Bitcoin Forum

http://www.americanbanker.com/issues/177_235/disruptor-chris-larsen-returns-with-a-bitcoin-like-payment-system-1055009-1.html

if anyone read; what are his supposed improvements over the bitcoin code?

A block every few seconds instead of every few minutes. The article says this will make POS transactions be confirmed faster.

kickass

It is Ripple (http://en.wikipedia.org/wiki/Ripple_monetary_system). Ripple is a great idea that has been around since long before Bitcoin and a good complement to it. Wonderful that someone is engaging this much in it. Together with Open Transactions we are getting ourselves some seriously disruptive economic infrastructure.

Indeed Ripple and Bitcoin can be complementary.   Ripple is to credit what Bitcoin is to money.    Banks have so far been dealing with both concepts in the same time and bitcoin challenges them only on the money part.  Ripple could challenge them on the other one.

Though I'm not sure how Ripple works exactly, especially regarding whatever can be done whenever someone does not pay his debt.   In other words, I wonder if a credit/lending system can work without any kind of recouvrement (https://fr.wikipedia.org/wiki/Recouvrement_de_cr%C3%A9ances_en_France) (sorry I don't know the english for that).

Sure it could but would likely need to integrate with more traditional infrastructure. For example, A could trust B with $1,000,000 via contract with something like a line of credit secured by some asset (https://en.wikipedia.org/wiki/Collateral_(finance)). Should B default then A could seek recourse through the court system, or even use something like judge.me (http://www.judge.me), against B and the secured assets according to the terms of the contract.

Ripple is a great idea for a system for people that trust each other. It is not appropriate for a financial system as it is far more corruptible that the current fractional reserve system. IOUs, really? This is article is a disingenuous claim.

[snip]Larsen would say little about the details of the venture. "We're in stealth mode," he says[/snip]

Didn't Trendon Shavers say stuff like that?

Ha.  The way lending works initially is if you don't pay back then u hire the mafia to break the borrowers leg.  Ripple will only work if the mafia equivalent group can be hired on silk road.  Otherwise, I believe ripple will fail.  Fugger also said the same problem existed with previous versions of ripple.  Everyone wants to borrow but no one pays back.

No, this is the problem (with LETS) that Ripple solves.

Trust is not enough.  You need law, contracts, enforcement and penalty.  The only penalty if you dont pay back is you get kicked out of you trust network, which is not a big deal.

The trust network is your friends and family. Most people don't want to get kicked out of that. And those who don't care are already kicked out. It's just as easy to borrow money from friends and family without Ripple. It's just not as easy to use that credit to make payments to strangers across the world.

Let's us dudes credit each other a million ripples so we can all be rippleaires. We'll give our friends a discount and kickback for accepting our IOUs. Then they can be rippleaires too!

but this is precisely how credit scores work and they work pretty well over all.

Go ahead! This affects no one but you and your friends. Great for you that you trust each other that much!

This is how the current system works. It's not about friendship, it's about collusion. Quants make the IOUs out of whatever they scrape out of the trash bin and their broker buddies sell it to suckers. Ripple will work the same way.

Ripple seems to be quite vulnerable to 'gaming' as some people have already said.

Any links or arguments that show otherwise?

In other words, if your intent is to exploit it, so you don't care about knock-on effects of being 'exposed', how far can you go? Seems as exploitable as online voting polls.

Suppose your mother gives you huge credit, say a ton of gold or simply infinity. Offer to buy bitcoin for gold and pay through Ripple. You would like to buy for a full ton of gold but sadly no one with an actual ton of gold gives that much credit to your mother. Maybe she gets a kg though, so you order 1 kg gold worth of bitcoin and get them sent to you. Now you have a 1 kg gold debt to your mother, she has a 1 kg debt to her friend who in turn has a debt to someone else all the way to the bitcoin seller.

If no payments flow in the other direction your mothers friend will eventually want the debt settled so she pays out 1 kg gold. This is ok, you are her beloved child and she would trust you with a ton of gold! When you meet next christmas she wants her gold from you. This is when you say "Go to hell, mum. My intentions are exploitation and I don't care about knock-on effects of being exposed.".

Are you kidding? My dad would beat the shit outta her if she loaned anyone gold. I would need a version of Ripple that exchanges protection. Maybe you would have a bouncer dressed as Santa pay him a visit and take Ripple as payment. I'm not sure if he would need a gun though. Dad might get jealous of a guy carrying around a lot of presents. It might be better if he has a getaway driver as well, just in case. Happy Holidays!

The point I'm making is that it would take one willing scam artist to play a nice confidence trick, and then the whole thing unravels. When considering this system, the 'stigma' of social shunning doesn't mean a thing when the person has already set out to deceive people for profit.

How would it unravel? A Ripple network is decentralised and robust, pretty much like an internet for credit. If one node is corrupt it is only bad for its immediate neighbours, who actively and voluntary took that risk for themselves. The rest of the network is not hurt and future transactions will be routed around the bad node.

Ripple does not rely on social stigma. The participants can handle their own risk any way they please: love and flowers, hitmen, social stigma, contracts and courts, whatever. The system couldn't care less. If a participant fails to do this effectively no one is hurt but itself. Risk or cost can't be pushed to others.

I don't see the point of the whole thing it the network is not supposed to percolate.  And if it does, then the risk exists for potentially everyone.

The risk is not for immediate neighbors if conspirators are playing the long con. The risk is based on trust. Ripple requires faith that people will not conspire to defraud. A Ripple system can be layered on top of Bitcoin, but cannot replace its trust-less utility. You can even use Bitcoin to transact with known fraudsters through escrow.

Take the bitcoin-for-gold transaction above. Bitcoin-seller sends bitcoin to U and expects gold in return.

Gold credit:

Bitcoin-seller to U: 0
Mother to U: 1000 kg
Friend to Mother: 1 kg
Bitcoin-seller to Friend: 2 kg

Debt:

U --1kg--> Mother --1kg--> Friend --1kg--> Bitcoin-seller

How could anyone here hurt someone who has not personally given them credit?


You can use Ripple to transact with known fraudsters too. As long as someone has enough sway over the fraudster to dare give it credit the rest of the world get a network path to the fraudster through this someone.

If someone in the chain does not pay, then everyone else does not get paid.   Sure, everyone who has not been paid knows personnally whoever did not pay them, but still, the probability of not getting paid does not depend anymore only on the person you lend money to.  That's what I meant when I wrote that the risk is distributed.

I guess this is not much different from how lendings actually work, but to generalize this and to make it purely software P2P is actually kind of scary.

This is correct. Think of pirate in this scheme. You didn't trust pirate, but you trusted Patrick Harnett. Partrick Harnett didn't trust pirate either, but he trusted Jackass. Jackass trusted pirate. If pirate defaults, then this can cause Jackass to default, which can cause Patrick Harnett to default, which can cause you to default.

I'm not saying it is a bad idea, but it is definitely scary.

Yeah, one might call this the domino economy.  As long as everyone stands straight, everything's fine.

http://3.bp.blogspot.com/_KmWgXYmoaIM/TUim0qE6o1I/AAAAAAAAB2o/vFmL__7Pc6o/s1600/dominos.jpg

It is not a chain of payments. It is a chain of credit. It is perfectly normal for Bitcoin-seller to get the debt settled before Friend gets anything from Mother. Nobody's payment is conditional on any other payment happening first.

It really much does not look so as you presented it initially:



But let's assume you are right and that it is not a chain of payment but a chain of credit, whatever difference that could possibly mean.  Well, then it could be a chain of payment.  By this I mean that there is nothing preventing a member of the chain to expect to receive a payment in order to pay hi own debt, possibly gaining some benefit in the process.  That would be some kind of credit rate arbitrage and we all know this will happen.

That is Ripple payments shifting around and cancelling debt, not settlement payments moving actual currency. Sorry for any confusion.


Sure it will. That is when the friends of such members learn that they have given them too much credit, both literally and figuratively, and will have to adjust it downwards. (Unless of course they contracted this behaviour from the beginning in which case everything is fine.)

Ripple tries to democratize and idealize the old failed system of credit. There's a reason it is failing, and it isn't because the banks have control of credit and money, but because money and credit distort values and produces aberrant behavior. Credit is a terrible idea, mainly because it is an idea based on false authority. The universe does not lend credit, credit has no basis in reality, credit is an idea, an illusion that we ourselves create to maintain the fiction that we have ownership over something, or that we are owed something or that we deserve something. Let's stop playing these detrimental mind games and start recognizing the realities that we find ourselves in, the unprecedented technological advancements we have achieved and the understanding that we have so much more to gain if we didn't paralyze and cripple ourselves with the ancient and outmoded idea of money.

I'm not a fan of credit either, but this is just no exact.

The word "credit" comes from the latin "creditus" which means "to believe, to trust".  We may not "deserve" things, but we do expect stuff to happen.   It's based on the ability for one human being to express his future motives and actions, and for an other human being to hear about it and thus predict what will actually happen.  It's not just humans.  I'm pretty sure all primates are capable of anticipating the behavior of other members of the group.    Same for many superior mammals and also for plenty of birds, who trust each other when they let each other take care of the eggs in the nest, for instance.

The universe has lent credit as soon as he invented a sophisticated central nervous system.

I expect the force of gravity to be in effect constantly and consistently, but a force of nature is not the same as the overwhelming possibility space of human behavior. And basing society on the presumption of future fallible human behavior is unlikely to serve us well in this time of technical and scientific capability.

ok sorry to just veer off course like this but what on earth is a venus project guy doing in the heart of the crypto-anarchism/anarcho-capitalism movements. You do realize that bitcoin is money and that rbe proponents are explicitly anti-money right?

Hey dude, how many Bitcoin do you want for your Marxism with robots?

 :D

You're the only one who talks about "basing society" on something.  I merely talked about acknowledging that the notion of credit does exist and allowing it to exist.  Much different.