and needs to accept responsibility for the creditors they've extended trust to.  If this doesn't happen isn't it a bit precarious?

But if this does work, let's say I put up a craigs list or ebay type site that works cash on delivery, no charge-back risk and negligible transaction fees.  I could invite those in my immediate and then extended networks to put something up for sale and to see if they fancy buying something off it.  If it got to the stage where someone wanted to buy something Ripple could more-or-less be used as escrow so the buyer would 'lend' credit to the seller who puts it in the post (seller taking risk of non-delivery).  When it arrives the buyer makes a bitcoin or bank transfer to the seller.  I like this because it by-passes the whole feedback thing which whether on ebay or on a web of trust is too easy to build up a reputation in order to abuse it.  With Ripple the only people you can rip off are your own friends and family.*

If I put BTC for sale for pounds on this web listing service of mine (or pounds for BTC) then it takes out the chargeback issue that most seems to scupper all scalable attempts I've read about.  It's only one step further then, as these mini-networks join up, to a proper p2p currency exchange with the Ripple trust network meaning people can have confidence that i) a listed order is a promise to exchange at that rate ii) trades are honoured, are 'cleared' at the end of the day by bank transfer or whatever.

I really like the principle (if I've understood it right).  The only thing that may be awkward is in finding a reason for someone to get enthused and join me to establish my direct links in my network when I have to explain there is a risk of losing money and there's very little gain for having done so - and I thought Bitcoin was a hard sell!

Also, every person in the chain needs not only to be trustworthy to the credit limit extended but also must have the means of being able to pay it in the event something goes wrong.

As a consequence the network may be very large and interconnected for small transactions but the bigger the transaction, the fewer the links with sufficient credit to carry it (except I suppose where there's more than one pathway over the weakest link the maximum credit is the sum of both max credits)?

Mmm, food for thought - but I think I like it :)

*I guess a COD silk road equivalent could also work, negating the risk of apparently expensive escrow or someone running off with hundreds of thousands of bitcoin (as I seem to recollect having read about recently).

You're absolutely right that money is merely information, but it's information about scarcity! After all, scarcity is the fundamental economic problem, i.e., the reason we need money in the first place. And that's why money needs to be scarce. If it's not, it can't accurately convey information about the underlying scarcity of real resources.

No, the idea that "money is merely information" is wrong to begin with. Trading with money is just a special case of barter which happens to involve highly-marketable commodities. Your net worth conveys information about your past balance between production and consumption; money is just one component, one which happens to be easier to account for than most, and more convenient for economic calculation. To be of any use, money has to be a marketable good, and anything which isn't scarce can't remain marketable, because no one would trade scarce goods for "money" anyone can get for free.

Note that Ripple doesn't eliminate the scarcity of money; not only does it have an even more restricted cap on the internal currency (XRP) than Bitcoin--the supply is not merely capped, but actually required to decrease over time--but the other currencies are limited by the participant's credit-worthiness, as measured in more conventional terms. In theory I could grant a trillion BTC of credit to a few of my closest friends, but no one would trust me to actually pay it back. In practice, the total credit actually traceable back to a trusted source, typically a gateway, will probably be limited to little more than the total amount on deposit with the gateways, or perhaps by the real-world property they can seize in the event of non-payment.

Ripple's problem isn't any lack of scarcity, but rather they it's trying to make a currency out of something non-fungible (loans with variable likelihood of default). Gateways mitigate this somewhat, by providing "trusted" centralized organizations with a low perceived risk of default, but if you have to rely on them for most trades you might as well employ the existing banking network.

You don't think the blockchain is just information? You don't think your private keys are just information? I'd agree that traditional money is not JUST information. But it seems to me that money in its purest form is. (And Bitcoin is money in its purest form.) I agree that trading with money is just a specialized form of barter. And I agree that money is a marketable good. But I think that marketable good is information, or more specifically, a means of credibly conveying information about value given but not yet received.

There are a lot of reasons you might prefer Ripple to the existing banking network, even if you assume that Ripple "only" provides the same functionality as the existing banking network. You can easily transact in multiple currencies and get exchange rates without fees. The rules are the same globally, well-defined, and nobody can enforce an arbitrary policy on your money. You have precise control over who you trust. And so on. The idea is to provide rules and functionality that is very similar to Bitcoin but with amounts denominated in existing fiat currencies.

That monetary units today have to be scarce in order to be recognized as valuable and barter-able is merely a limitation of the currently available toolset.

Imagine a giant super-computer network (and a pretty dystopian one though) which can record every good, every service, every job, and every transaction in a society. It could relieve people entirely from having to deal with any form of money we know today, be it tangible or electronical. If you want that nice car over there, you'd just ask the computer network if you contributed enough to society already so that you're eligible to have it; or how longer you'd have to work in your current job to be. The internal calculations this computer network uses would be the monetary system here, and it would resemble nothing that we know today. It would not have to artificially create any scarce units just to be able to make these calculations. Resources are scarce, our time is scarce, that's all it needs to know.

Ok, so I created a Ripple account. How do I get credits to spend? I am willing to loan my slave out to wash a car or mow a lawn. How much does that get me?  :D

Both the blockchain and private keys are indeed just information, but they aren't bitcoins. They're information about bitcoins and their owners, respectively. The bitcoins themselves, while completely virtual, are not information--they're a scarce commodity.

One function of money--a side effect really, and not the reason people use it--is to convey that information. However, that isn't what money is, that's what it does, and it's not the only good which can convey that information; all goods do, really. If I do a job and receive a house in exchange, that house represents value produced but not yet consumed. We could talk about the market value of the house, of course, but only for the sake of convenience, because you can't directly compare the values of a house and a car and a week's worth of groceries without reference to some common good they could all be traded for. This is the economic calculation function of money, allowing most goods to be assigned a market value in terms of a single widely-traded commodity.

Put more simply, people don't value money and accept it in trade because of it's information-carrying abilities, they value it because it's a marketable commodity and they expect to be able to trade it for other goods later. That any good can be priced in terms of money is merely a nice bonus. That money allows you to add up the estimated market values of various goods and determine net worth and the balance between production and consumption is if little real interest to non-economists.

many rumours of what ripple is or potentially is are still flying around, as are the many speculations as to how to use it. so can anyone care to clarify it.. as this is how i see it.
the best way to do it, is this:
http://i47.tinypic.com/3448owh.jpg
now:
imagine MTGOX holds all of the physical Yen in a "locked in" reserve. (greenbox)
imagine Bitinstant holds all of the physical  Dollar in a "locked in" reserve. (greenbox)
imagine BTC-e holds all of the physical Rubles in a "locked in" reserve. (greenbox)
imagine Vircurex holds all of the physical Euros in a "locked in" reserve. (greenbox)

they have all given each other an equal share of what they have to each other in the form of XRP that represents the fiat, much like MTGOX/BTC-E Codes (blue boxes)

the physical money stays where it is(green box) but for instance MTGOX has now 75,000 locked in as reserves for everyone  and 25,000 free to do with as they please.

now then imagine an indivicual, me... i have Bitcoin and i want Euro i am friends with BTC-E and he wants my Bitcoin. so we trade. i get an XRP for X Euro and BTC-E gets a XRP for Bitcoin. BTC-E Euro reserve decreases and my Euro reserve increases.

now it shows that i have some euro which i can use with other traders or cash out to a EURO accepting bank account.
so, say i wanted to withdraw.

i hand my XRP into the ripple withdraw system. it informs Btc-E to inform Vircurex (the phycical Euro Holder) to send the Euro to the destination i chose.

the amount of total Euro is reduced at Vircurex and the XRP is destroyed

remember BTC-E and myself never handled physical Euro. it was all done on a reserve bases.

XRP is not a minable coin. it is a IOU certificate, a mtgox code idea.
remember i just used the named of companies for examples. i could have called them dave, peter, john and andrew so the names are not of importance


the big main aim is not to have to continually accept non native FIAT where the banks would convert it to native and cause us to get less then we asked for. but to keep it in the system/community so that we are less reliant on hourly withdrawals and deposits and especially bankers exchange rate.

where by the Ripple system would work as a better method of ensuring that native currencies cross over without conversion fee's

now that i have explained it in a way that i have seen snippits of information going around... am i actually anywhere close to the reality of ripple.

Your very close, the 4 exchanges would be reserves but instead of exchanging XRP you/they would exchange IOUs denominated in the currency of interest. XRP is used primarily for fees, it'll take a long time if at all for XRP to get a stable exchange rate given the owners gave themselves 100billion or whatever it is and they are handing them out for free.

Hopefully the IOUs balance out over time between the 4 exchanges but if not they could settle using btc or something.

nice +1

I wanted to get a refresher but wondering where to start? are you saying 3-10 min mark?
So they way I see ripple right now
Ripple= insecure debt is that right?
If you wanted to loan so money out why not just loan some money out? The person you lent to knows they owe you money you know they owe you money what the hell is Ripple good for? I dont need a public ledger of my private debt.
BTW debt = slavery. 

I didn't watch the whole thing, but can someone explain their rationale on this:


What? I see bitcoin as a commodity money. So what are the problems they are pointing out in the video?

I'm currently of the opinion that gold could well be used as a global money (as medium of exchange and store of wealth), if only it could be transacted only without the need for a central authority. Does Bitcoin as a solution to this suffer from the same problems as gold does in the minds of the autors of "money as debt"?

What is this, 2007? That "Money as Debt" video with its basic economic fallacies and - worse - pro-fiat solutions, killed dead a thousand times in the intervening years, is enjoying a necro-resurgence. Depressing.

Yep.  They should ask Zimbabweans, Argentinians, Yugoslavians, Germans whether giving the printing press directly to the Treasury or Congress makes any difference whatsoever.

I dont think they are going to replace bitcoin anytime soon.


People dont buy what you do, they buy why you do it. Tell them why you believe bitcoin is the future.

Say things like. "I believe that people should be able do what they want with their own money." --- "I believe huge fees and taxes should not be placed upon the money we use."

You will perk up the ears of the right crowd, because there are plenty of people out there like that, who want the freedom to do with their money what they want.

Good luck.

I dont like the solutions but what exactly has been proven to be a fallacy?

As far as I understand, the authors by "commodity money" mean some kind of money backed up by a commodity with all the fractional reserve inevitably built on top of it and as such turning into a debt based money anyway. They think that use of gold and other commodities directly is impractical for all the obvious reasons.  If only there was something that is just like gold but also cannot be confiscated easily, can be transferred instantly and at very low cost over The Internet and that could have practically unlimited divisibility, easy to transport and identify,  hard to counterfeit and easy to store  ::)

I would say Bitcoin + Ripple is a perfect combination that has all the properties needed to eventually become worldwide currency. That would mean monetary freedom for all.


Molecular: maybe this helps http://paulgrignon.netfirms.com/MoneyasDebt/disputed_information.html (not saying that I agree or disagree with this)

Ok, but if we destroyed every single copy of the blockchain, would the "completely virtual" bitcoins not also be destroyed? And if the answer is yes, and if bitcoins are thus incapable of existing in any form separate and apart from information about them, doesn't that suggest that they are in fact information?

Well, I think there's a difference between having money and having a house.  If you have a house, you have in fact already "consumed," or at least, you've received value in a form with which you can directly satisfy your wants and needs. 

Yes and no.  People certainly don't think in terms of "I'll agree to sell these goods and services in exchange for money because that will enable me to credibly signal that I've given value for which I've yet to receive any kind of real satisfaction," but that's ultimately why a system of money-mediated exchange works.  At the end of the day, I'm not sure we're really in that much disagreement (although maybe you'd disagree :)).  You say that bitcoins are a "scarce commodity."  I say that bitcoins are "information."  Maybe what we both really mean is that bitcoins can be usefully thought of as a scarce commodity / information?  Or maybe you could at least agree with this, given the purpose of my original post: "one of the functions of money is to convey information about scarcity; money needs to be scarce in order to do that effectively"?

Having done a bit of research on Ripple after stumbling upon this thread last night, it seems very very interesting. It definitely seems like it'll complement, rather than compete with BitCoin. From what I've read, it seems like an extension of MtGox.

I understand how the IOU's will work, and it's quite an interesting idea. But I'm not going to focus on those, I'm just going to write what I interpreted from reading about the system to see whether someone has any other interpretations. Please guys let me know if you think I've hit it bang on or whether you've interpreted their information differently.

Basically the impression I get is that the Ripple system intends to become a holding (bank) and exchange market for every currency (fiat and crypto) in the world, whilst also creating their own cryptocurrency (XRP). Basically, I can send GBP to Ripple, and with one click of a button, I can instantly convert (or send to another Ripple user or shop that accepts Ripple) this in USD, BTC, XRP, Yen, or whatever currency I want with no fees involved. And I can deposit/withdraw any currency I want WITHIN the Ripple system with no need for 3rd party exchanges. So basically, as I said above (an extension of MtGox) Ripple is a massive currency exchange market who intend to make profit only off of their own cryptocurrency (XRP), which they're hoping will become worth something (which it should do, as it will become a central medium of currency exchange).

And on top of this, they have the 'contacts' list which can be used to allow people you trust to borrow a maximum amount from you whenever they want.

This, is a fucking outstanding idea and I'm very surprised someone hasn't thought of something like this before. Instant payments/conversions to any currency within the system, obviously it'll take a few days to bring money (fiat) outside the system.

-

And this won't kill BTC, it will complement it. Why do I think this?

BitCoins have a value, because of the black market mainly. XRP's, do not (currently) have a value. And won't do unless (like BitCoin) people perceive them as worth something. In order for XRP to replace BitCoin, they would have to become widely used in the black market, which I highly doubt will happen because look at the identity checks MtGox requires. If Ripple takes off though, XRP could gain a value based on the fact that every Ripple user has access to it, and it will be the 'central' unit used for currency exchange within the system.

Definitely going to follow this development.
This has the potential to kill PayPal. And if that happens, through Ripple, BitCoin will gain in popularity.

I will admit, I don't currently use MtGox because of their requirement for identity, and I don't really want my identity associated with BitCoin. However, Ripple intends to serve a completely different purpose to BitCoin. I would use Ripple, without a doubt.

Very excited to see what happens here.

No, because you can't destroy something which never existed in the first place.

A house is a durable capital good which is consumed gradually, through age and wear, as you use it to produce the more immediate good of shelter. Consider the case were you receive a house for services rendered and then turn around and sell it for money. Selling the house isn't an act of production, aside from the minor sense in which all voluntary trades improve the overall allocation of resources. If the mere receiving of the house were considered consumption then there would be an imbalance--you would have consumed the value of the house and still had the money to spend. Rather, the house represents just as much saving as the money it's sold for (or could be sold for).

I do agree with you on that, if nothing else. My problem with the rest of your argument is that information is not scarce, so if bitcoins were nothing but information then they wouldn't be scarce and couldn't function effectively as money.

Your argument is essentially that if members of a set are not scarce, then members of a subset of that set cannot be scarce. That is clearly false.

Bitcoins are not just made up of information, they are created (mined) from people around the world who used their machines to do the mining. That is/was work accomplished. Part of the value of the gold used is that it also is mined.

your 99% right.

the bit that i find most unique and powerful is that if i held GBP and you held bitcoin we can swap them and leave them held within ripple, without banks involvement, we can then use those funds for further trades spreading the types of currency we all hold without restrictions.

i dont think the ripple concept is based on loans in the manner that BTCJam consider loans. but more on the concept of reserves and allowing / trusting other people to manage X amount of my funds for me.

but for my personal use i wont be involved with loans, i would only consider the currency transfer concept without banking rules/restrictions/fee's

There are many meanings attirbuted to the term information. Consider ones where the value of information is the difference that information makes to the probability of an event.

For example the probability of a shop shipping me a pair of alpaca socks without that information as compared to the probability of their shipping me such socks given that information...

The fact that the whole world knows the information (account X send Y bitcoins to account Z) actually enhances its value, doesn't it?

Would the shop be as likely to ship me the socks if only they and I possesed that information, the rest of the world not knowing it?

-MarkM-

No, my argument is that if all members of a set are not scarce, then members of a subset of that set cannot be scarce. That is clearly true.

In other words, bitcoins are not information. I'm glad we agree.

I'm not quite sure where you're going with this. It would be more correct to say that there is value in the fact that others believe and act on the information, which is a service, not a good. If they simply knew it, but didn't act on it--for example, if they accepted conflicting or otherwise invalid transactions--then it wouldn't matter how widely the information was distributed.

I tried some Googling to find a specific reference but couldn't find one; but in the large amount of reading I have done over the decades on information, probability, and entropy I am sure there was an approach to or concept of information in which the value (as in measure, quantification, quantity) of information is, exactly, the chance of an event in the absence of that information compared to the chance of that same event in the absence of that information. So if for example you only enough about me, bitcoins, and the alpaca dealer to calculate a 50% chance of the socks being sent, the value/quantity of alpaca sock delivery information required for you to calculate a 100% chance of that delivery would be precisely the missing 50%. For example when you know for sure the delivery did in fact happen, that is 100% information.

Maybe it might even be something to do with "Bayesian" information/probability calculations, I am not sure, a few quick Googles on value of information, probability value of information and such didn't find me a handy link to such a definition unfortunately.

-MarkM-

Bingo, If Ripple did that, it might have had a fighting chance.  But they just couldn't resist the temptation of creating their very own currency.  It has corrupted many over the centuries.

It's not true for information. There's all kinds of information that's scarce -- for example, tomorrow's stock prices or the factors of this near prime expressed in hex:

    00:c7:4d:7d:6e:dc:d1:c4:b1:8b:31:6b:0d:21:90:
    59:f6:f3:3e:9d:87:2b:04:de:99:39:4e:4d:a6:b1:
    bd:2a:55:25:ac:33:82:3e:68:19:1c:27:34:50:55:
    88:ba:9f:00:d0:5e:02:95:50:aa:d9:6a:67:62:ff:
    23:24:6d:d2:83

Say you hold the private key corresponding to a Bitcoin account that holds 1,500 BTC. Since that private key is just information and no information is scarce, you should be willing to give me that key for $1, right?

Will XRP be the first alternative currency used on Mt Gox ?

https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiners

Sounds like.

I have to say, I dont like the fact that the creators of Ripple just decided to keep 50% of all XRP ever in existance.
What prevents people to just make a new fork and have no "premined" coins at all?

Our system would give everyone who participated in the giveaway a free account and millions of free transactions. There's wouldn't. Our system would be promoted and supported by a company with expertise and funding. There's wouldn't. Which system would you rather use?

I helped build a *payment* system with community credit features. Doing it this way allowed it to have no central authorities and (we hope) be nearly free, or free, forever.

I think you're trying to position Ripple as a currency and a competitor to Bitcoin. Ripple was built by Bitcoin people, people who love Bitcoin. That's not what they wanted to do. Look at this from the point of view of the people the system was built for -- people who want an alternative to PayPal or checks.

(Again, speaking only for myself and not as a representative of OpenCoin.)

Or prevent someone from making their own "foundation" with ripple fork and keep only 40%...30%...etc..

Ripple seems interesting, but the logical imperative doesn't strike me as clearly as bitcoin does.

We honestly believe we struck the right balance between giving as many people free use of the system as possible and being able to maintain the system and fund its development. This is not a "more is better" or "less is better" thing -- it's a compromise.

It's well known that OpenCoin has received funding to continue development, and you are advertising for more developers so there must be a sizable amount..

So whats the incentive? How does your investor plan to capitalize on their investment from a free, open source, no fee earning system?  I had assumed that the XRP was part of that investment return..

If you had created 20million XRP then the price would have to be equal to bitcoin to make a decent return, but when there are 100 billion, XRP doesn't have to rise much over a few cents to make some serious return.

Anyway, very excited about the project, happy to see you guys make some money from it.

Correct me if I'm wrong...but...

It seems to me that the biggest obstacle for anyone who is trying to understand Ripple is to already understand Bitcoin. XRP is NOT the equivalent of a Bitcoin, although it might appear that way in the beginning. They are supposed to have just enough scarcity to discourage spam, but no so much value that trading and hoarding them becomes profitable. From the little information on the subject, I guess that the Ripple protocol has some mechanism for nodes to come to a consensus on tuning network parameters (like the amount of XRP required to fund an account, or the cost per transaction) to ideal values.

Everyone keeps thinking of XRPs as some sort of currency but they are more akin to a low-value postage stamp.

That's correct.

I'm going from memory here, but this should be roughly correct: Every 256 ledgers is a "flag ledger". Validations for a flag ledger can include fields for what you think the XRP cost for a transaction and reserves should be. During the ledger interval after the flag ledger, nodes collect validations from the flag ledger and make their own determination of what the values should be (based both on what they want and what nodes they trust want). Nodes can then introduce pseudo-transactions to change these values into the transaction set of the next ledger. If one of these pseudo-transactions gets accepted, then the fees are changed.

Before the system was named "Ripple", ripples were called "stamps".

Buying mass amounts of XRP, got any I want em.

See also http://en.wikipedia.org/wiki/Hashcash

Why are you buying mass amounts of XRP? Did you read what I said? Have you used Ripple yet? Do you realize that it costs 0.00001 XRP to perform a transaction? Why do you need mass amounts?

Can anyone speak about ripple's inflation? How many XRP are there? How many will be there?

100 billion initial XRP created

And they are destroyed as they are spent on fees, the fees do not go to anyone such as miners etc. So the total number will go downward over time.

-MarkM-

the idea of XRP as a postage stamp attached to an envelope is a great one.


whereby the XRP only holds the information about the details of other currencies being moved around and ripple gets paid by you buying a number of transactions. (stamped envelopes)

its like sending cash in the mail, you can put a bitcoin paper wallet into an envelope, a £10 note, $10 note. the XRP just ensures it travels safely around the worlds postal network (XRP blockchain).

ripple is giving away millions of free stamps so that everyone can start sending transactions to each other for free, XRP are not a currency themselves in the way that bitcoins are.

there is however an opportunity that if ripple decides to increase their 'fee' then everyone holding hoards of empty stamped envelops can sell them for a fraction of the ripple asking price, privately. where by they would make a small profit, due to the fact that they were initially given the envelopes for free.

the XRP is not a 'pre-mine' it is not a method to make ripple millionaires before they have even opened. it simply the same scenario as the postal service pre-printing stamps and giving out half its supply and holding onto the other half to cope with demand while allowing them freedom to print more at their leisure.

so those spouting out FUD please read the details of ripple, or atleast try beta testing how it works. and have some half knowledge about what ripple actually is/will be used for before shouting out bitcoin Armageddon stories.

"All ripples were made at the network’s inception (100 billion). No more will ever be created."

The way I understand ripples (XRP) are merely used as a DDOS/Spam prevention measure. No reason to hoard unless you want to attack the ripple system at some point.

I'd like to try the beta client, have a wallet (rpH3zuMch2GrrYX724xGWwbMGwiQ5RbSAU). Can someone send me some token-amount of something? There's not much I can do now, need some contacts at least. Also: how to issue my pig-halves?

This is getting way off-topic, but to answer your question, if I did choose to give you the key, we would both have it, so the key itself isn't scarce. It can't be consumed, only replicated. There is value in having monopolies on certain kinds of information, however, and it is these monopolies which are scarce. If I agreed to tell you the private key, I would be consuming my monopoly, trading my exclusive knowledge of the key for other goods.

Scarcity is fundamentally the idea that there isn't enough of a good to go around, no matter how it's distributed, implying that some uses must be prioritized over other uses. Information benefits those who know it without being consumed in the process; there is always enough of it to go around, though it isn't always to the benefit of those who know the information to share it with others.

for those that didn't spot it: here you can get some XRP: https://bitcointalk.org/index.php?topic=145506.msg1544043#msg1544043

I made a thread to talk about and test ripple: https://bitcointalk.org/index.php?topic=145896.0

Oh, so your whole deal was just to pretend that you didn't understand what people meant when they said "information is scarce". To clarify, when everyone else says "information is scarce" they mean what you mean by "monopolies on certain kinds of information are scarce".

so IT IS possible for them to create more ripples, isn't it?

No

Well, right now OpenCoin could do whatever it wants, though that would be a pretty self-destructive thing to do. Once the system is decentralized, it would be equivalent to Bitcoin people agreeing to change the block reward. Can anyone 100% guarantee it won't happen? No. Is it likely to happen? Not at all, not unless something truly awful would happen if it wasn't changed.

For example, one could imagine in the far future if XRP are so scarce that their divisibility is a problem, there could be an agreement to multiply all XRP values by 1,000 to restore divisibility. This is at least sort of creating XRP. (And one can imagine this same thing happening for Bitcoins.)

No, I understand what you meant, it just doesn't match what you said. Information being scarce and monopolies being scarce are not interchangeable concepts. The former is false due to the nature of information, while the latter is inevitable due to the nature of monopolies. The only "pretending" going on is the pretense that they are equivalent.

All of that is really beside the point, however, as bitcoins are not private keys, and none of the other information in the Bitcoin system is private. Even revealing all of the private keys wouldn't result in the creation of any additional bitcoins; it would just create a "gold rush" as people raced to transfer the existing bitcoins to new private keys. If bitcoins are scarce (and they clearly are), it isn't the result of any hypothetical scarcity of information.

So, a bot-net can really be useful in destroying a payment system? The bots will pretend to be honest nodes for long time before they start to attack the system. Is that possible?

Just read the wiki page about Consensus (https://ripple.com/wiki/Consensus).   Basically it's a system where each node trusts a particular set of validators who are believed not to collude to about the ledger.

It seems quite smart.


From what I understand, one needs to find people to trust not to be the same person or working together to screw you, though.  It should not be too difficult, I guess.

They could pull a long con after gaining high trust.

From what I understand, such an attack would be successful only if the bots are capable of convincing other humans (or even other bots) to elect them as validators.  Humans will probably chose other humans as validators, so those bots would need to pass a Turing test.

Of course, the attack could be done only with humans but then it would require quite a lot of human work.

Just a couple of basic questions as I'm trying to understand ripple....

Would ripple help secure bitcoin because it further abstracts exchange? For instance already bitcoins are a "virtual" currency. The government can try to make bitcoins illegal. But if ripple is built on top of bitcoin all the sudden now not only is it a virtual currency being traded but it isn't even really being traded... just debts are being passed around. Is it possible that it could somehow legally protect bitcoin in the future? Just wondering.

Yes and no.

Yes, because indeed the exchange system in Ripple is P2P, so it's very difficult for the government to stop it.

No, because Ripple is also vulnerable, at least because of its Gateways.  However, I presume if Ripple is successful, then the internal fiat currencies could be used per se and then the system would not need gateways anymore.

Unfortunately in some jurisdictions debt is a magic word, so that you always have to accept fiat instead of whatever is actually owed, or something like that?

So if you held, say five million bitcoin-IOUs, someone could, on some day when bitcoins happen to hit a dip in value on some exchange some jurisdiction uses to decide how much of their fiat bitcoins are "worth", send you fiat of that jurisdiction to cancel the five million bitcoin "debt".

Good luck buying five million bitcoins with that fiat...

-MarkM-

It's possible, but it requires a lot of people to do a lot of things very wrong.

I am going to lock this topic since I feel like my question is answered.  Most of these discussions should go in Alternative Cryptocurrencies.