Bitcoin Forum

Problem

Ripple aims to be a decentralized system. But as long as a significant portion of the XRPs is handled by a single entity, there's no way the system can work. Currently, on the 100 billions XRPs, 50% will be given through give away operations, 30% are kept by OpenCoin to fund itself and 20% are kept by Ripple's founder.

There's no way a sustainable economy could grow if, at best, 50% of that economy is in the hand of the same people (OpenCoin and founders). Even 10% is completely crazy. Worst: even if, later, the founder and OpenCoin spend most of their XRP to try to bootstrap Ripple, there's no way they could prove it. Ripple will forever lives under the threat that someone might have 10% or 20% of the entire economy.

If all the technical problems are solved (opensourcing the server, publication of mathematical demonstrations, etc), it would be a shame that Ripple never take off only because the founders were too gready. It is also in their best interest that Ripple becomes popular. It's better for them to hold 0.1% of a 100 mililons $ economy than 10% of a non-existent economy.


Proposed Solution

Bitcoin economy was, at the start, heavily boosted by the faucet. Such a faucet should be implemented for XRPs too. The faucet will give, for free, a given amount of XRPs but only once per IP and once per Ripple address. Sure, it is possible to cheat but I believe that it cannot be done on a large scale if protected by a captcha. This will allows everyone to try Ripple. Some will manage to get 10 or 100 times from the faucet. So what ?

Another thing is that, once you've got your free dose from the faucet, you could still get XRPs by buying them for a fixed price or by giving a cupon code. This cupon code will enable OpenCoin to still make some giveaways. Instead of asking for a Ripple address, they will send cupon codes to people. The fixed price is very important: it ensures that, during the bootstraping, there's always a cheap way of buying XRPs and using the network. It also discourages early speculation.

The faucet will also be transparent: the total money in it will be known and displayed publically. At the launch, the faucet will be loaded with 99% of all the ripples. It will be very easy to check at the start that there's well 9,900 millions of XRPs in the faucet. Transactions will be displayed publically so anybody can check for potential problem.


Details

1. Why 99%?

The more goes on the faucet, the better. I would say that 99% is the bare minimal. Less than that leaves too much risks for a centralization. And, as said previously, the risk will *always* stay. Nobody would ever be able to proove that the risk fades away.

2. What should be the fixed price of a XRPs?

It could be a fixed price in bitcoins, strongly linking Ripple with the Bitcoin economy or a fixed price in any fiat currency. But then, the question is: which fiat currency to choose? [1]  Both solution should then be discussed openly. The price should be low enough so that it discourages cheating but high enough so nobody can buy a significant portion of the market.

Having a low fixed price also discourage the use of XRPs as a hoarding money but reinforces the anti-spam goal. It is in the philosophy of XRPs (at least as described on the wiki).

3. How much should the faucet gives?

Currently, OpenCoin is sending 40,000XRPs to individuals. It means that the faucet will be able to make nearly 250,000 donations (minus the sales). If the price of XRPs should be fixed, the free faucet could decides to give less and less. This will encourage early adopters to try the system.


Questions

1. The faucet will ultimately dry out.

That's the goal. When the faucet is dry, we can make the assumption that there's at least some distribution of XRPs accross a few ten thousands of players. At that point, the experiment may start.

2. The price needs to be adjusted.

A fixed price will introduce some stability and some trust in the system. It will reinforce the idea that XRP is a way to prevent spammy transactions, not a hoarding money.

3. OpenCoin needs to make money.

OpenCoin will receive the money from people buying from the faucet, will keep 1% of the XRPs (minus those already given) and will have its online/consultancy services. If that's not enough then OpenCoin is obviously too greedy to be trusted for launching something that big.

4. Someone could buy a lot from us to control most of the economy.

Firstly, it has to be noted that this power is already in the hand of OpenCoin. So why cannot we trust someone else who would do exactly the same: throwing early money at high risk to gain significant control of a future economy?

Now, we have to think about what it means: the more one single player buy XRPs, the less the Ripple economy has a chance to become successful. Do you think that a bitcoin would worth 34$ if 10 players were keeping 1 million BTC each? I don't think so.

The situation is then exactly the same for any rich player than for OpenCoin: finding a balance between earning money and not crashing the structure by controlling too much.


5. OpenCoin has too keep some reserves, to reinject in the economy if needed.

No. It would means that OpenCoin becomes the government of the completely centralized Ripple economy. There's only two solutions: the Ripple economy sustains itself and is able to survive through problems and crisis or it is not. In that case, Ripple is not the solution we need.

Having OpenCoin as a Benevelent Dictator of the economy is the worst possible thing and is, by definition, the opposite of decentralization.

6. OpenCoin could buy from itself.

See question 4.




[1] Another solution is to propose a fixed price for most currencies (like dollars, euros, …). It doesn't matter if the price is not the same in different currencies: it's a selling price but not a buying price. During that bootstraping phase, the market price of XRPs will never go above that fixed price. Say that the fixed price of an XRP is 1€ and 1$ but that 1€=1.5$. It is more interesting to buy your XRP with dollar but it doesn't mean you will find someone to sell your XRP at 1€.

Interesting lead.

The thing is, if people object to mining because it wastes electricity, they should object even more to having to fill out a CAPTCHA. Or if they don't, how about CAPTCHA-based mining? The problem with CAPTCHA is it is not an objective PoW unless audited by someone (in which case it is even more wasteful) or unless OpenCoin knows all the solutions in advance (which is unfair as they could automatically collect the dough).

To me the elephant in the room is that equitable distribution has been a problem for a long time, and it only finally found a solution in the form of PoW. PoW was a game-changer precisely because it was the only system to solve yhis hard problem of how to fairly divvy up currency units.  Barring another ingenious breakthrough as big as PoW, there's no reason to expect that anything besides PoW will be suitable for the task of distributing XRP.

OpenCoin calls this a hard problem and asks for suggestion on how to overcome it. Well unless someone can make that next big breakthrough, the only answer available is PoW. It seems to me very strange that anyone in the Bitcoin community wouldn't understand this. With the current level of technology, spending electricity is simply the price that must be paid to effect fair distribution. If that is unacceptable, the project will probably have to be reconsidered in some fundamental ways.

A faucet is a total non starter. Anyone with Tor and a script could continually pump out new Ripple addresses and connect from different IPs, to loot the faucet.

The only reason that the faucet marginally worked with Bitcoin is because Bitcoin was the first cryptocurrency and people didn't quite understand how big it would get. Now that Bitcoin has won the hearts and minds, there will be a million greedy mouths trying to suck at the Ripple faucet for a second chance at "get rich quick."

XRP's are not 100% of the Ripple economy its more like 0.1% or maybe even less.  The economy of Ripple is based on the IOU's bought from trusted Gateways like BITSTAMP.  XRP's are for paying tx fees only, while yes I agree they should get as many XRP as possible into users hands but Ripple still has very few users beyond members of this forum.

That's indeed a valid point that should be said more. In fact, would Ripple work without XRP at all?

You've been fooled by the OpenCoin propaganda. XRPs can be used for whatever people want to use them for. Right now:

- You can send and receive XRPs between anyone else without incurring any gateway fees
- Only 100 billion XRPs can ever exist
- XRPs are divisble down to many decimal places

XRPs have all of the qualities of a currency.


It would "work" but then anyone could spam the network with transactions, effectively creating a denial of service. In order to discourage spam, transactions have to have a cost associated with them. For efficiency and performance reasons, the cost needs to be paid in a currency that is also transmitted by the Ripple network. For economic reasons, this currency needs to have some non-trivial value. It must be expensive enough to make spamming costly.

So no, Ripple cannot work without the XRP concept. The problem with XRPs is that they are the worst sort of pre-mine.

I don't agree. One guy paid a pizza 15.000 BTC not further than 3 years ago. If he had keep them, he would now have 450k$, right? Not really. If he didn't spend those btc and nobody ever spent them, then the bitcoin we know today would not exist. The faucet was a *huge* helper and is not different at all from the giveaways of OpenCoin.

What was subtle about the faucet was that the value given was decreasing. When I used the faucet, I received 0.5 BTC. Then it became 0.05, etc. (I think it was even 5BTC at the start). The faucet was taking its money from donations from rich bitcoiners.

The situation is exactly the same here except that we have only one rich Rippler: OpenCoin.

Yes, I'm saying that yes the faucet did help Bitcoin. But only because Bitcoin was the first cryptocurrency. Ripple doesn't need a faucet now, because Bitcoin has already created a community of people who are open minded to the concept of a digital currency.

The Bitcoin faucet is MUCH different than the giveaways of OpenCoin. Unlike the Bitcoin faucet, no one can "mine" XRPs. They are totally under the control of a handful of people. Some of these people are secret: OpenCoin, despite having the word "Open" as part of it's name, does not reveal who works for them or who is funding them.

Ripple would definitely be better if OpenCoin destroyed the 100 billion XRP they gave themselves and switched to a proof of work like Bitcoin. At that point, a faucet would certainly be helpful. But not in it's current incarnation.

I would be curious to hear about people from OpenCoin. Why are they so secret?

I'd also say people should not focus too much on these XRPs. The original concept of Ripple (it was conceived in 2004) is not about a built-in unit, but rather about peer-to-peer bartering and banking with any currency, even Ithaca Hours or whatever. Thus, this is not OpenCoin propaganda.

These XRPs seem to be a technical necessity for the current implementation of Ripple. As long as they solely function in a role as some kind of stamps, I wouldn't mind much if there is a little centralization to them. But if people hype it up into a proper, widespread currency, and if also the OpenCoin organization wants them to become more valuable, then it's indeed problematic.

Yep, that's exactly what OpenCoin wants people to do. But the usefulness of XRP as a currency so completely eclipses the IOU feature that it almost makes it insignificant.

Let me ask you a question: why would you accept someone's IOUs instead of XRPs?

Liquidity. It's very empowering when people can issue their own promises. Also, intelligent credit clearing in the network is a powerful feature. It's an elegant solution to the Greek Village problem (http://www.nationalreview.com/corner/286017/euro-parable-john-derbyshire).

XRPs have more liquidity than any IOUs. It is impossible to prevent someone from sending you XRPs. But it is possible not to take someone's IOUs. In fact the only way to receive an IOU is to first extend trust, and in sufficient quantities. XRPs have more liquidity than any IOUs.

What OpenCoin are doing/have done (with some degree of success) is move the discussion to HOW to fairly distribute XRP.  In fact, given they're happy to run a centralised system, there's no need for a block-chain or XRP at all - they could just manage the ledger on a private server.  PayPal (and other centralised services) have managed to do that without problems with spam.  Of course then they'd not be able to sell the Ripple concept so easily here - as it would be OPENLY centralised.

But they could promise to decentralise it later without any detail of the plan for that.  They seem to think a vague promise to decentralise XRP supply is fine - so if the communty will accept a vague commitment on one promise to decentralise why wouldn't they accept a different vague promise (rhetorical question of course)?

Did you miss the Captcha part? unless you have created a De-Captcha algorithm that is 100% effective, the Faucet will work. 

If this is the only problem, it's a technical one and we could imagine plenty of solutions. Let's assume that we have a faucet that prevent abuse (at least enough to make it anecdotical)

You'd accept IOUs for three reasons:

1. The payer may not have XRP, since those are in finite supply and take effort to acquire.

2. XRP, like BTC, isn't be a great unit of account, since its value hasn't stabilized yet.  Unless you want to constantly be keeping an eye on the current XRP price and doing conversions back to more stable units, like dollars, or better yet, something like Terras (https://en.wikipedia.org/wiki/Terra_%28currency%29), in your head.

3. You are unhappy that a small group controls the majority of XRP and you'd rather not use it for payments.

from the horse's mouth  ;)


lol  :D  ;)

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This will never happen.

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can somebody help me get started on ripple i have 0 and wanted to use the exchange.