Nah, if you want to replicate the BTC network, you need to spend hundreds of millions to replicate its hardware infrastructure first, or your network cannot achieve the same degree of reliability and security, a Ripple network costs very little to create and thus very little to cooperate, all you need is trust, which is cheap, a botnet operator can just ask his thousands of nodes to be very cooperative and helpful with validating your transactions.
That remains to be seen. It's not inconceivable that the consensus process is superior to the block chain. It's also quite possible that it isn't. I don't think anyone here is in a position to know that just yet. |
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I'm simply saying it is not superior to the current system of Gox and other exchanges. That's my point. At best, it is a cloudy, less transparent way of achieving the same goal and exposing oneself to the same counter party risks and hindring oneself with the same bank regulations.
For one, it is (or will be) distributed, unlike Mt Gox. But don't you think that person-to-person rippling will allow a black market for exchanging between fiat and crypto to persist even in the face of draconian government repression? |
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"You" refers to whom the "you" in your sentence refers to, the Opencoin. They decide how much XRPs they will allocate to anyone out there at any given time, nobody else knows.
Why is that important? And how would OpenCoin know what happened to the money after they gave it away? |
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Notice something important though... the promise to investors must have been more than "you get X% in OpenCoin equity" because the company MUST ASSUME that it will be closed or shut down once Ripple achieves a significant size (the e-gold problem).
Absolutely. |
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Again, it doesn't do this. Ripple doesn't let you exchange between fiat and BTC. It lets you exchange between fiat IOU's and BTC. To actually take possession of the fiat, you're back in the normal banking/payments system.
Sure, but why would that be a problem during the transition from fiat to crypto? The same is true for Mt Gox or any other exchange. |
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And nobody other then you knows how much is out of your control.
What do you mean by that? |
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I think it reeks of hubris when you look at the financial mess a large number of world governments are in trying to manipulate their currencies; despite having 1000s of very intelligent people analyzing and reanalyzing their course of action, and plotting and debating various options a long the way....but yet a few programmers seem to think..."step aside, we'll show you how to manipulate a currency safely"
Not if you sit on nearly 100% of the money supply. |
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You lost me here, what do you mean the "bot would gain USD"? Are you saying an account controlled by Opencoin would start buying back XRP with a USD balance?
An account to which the bot has access. Initially the bot would be given a certain amount of the XRP OpenCoin intends to give away anyway. As it sold the XRP, the bot would accumulate USD. Then it could try to intervene as long as its funds (both USD and XRP) allowed it to do so, until a time limit expired and any remaining balances would be transferred back to OpenCoin. I think you can do this completely within the automated scripting system, making the decision to deploy the bot irrevocable. So you are assuming:
1) Opencoin is going to keep a large amount of USD balance within the system
Not necessarily a large amount, and if the bot ran out of USD it could no longer prop up the XRP exchange rate. 2) Opencoin is going to sacrifice this USD balance to by back XRP during a crash
Not just during a crash, but as a result of existing volatility, which it would reduce, at a cost. Also you seem to be under the impression that market manipulations is as simple as plugging numbers into an equation....such as "could have prevented last month's BTC bubble"....you mean to say if you had 1million bitcoins you would have been able to say "Oh uh looks like a bubble might be brewing, let me get out my texas instrument, *punch punch punch*, ok problem solved, just sell 300bitcoins every 30 minutes for the next 2 days and the price will increase at a nice 2-3% per month"...
No, you could program the bot to intervene if the price rose more than 2.5% in a day, more than 10% in a week, more than 25% in a month. Intervention could only happen as long as the bot had sufficient USD / XRP for the direction it wanted to intervene in. Its funds could run out, but it would still have some stabilising effect. It would be a more meaningful intervention than putting up walls, because those can just as easily be removed. |
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They would only be able to manipulate the price of XRP is one direction (down); by releasing additional XRP they can prevent the price increasing, or decrease the price if they wish.
One sided stabilisation could be useful by itself. It could have prevented last month's BTC bubble from arising in the first place, so it wouldn't have had to pop and crash afterwards. But what is the plan if the prices in crashing, how will the stabilize it? Start buying back XRP? (Don't think the investors will go for that somehow)
The bot would gain USD if it sold XRP, and as long as it had a positive USD balance it could also intervene in the other direction. As long as the XRP funding provided to the bot were not too large it wouldn't get in the way of plans to simply sell XRP. |
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You should read my last sentence, I do not worry about Opencoin manipulating the XRP market. What I worry about is some other organizations(like a botnet for example) creating a Ripple clone(if they release the source code then why not), and tries to outdo Ripple, all because they want the currency they create in the XRP way to appreciate, like what Jed openly admitted.
That would not be a problem with Ripple or XRP, but with the competing system and currency. If you stay away from that competing system, you should be fine. Whether Ripple will become a good model for a payment network remains to be seen, what I am convinced however, is that XRP is a bad investment.
Then don't invest in it. |
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OK, the predictable rate of BTC production vs the unpredictable release of XRP could be an advantage. The total number of both is fixed however. And if OpenCoin controls the release, they are also in a position to stabilise the exchange rate, which has clearly been a problem for BTC, so it's not universally disadvantageous for them to have this power. Then again, there are no guarantees they will actually do this. Maybe they could release a script that verifiably stabilises the USD/XRP exchange rate to within certain limits on daily, weekly and monthly swings until its XRP supply runs out?
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In this case creating a market expectation that XRP would be managed to retain a certain value then dumping them on the market would be seen as predatory.
But everybody knows how much XRP is hanging over the market. In the context of free banking it corresponds to the deliberate debasement of the bank's currency, or the issue of redeemable notes that it lacks the capacity to redeem.
That will not be possible once the source is released and the system becomes truly distributed as opposed to merely potentially distributed. |
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This is what I can't overlook, and therefore I can't take the rest of the content in your posts seriously.
Technically it's not a fatal flaw, but if the consensus mechanism turns out to work just as well (not a given), then that could be an advantage for Ripple. It is conceivable (but by no means certain) that this could turn out to be a fatal flaw in the competition between Ripple and Bitcoin. |
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I think Erik's point about ripple moving IOUs rather than assets around is an important one.
It's an important difference, but I see IOUs issued by gateways mainly as a temporary tool for the transition to crypto. Once Ripple was widely used, XRP could be used for everything and you wouldn't need IOUs anymore, except perhaps for exchange with other crypto-currencies. I don't think there is a fundamental reason something similar couldn't be done with Bitcoin. In any event, Ripple would give us exactly what Bitcoin needs right now: an efficient, distributed mechanism for exchanging between fiat and BTC. |
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It's easy enough to do real-time monitoring of BTC holdings.
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It's very different in that it is designed to be both distributed and open-source. And if the gateways are reliable, redeeming IOUs might be a relatively rare event. An IOU might be traded for goods and services thirty times before someone redeemed it.
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To actually get it, you're back in the normal banking system just as if you had traded BTC for USD on an exchange.
One of the things I find attractive in Ripple is that it might survive even in the face of dictatorial government repression, with fiat payments rippling through the trust graph, thereby still allowing the exchange between fiat and crypto to occur. |
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Don't you think that merely having a distributed exchange that can act as a bridge between fiat and crypto is already a very good thing, probably a crucial one? Ripple isn't quite there yet, but the concept seems sound. And even if OpenCoin doesn't deliver, surely someone else will.
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History tells us that even central banks in a position of monopoly have sooner or later abused their power.
Once they release the code, there can be no abuse. They can sell their XRP to the highest bidder, which is fair since they created them. If someone else builds a competing ecosystem around the Ripple code it seems unlikely they'll get a lot of money for it. In my opinion, the situation for OpenCoin is even bleaker, because once the source code is published, the competition with other Ripple clones will be fierce, and the future of XRPs will be tied to the future of OpenCoin in a very competitive environment. It is true there is a maximum cap of 100 billion XPRs, not unlimited, but I somehow feel XRPs may just be used to pay transaction costs, and be avoided as store of value.
In which case the world will still have a great distributed system for exchanging BTC for fiat money, which is exactly what Bitcoin needs right now. Envy is an ugly, ugly emotion. |
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mmeijeri, i thought you said they were taking money out of their own pocket to fund development?
They have VC backing. But selling XRP and spending it counts as taking it out of their own pocket. |
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