Bitcoin Forum

"Ripple: Open Source Scam Payments".

0. "Trust" (confidence, fiat style) instead of decentralized & provable. Saw that you have 1 BTC on Ripple? You don't. You are TRUSTING that someone has 1 BTC 'for you'. Compare this to a true cryptocurrency - you have 1 bitcoin, you can sign the private keys to spend it. Not someone else who is bribed by Ripple (see #4).

1. Not open source. You can't get the server source code, make changes to it or create your own fork.

2. 100% of the XRPs (which can be traded with btc, usd, etc) are premined, and goes to the founders and OpenCoin Inc.

3. Centralized as only OpenCoin Inc developers can contribute to the code and make whatever changes to the network as they desire.

4. Bribes exchanges with XRPs (NovaScam style), exclusive benefits, so they accept Ripple and otherwise won't have.

5. Distributes small coins to people to encourage usage of them. They plan to only distribute half of it, and keep half it it themselves to dump & bribe people (see #4)

The idea behind Ripple is certainly interesting and novel, but with the current business decisions Ripple is a centralized, centrally issued and non open source scam currency.

This is not a scam in the strictest sense of the word, but rather deceptive business practices that are attempted to be kept secret.

Actual quote from Ripple employee:


Ripple is a trust based currency, and it will collapse. Your 5 "BTC" and 444 "USD" will vanish into thin air, and all you have left over will be the premined XRPs.

good thing i sold

Great thing you sold them, because Ripple Devs just fairly "giveaway" 50 billion ripples to themselves to buy a mansion and devaluing / inflating XRP. Oh, and develop "open source" software.

agreed... its a HUGE scam

Just like NovaScam..

I dont think its a scam, I just dont think it will work. A giant digital IOU system is cool in theory, but fairly worthless in practice.

As a person who owes other people $ and has a lot of $ owed to them IN REAL LIFE I will tell you it certainly doesnt make life easier.

Sure, 85% of the people involved are good for it, but being able to collect when you want to and when you need the $ just doesnt happen.

In the gambling world, which I am big in, when someone owes you a lot of $ you can SELL the debt but you usually take a big hit.

Lets say you beat a guy for $5,000 in Backgammon, he cant pay immediately but you know hes good for it and he is a know person in your circles.

What you do is go around to a few people and say, hey, Larry owes me $5k, will you buy it for $3500? So you get your dough NOW, but less...

Owed money doesnt equal the exact amount. Collecting is hard and just because someone owes doesnt mean they will pay on time or all at once.

For the simple reason that $5k in debt isnt actually worth $5k (because of issues collecting and the fact that time = money) ripple will fail.

Oh, and a central authority plans to "give away" the majority of the currency units? I dont see that ever helping the value of them.

Im not signing up for ripple and have ZERO interest in it. I have enough of that whole business in my real life to know its not worth it.

Great point. I can't wait till an exchange runs away and all the paid by opencoin ripple fanboys watch as their USD balance change from 500 to 0.

Might even start a bounty, "break Ripple's IOU system majorly and get 100 btc"?

No, it's not a great point. If you dislike the motives behind Ripple, I'd understand, but people seem to be upset with a lot of things that aren't really big issues. A promise of being paid one dollar sure is not the same as one dollar in your wallet, but this is just the same in real life. In real life, you "solve" this by dealing with banks. In Ripple, you will probably deal with gateways having a role very similar to banks. It's a bit of stretch imagining Ripple gateways becoming as large and trustworthy as banks (well, if you really consider banks that trustworthy), but the concepts are in essence the same.

The problem is a line of trust does not work in practice. A trusts B. B trusts C. C trusts D. D trusts E. E trusts F. F defaults.

You ask B, and B tries to contact C. After a few days, B finally got in touch with C, and C looks for D who moved to France a few months ago.

That's not how trust works in Ripple. The trust line only exists for the instant the payment is made. Otherwise, each extension of trust is independent of every other one.

If you trust B, presumably it's because you entered into an agreement with B such that they have an obligation to settle their debts with you. What interaction they have or don't have with C is none of your business. Either B makes good or they don't. If they don't, then they are betraying your trust. Nothing C, D, E, or F does has anything to do with it.

It's like if I send you a check for $50, you deposit it in your bank, and then your bank goes out of business without paying you. It's not my problem. I only chose to trust *my* bank. Once you take the $50 as payment, how you settle with those you chose to trust is your issue. (When you set trust, you are essentially setting what you are willing to accept as payment.)

Because of issues like this, we're not relying on the community/social credit angle. I think long term it has tremendous potential and may even change the way people think about money, but there are a lot of hurdles keeping us from getting there.

That's great in theory, but it's not going to work in practice because nobody is 100% trustable. The blockchain, on the other hand, becomes nearly 100% trustable with a high amount of transactions, and/or checkpointing in the client.

Again, this sounds great if you just have a few hops. But once you get to a large amount, people will start realizing they're losing all their money because of covering for scammers, people who died, etc.

It's not going to work in practice, and is just a disaster waiting to happen once a sufficiently trusted person / gateway collapses.

I also think "scam" is an unwarranted accusation. Ugly, brazenly opportunistic crippling of Ripple for profit, false advertizing at this point about bring open source, and misleading statements from some about XRP being valueless - sure. But not a scam. Anyone investing in cryptocurrency has to understand what they're getting into, and that includes investigating these points.

The number of hops is irrelevant. How many people you trust and how reliable they are has nothing to do with how many hops a payment takes.

No, it is relevant because people will stop using Ripple the more times they have to pay for other people. The more hops there are, the more likely this is going to happen.

Holding ripple is just about the worst thing you can do right now.

I have to agree with TradeFortress here. While I have a great deal of respect for the developers of the project, the way I understand Ripple as it currently functions, I simply do not see it becoming a viable service in the long term. I await further announcements and developments, however.  

As I said, we're not relying on community/social credit. We're promoting Ripple as a payment system based on gateways. The social credit system will always be there should people be ready to use it. I agree that it's difficult to use safely right now, hard to understand, and so on. Much better tools will be needed, and even then it may never catch on. I genuinely believe that one day it will be Ripple's killer app and will transform the way people think about money and finance. But we're not relying on it.

In any event, among people using the same currency, the path will almost always be either:

Payer -> Gateway -> Recipient

or

Payer -> Payer's Gateway -> Middle -> Recipient's Gateway -> Recipient

Where the "middle" will typically be someone who holds IOUs from the recipient's gateway and accepts IOUs from the payer's gateway. Both the payer and the recipient are only necessarily trusting one gateway. You won't have to do more than that to use the system to make and accept payments.

The number of hops has no effect on the number of people who owe you money. There's just no connection at all.

It really tells you when one of the employees doesn't even know their own system.

Ask yourself this: Do you want to owe someone money because someone owed you money? Do you want to owe someone money because someone owed you money as another person owed that someone money?

Unless you like paying out of pocket for the mistakes and scams of others, ripple is destined to fail. There's no killer app for something that has a critical flaw in the logic, execution and pure greed of the developers.

Maybe I do and maybe I don't. If I don't, Ripple doesn't force me to. If I do, Ripple lets me. You don't ever have to issue IOUs to use Ripple to make and receive payments. You need never owe anybody anything unless you find it to your advantage to do so.

Again, you need never owe anybody anything unless you find it to your advantage to do so. Read the very post you're replying to. Nobody but a gateway ever owes anybody anything in the typical payment paths.

You have to choose between the certainty of a small loss and the very low probability of a moderate loss. Today, every business that accepts credit cards chooses the former. If you do the numbers, the second makes more sense.

Wow i think this maybe the first time me and Trade fortress agree on something.

My reply on a different post

------Set me straight If I am not understanding any of this.

I would love a video of exactly how ripple is intended to work. Though I would suspect it would be hard to create a video explaining that 4 guys are going to create a currency give 50 percent away then hold the other 50 percent in the hopes that it gains in value. Then convince people that they should use it and even though 50 percent of them were given away for free! and the other 50 percent are held by the 4 oligarchs of digital currency! that they are valuable! 
So basically you have designed what could become the worlds most centralized currency with 4 members issuing and controlling the distribution of said currency oh and you have this little problem too

* Since OpenCoin's business model is to "hold XRP and hope they appreciate", we know that no proposals for fully decentralized distribution (e.g. "proof of work") can possibly be taken seriously.

So we know that you cant be trusted because of the nature of your business model.

Does anyone else see this ending in a repeat of the facebook fiasco between these guys all four of them in court suing one another over who did what and who owns what?

Let me know if i am missing something-----

haha this is crazy, everybody yelling it's a scam, and everybody still jumping the scamwagon xD
This way it may become a greater success in a few months then bitcoin has ever dreamt of.
And the founders? Oh well, they are already enjoying the full extent of their premined coins

100 million xrp (full) premine, exchanging at what.. 50.000 xrp per 1 btc... That is a very very profitable scam imho.

10¹¹ XRP is at the moment priced at around $100,000,000.

how can i make me own digital currency so i get rrich like these guys

Notice how most of the alt-coins are worthless, its because they are not different enough to warrant faith in their value to the same degree as Bitcoin.

However, ripple is a novel system that is apparently worth $100,000,000 at current market rates. Under the hood the xrp is simply another pre-mined alt-coin, however its this new IOU magic that is running on top that brings something new and unique into the world.

I personally think the centralized nature of this new ripple system will be its ultimate downfall but it is very unique and people are willing to have faith in this system and that might be enough.

We understand this risk well. That's why we want to decentralize the system as quickly as we can.

If serious, releasing Windows client build will be a good first step. 

Last time I checked, couldn't find it.

The client source is available.
https://github.com/rippleFoundation/ripple-client

As discussed elsewhere, the server source is not available yet. (The primary reason is that once other people are participating in the network, changes are as difficult as Bitcoin hard forks. That would slow the rollout of new features. So we'll delay releasing the server source at least until the feature set is reasonably complete. Once the network is distributed, we want people to be able to rely on settled expectations even if that means not adding new features.)

Technical details are available on our wiki and, if necessary, simply by asking us. I can't promise that I'll have time to answer every question, but we aren't hiding anything and so far I've been able to answer every technical question that's been asked. You can also find ledger and transaction structures available for download.

So if this is the case...why not just use the current monetary system? Same setup basically. Based on debt and trust of the government that the paper they print their name on is worth what they say it can buy (i.e. $5 dollars worth etc.).

I see no advantages with ripple other than more smoke and mirrors and another opportunity for the originators to either get shut down by a government entity or run with the funds given its centralized nature.

Banks are using ripple-like system for interbank money transfers for decades. It is called SWIFT. This is one of their greatest assets.

All ripple does is democratization of that idea by bringing it to anyone willing to use it. Power to the people. Take it or leave it.

It isnt about how much 1 person trusts a ton of people. It is the inter-trusting of different parties that are all linked together. Just because I trust B and B trusts C doesn't mean I trust C. And in fact if I know that B could be trusting known scammers or people I don't trust, the entire thing collapses because at some point B isn't going to want to trust A, D, F, G, H, J, K, ....Z.

A system based on TRUST is a flawed system. The current monetary system is based on that...."full faith and credit of the US govt"...as an example...means shit. Broken system.

Anything where I have to trust someone else, is a broken system. I rather trust the mathematics behind Bitcoin and Litecoin than an entity called "Opencoin Inc." ...or anyone who wants to use the system.

I trust me, I trust the bitcoin network as well as the litecoin network. Perhaps I also trust verifiable gold and silver products (after being tested).

That is the beauty of bit coin/litecoin, I don't have to trust anyone.

That is fine. If you do not trust anyone at all and nobody trusts you, you then will not be able to accept or send any ripple payments. However, if some entities could still trust you, this would enable you to send payments and then accept payments within some limits.

Trust just like risk is not something binary. Risks could be very small, so small that it is unwise to not ignore it. It is like refusing to exit ones house because there is a chance that one can be hit by lightening. The same is with trust. It is not reasonable to refuse to trust some modest amount of money to some reasonably trustworthy entity if it enables your participation in an important market.

In any case if you say that you trust no one and you have made a single trade ever on any Bitcoin exchange or held any amount of money in any financial institution then you are less than honest here.

I think you simply do not get what ripple as money is, I mean the concept itself. You do not see the forest behind the trees yet.

I suppose our definitions of "money" differ. that is okay. Ripple to me is not money, nor is bitcoin. Bitcoin is just a better currency than fiat paper and ripple.

Yes I have little risk-tolerance for trusting others with my "money" or value. I prefer to not have to put my trust in a system (ripple) that has a single point of failure.

To each his own I guess.

I think you still don't understand how trust works in Ripple. For one thing, most people will wind up trusting just gateways, and gateways don't need to trust anyone to function.

Say there's a gateway that's a regulated financial institution, and you and I each trust that institution. First, all we're trusting is that their IOUs will retain value. We don't need to trust them to do anything. We don't have to be their customers. Now, you and I can pay each other by exchanging this gateway's IOUs. None of us need to do any business with the gateway, the gateway doesn't need to do anything (except maintain the value of its IOUs by performing redemptions for other people), and the gateway doesn't need to trust anyone.

And say you trust gateway A and I trust gateway B. Gateways A and B don't trust anyone. We can still pay each other so long as there's someone who holds IOUs from one gateway and accepts IOUs from the other gateway. All we've had to do is trust one institution that doesn't trust anyone else, and we don't have to do business with that institution or rely on them to do anything specific for us. All we're trusting is that they will continue to do business and thus their IOUs will hold value. And we only need do that for as long as it takes us to move money.

Similarly, the person in the middle who makes the exchange possible just finds that his gateway A IOUs turn into gateway B IOUs, two conditions he prefers equally anyway. Nobody has had to trust him at all because the IOU exchange is atomic and instantaneous.

And, of course, we all agree that if you trust B and B trusts C, you don't trust C. But that's fine, you don't have to. The system can act just as if you do even though C's default can never harm you.

This has an embedded assumption that has concerned me a bit about ripple from the start.

Just because I "trust" gateway A and gateway B does NOT necessarily mean that I have no preference over which IOUs I hold.  I may well trust A a lot and only begrudgingly extend trust to B because I need to for some specific reason.  In that circumstance there's no way I'd want IOUs I hold from A exchanged into ones from B involuntarily just to let someone else avoid having to trust B.

Now I know in theory I can avoid this to an extent - by micro-managing trust.  But ideally I should be able to extend trust whilst locking it against being filled by any action other than my own (which would include filling of orders I had placed of course).  Or alternatively I should be able to lock specific IOUs in so that they can't be changed to different ones - regardless of what other trust I have extended.

Note that my preference for A over B may not be because of an actual lack of "trust" - it could be for reasons such as A being faster at redeeming IOUs on request or A offering other non-ripple functionality that I used or A offering cheaper cashout.  As it stands I can easily see a situation where I'd have to run multiple accounts with different trust profiles just to be able to swap my held IOUs BACK to my preferred debtors.

If we only "trust" "gateways" though, then it's not much different to today's banking system.

Ripple is a fascinating concept. The current explanations are dead on-- it's a decentralized (or centralized) modern SWIFT system where all the daily high value trust decisions are made by individuals without financial training instead of banks whose very business it is is to provide such services.

It will either end badly or it will start badly and end well. That is the gamble that the Ripple group are taking and they're fully aware of it. Joel is right to not focus on the "trust" part of things too much because those elements really are a breeding ground for scammers and deadbeats and everyone will get burned a little until everyone agrees that trust is worth money (something not many outside of finances and business owners really understand yet).

In terms of what it does, yes. The biggest exception would be flexible currency support for things like Bitcoins or silver dimes and cross-currency transactions. Of course, a lot of people and companies do find today's banking system to be pretty useful. If Ripple can be cheaper, faster, provide truly irreversible transactions, and be decentralized and open source so that anyone can participate and nobody can force anything down your throat, that's more than good enough in my book. That's where we're trying to go.

From this point of view, all the other things we're trying to do, like contracts, a native crypto-currency, and person-to-person credit lines are just extras. They might revolutionize money in the future or they could all fail entirely and Ripple can still succeed as a payment network.

I read it was 20%.

I think scams in Ripple will be about 100x worse than Bitcoin. You can essentially invent currency, try and social engineer your way into getting people to believe you have X amount of funds. Gateways (exchanges essentially) will be trusted for a while before they fold and take everything with them creating huge losses because they can invent funds they don't have.

A decentralized financial system based around human trust is pretty ridiculous. Banks work because they have the police and politicians on their side able to protect themselves (which is both a pro and con). People in ripple will nave nothing. I bet thieves would be licking their lips at the concept of Ripple.

Same as GLBSE. Just that this time you call it currency instead of asset. But you don't have to partecipate :P Just because someone created some odd currencies (or assets) doesn't force you to have anything to do with them, does it?
The system is more powerful, of course it enables you also to fail in more ways if you take risks you shouldn't. Just be wise and don't take them.

All this issues with trust. Of course the less trust the better, but sometimes you just can't help it. As it was repeated over and over, the most common use case for this feature is to trust an exchange. If you deposit 1000$ in an exchange to buy bitcoins, you trust the exchange 1000$, period. Is it so terrible if you have to explicitly declare it inside the system, since you are doing it anyway in real life?

ripple is a scam i lost about 10 grand with it

I honestly do not think Ripple is a scam.

It is a fascinating concept.

However, I can already take any kind of Crypto I want to for payment.

What I am wondering is why I need it? Where is the benefit for me?

bitcoin is a scam i lost about 10 grand with it


Btw, is there a better way to distribute crypto coins than premine and give? Mining at this point will lead to few players getting most of it and poor people getting none. TF, if you're reading this, please tell me a better solution (better than opencoin premine) for this. I think that the OP post is troll.

Well, I would beg to differ!

Funny how Ripple didn't collapse. Quick, somebody give TradeFortress another negative trust rating... LOL.