Most of the transactions we currently do in the financial realm of our lives rely on trust based systems.

Bitcoin, brilliant in design, sidesteps the need for most of this trust.

Bitcoin is a sort of digital gold with a built in transaction system.  Awesome and very useful.

Bitcoin's base value comes from fanboys, folks willing to take a stand for their monetary ideology, but most importantly its usefulness in transactions that can't be done online for legal reasons or when a person would prefer not to reveal their identity.  Due to this base value, it has attracted speculators who have driven up its price way beyond its value based on its base uses.

That said, in every day transactions, is it useful or practical for people to exchange their dollars (or other currency), pay 4% to move it to Bitinstant so they can get it into MTGOX, so that they can buy some Bitcoin (another 1/2 % fee), so that they can buy a pizza at their corner store?    I'm going to go out on a limb and say "no."

This is the MAIN problem with Bitcoin.  It is not useful as a transaction system to purchase every day items and does not fit well into the current system.   Would you exchange your dollars for euros to buy a pizza in the USA?   Then why would you do that with Bitcoin?  You wouldn't unless you already had a bunch of Bitcoin or you were living your ideology.

Ripple on the other hand, is first and foremost a PAYMENT AND TRANSACTION SYSTEM.   It can handle trust based transactions that people currently use and will therefore be readily accepted into everyday use (unlike Bitcoin).

So where does XRP and ripples (the currency in Ripple) fit in this equation?

I'm guessing but...

Opencoin, Inc., is smart in that they have printed up the currency in their instance of the pre-open source server almost like a stock issue. They have a certain number of shares that they are banking will increase in value, since xrp is the Bitcoin/gold in the Ripple system. They can hand out these "shares" like an IPO without the usual regulatory rigmorole and without having banks in between each transaction. Ingenious in my opinion. However, as mainly a transaction system, the value of the xrp will only increase and be worth something if Opencoin Inc. gains an early mover advantage in the market with their version of Ripple.

Anyone can make a Facebook clone even though Facebook isn't open source. The software isn't what makes Facebook worth something. It's the network of people and the infrastructure possible because of it. I think Opencoin is attempting to reach the critical mass needed to make sure that their instance of the server is looked at more favorably because of the network adoption vs. a clone.

If they succeed then their xrp will be worth quite a bit, in my opinion. If they don't they can still make money consulting with people running or implementing the software. The former would be preferable I would think.

So Ripple is taking the exact opposite approach of Bitcoin to gain adoption of xrp.   Bitcoin people have to convince others to use Bitcoin in situations where they would normally use their regular currency.   Ripple will merely need to get people to use their payment network for currencies they are already used to (by partnering with banks and other financial services) and xrp will become valuable as a result of that (it being the only trust-free currency in Ripple).

Now 1 BTC for 10,000 or 2 BTC for 20,000.

Now 1 BTC for 10750 xrp (Ripple).  I'm ONLINE NOW and READY TO DO BUSINESS.

Now 1 BTC for 14,000.  ONLINE AND READY TO DO BUSINESS. 

Now 1  BTC for 25,000 XRP

3.22 BTC for 50k

Now 1 BTC for 15,500 xrp.  Best deal.  I'm online now.

Now 1 BTC for 19,000 xrp

Did you receive 20,000 xrp from the giveaway?

I'll purchase them for 1BTC. ( 1 BTC for 20,000 xrp)

PM me first, letting me know the amount you're going to send and the BTC address you'd like me to make payment to.  

If there are less or more than 20,000 xrp, I'll prorate the amount.  

If you have any questions please ask.

In all fairness, the definition of an "Administrator" is defined as a " ...a person engaged as a business ..."  but how will "engaged in business" be determined?   If you collect a fee every time an IOU is moved in Ripple, I'd imagine they would consider that as "engaged in business."  

These regulatory agencies don't like loose ends.  They want everything under their thumb and I'm interested in how Ripple will be able to stay out from under that thumb.    It would be nice if these new technologies could  keep the barrier to entry for the average guy -  LOW.

I've discontinued this experiment.  The 20 AMZ's have been returned to me and I returned the cards to the original owner.   The person who took the AMZ's put a few into the market but there were no takers.   I am happy it turned out this way, since someone pointed out that the legality of this (at least in the US) is doubtful - according to a recent FINCEN guidance (see http://cryptome.org/2013/03/fincen-bitcoin.htm), people who "create" virtual currencies and redeem them are considered "administrators" and administrators are money transmitters.  Money transmitters must be licensed.

Here are the relevant parts:

"An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency."

"An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person.10 FinCEN's regulations define the term "money transmitter" as a person that provides money transmission services, or any other person engaged in the transfer of funds. The term "money transmission services" means "the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means."11

            The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.12 FinCEN has reviewed different activities involving virtual currency and has made determinations regarding the appropriate regulatory treatment of administrators and exchangers under three scenarios: brokers and dealers of e-currencies and e-precious metals; centralized convertible virtual currencies; and de-centralized convertible virtual currencies."


This brings up some big questions regarding Ripple.   Anyone in the USA who creates a virtual currency they redeem (even IOUS to your friends) is considered an administrator by FINCEN.   Am I missing something or would this put a serious damper on Ripple?

So it looks like there is a very small market in AMZ/USD in Ripple.  There is at least 1 AMZ for $10/USD-Bitstamp available.  So no premium to exchange whatever you'd like for an AMZ.  Not a bad deal.

The first person to redeem one from me will receive a 500 xrp bonus.   I'm looking forward to seeing how everything works.

NOTE: You can send AMZ to yourself and Ripple will let you know what paths are available (it will allow you to pay with BTC, XRP and whatever paths are available.

Well the issue of divisibility with gift cards in general, might be an issue, no?   If I made 1 AMZ = 1 USD,   then what happens when someone does a trade where they get .37 AMZ?  They can't redeem that, so that would be a problem.  Same goes if they have 3 AMZ (if the rate is 1 to 1).     How can the redeeming issue be resolved in these cases?

I couldn't decide whether to do 1 to 1 or this way.  The only reason I decided to go this way is that I didn't want people sending me 3 AMZ and me having to tell them they need at least 10 AMZ to redeem (since the cards I have are in $10 units).

However, I see your point as far as looking to the future.  As it stands, I'm pretty sure that the person I issued the 20 AMZ to still has them.  I could have them cancel all their orders in the order book and change the rate of an AMZ if that would work better for the future.  Should I do that?


This is a good point.  The acquaintance gave me packaged $10 cards so I didn't even think of emailing the codes.  However, I imagine I could open the package scratch it off and just email the code to someone, yes?   If that's the case I'll change the OP to reflect this so that redemption can be quicker.

I'd like to test out Ripple with Amazon gift cards.  So, to make this so - the AMZ is born...

1 AMZ is equivalent to 1 $10 Amazon gift card.

I, bitaccumulation () will provide 1 service for AMZ:

1)  I will send 1 $10 Amazon gift card for every 1 AMZ sent to me (free US Shipping).  Alternatively, I can scratch off the card and email you the code (faster).

I will NOT be accepting Amazon gift cards through the mail in return for AMZ at this time.  An acquaintance has 100 $10 gift cards and he has given me 20 of them in return for the first issuance of 20 AMZ's so that this test could take place.  I'm not comfortable taking gift cards from strangers since I don't know how to make sure they are real.   So for now there will be just these 20 AMZ's issued by me and I will not be accepting gift cards via mail.  This is just a test for now.

Notes:

I am not going to make a market in AMZ.  Trust me only for delivery of Amazon $10 gift cards or email delivery of the code. There may or may not be a market for AMZ by other parties.

* In order to handle official bitaccumulation AMZ in ripple, you must trust the address () for an amount of AMZ that you are willing to hold.

* Your trust in bitaccumulation means:
1) You trust me to make sure the Amazon gift cards I receive are real and have the balance stated.
2) You trust me to properly ship the gift cards.

* delivery details: 1 $10 Amazon gift card will allow you to purchase $10 worth of goods from Amazon.com.  NOTE:  These gift cards only work in the USA based AMAZON.com and will not work on other Amazon sites.   For this reason, I will only be shipping the cards to US residents.  Amazon cards do not expire and do not have fees for non-use.    No redemptions will be made for amounts under 1 AMZ.  All redemptions must be done in 1 AMZ increments - I have no current way to redeem fractions of a $10 Amazon gift card.   PM me if this becomes an issue, but I suggest you try to keep any trading you do (if there is a market) in whole units of AMZ for now.

* How to redeem your AMZ: Simply PM me BEFORE YOU SEND THE AMZ TO ME something like the following - "I want to redeem an amount of AMZ, will be coming from address r....., Please send the physical Amazon $10 gift cards to Bob Smith, 123 Maple Street, anytown USA. or alternatively - please email me the code to <email address>"  When I see the AMZ come in, I'll ship them out right away at my expense (or email them to you once I see your message). Think of AMZ as a warehouse receipt for a $10 Amazon gift card. The supply of AMZ decreases with a redemption.

* I have issued 20 AMZ to a 3rd party as the first trade.  A market currently exists in the USD/AMZ(bitaccumulation) and AMZ(bitaccumulation)/XRP  in ripple.

* I am not buying or selling Amazon gift cards.  So please don't ask.

current inventory, 20 $10 Amazon gift cards.

I'd like to acknowledge TTBIT for coming up with the DYM currency and inspiring me to give this a try and also for the format (and much of the content) of this post.  I'm not that creative and it helped a lot to have a template to make sure I didn't miss anything.

Makes sense.  So the minute someone trust me for GFT, then that new GFT iou will be created in the ledger, yes?

Also, gift cards are not uniform like dimes are, some gift cards are worth less than others and if a business ever closed it's gift cards would be worth nothing.   So how in Ripple could those different gift cards be distinguished?  It wouldn't seem wise to use a three letter designation for hundreds of gift cards.   Is there a way to create a subcategory like GFT-AMZ to signify an AMAZON gift card?  (Don't mean to get off topic and I'll move this to another thread if you'd prefer).

Thanks.  You may want to paste that in your initial post for the uninitiated like myself.


So I can come up with any 3 letter item?   I could trust myself for GFT and that could become a new currency for gift cards?


I don't know the answer to that question.  It just crossed my mind that gift cards might be something that could move easily through Ripple.  There must be a way to verify balances since there are companies that buy and resell these cards as a business.  In fact, one of these companies might be a good candidate for a Gateway. 

I'm not clear on how the redeeming of DYM's is done.  If I send you a DYM how do you know where to send my physical DYM?   Do I need to let you know I'm going to send you a DYM before I do through another channel (PM)?   Or do I send the DYM and then contact you through PM?

Also, is there somewhere where it's explained how you created DYM's in Ripple?

Final question, you stated in your initial post (I think) that if someone sends you a dime that you will issue them a DYM.   How does that work?

Could something similar be done for gift cards?

I posted this on the RIPPLERS subreddit but figured I'd post here too to get some responses...

One of the promises of Ripple is that no one can "freeze" your accounts, and while I understand this is true WITHIN the Ripple network, what happens when you want to move something out of the Ripple network to an exchange? Wouldn't it be possible for authorities to tell exchanges to freeze or hold any deposits out of Ripple into an exchange from a particular address?

Also, since Ripple is trust dependent, people will most likely be building that trust with a particular account and nickname or real name. What would prevent a government from going after anyone that received or made transactions to a particular address associated with that name or nickname (or making it a crime for people to do so)?

Or alternatively, what would prevent a judge from forcing someone to remove items from Ripple so that governments could then confiscate them through the exchanges (or risk being jailed for contempt)?

I bring up these issues since there doesn't seem to be much anonymity in Ripple and without anonymity it would seem many of the issues Ripple is trying to address would still be issues unless some type of anonymity were implemented.


Original question posted here: http://www.reddit.com/r/ripplers/comments/1dew7r/potential_issues_with_ripple_and_authorities/

When you make a payment to yourself of DYMs (as an example) if there are no people selling DYMs on the market, will it automatically create a new IOU and create an obligation on the issuer of DYMs or does the issuer have to approve the transaction?