Credit is always risky, since there is always a risk of future. You can promise me to make a $1M house to back the value of your issued $1M money, but what if that house's market price drops to $500K after it is constructed? It means that the value of all your issued money will be cut by half
And what if the market price of gold drops by half? Then the value of my gold is also cut in half. So in practice, a piece of gold is just another way to hold a quantity of credit. Good example, thank you. |
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If merely having an exchange value in the future made anything money, then we could only buy or sell things that lacked future exchange value: otherwise, those things would be the money with which we buy them or for which we sell them, rather than what we buy with money or sell for it. Many things have once represented money, but not only because of their future exchange value (otherwise, almost anything would always be money, leaving us just a few, quite uninteresting things to buy - and serious problems in choosing the money to buy them with).
Not just commodities can be bought and sold, money can be bought and sold too. That's why there's a giant market of currency exchange. You're creating another false dichotomy that money and commodities are always entirely separate things (sometimes they are, but not always). The other false dichotomy is that money and credit are separate things. In reality, its blended together on a spectrum: pure credit/currency on one end, and commodities with no exchange-value on the other. It was you to say that merely having a future exchange value made anything money.
Still, gold also has a use value independently of being money, as does cattle, silver, and salt. They are also useful "regardless of whether or not I trust you," and even so they can be - as once were - money.
Its having a future exchange-value based on trust which makes something a currency. Not "future exchange-value based on use", which is a total misuse of the term exchange-value. future exchange-value (the gold) is a separate thing from future use-value (the knife). But we do agree, having a use-value does not preclude something from also functioning as money. Commodities can have a dual-function as both currency and as commodity (again, in the real world, its a complex blend). The point is that, as a currency, its exchange-value is derived separately from its use-value. The exchange-value comes from the network of trust among people who will accept it as payment, even if have absolutely no intention of using it themselves (just an intention to exchange it again in the future). (if it were a ceremonial knife made of precious metal, then we could assume it would have additional exchange value above and beyond its cutting utility, and the scenario would be different).
So its metallic utilities would make it useless, then credit, hence money? No, its ceremonially-precious quality would give it exchange-value (derived from the trust and agreement that it is precious). That is entirely separate from its utility as a cutting tool (its use-value). It is not a matter of just "presuming" things, but rather of explaining how things are the way we "presumed" them to be: the circularity arises from trying to explain, by using your own argument, how money and credit could be the same.
Okay, credit/IOUs have value based on trust, that should be obvious (an untrusted IOU is worthless). Money/currency have value based on exchange. And that exchange-value is always in flux, clearly, the price of gold and bitcoin are constantly changing. Changing based on what? Based on the trust that it can be taken to the market and exchanged at x price in the future, in other words, that it can serve as a "good-as-gold" "buyer-owes-u" x in the future. If that trust collapses, the price collapses. Physical gold is just a token which measures the credit backing by the gold market. So instead of an "i-owe-u" its a "gold-market-owes-u". And obviously a "gold-market-owes-u" is only as valuable as the collective trust in the gold market. |
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So let's assume I trust you, first and foremost that you won't kill me. But I also trust that in the future, I can use the gold to haggle with you and trade it for something else you might have. If I didn't expect that I could use it to pay you in the future (say for some of the meat you hunted with your new knife), it would have no value and I would never have accepted it from you as payment for the knife.
So the gold is only credit, and its value is strictly limited by how much we trust each other to use it for trades.
According to this logic, the prospect of having exchange value in the future would turn anything into credit. And you would be absolutely correct. Otherwise, how can you explain that throughout history, everything from sea-shells to tally sticks to little green pieces paper, have all been able to act as a currency. Just like gold, my knife will also have an exchange value in the future. Does that make it credit?
No, because the knife actually has a use-value. The knife has use-value regardless of whether or not I trust you, because I can use it to kill and skin animals, etc.. The knife's value (in this scenario) does not derive from our trust relationship whatsoever. So the knife is not credit (in this scenario). (if it were a ceremonial knife made of precious metal, then we could assume it would have additional exchange value above and beyond its cutting utility, and the scenario would be different). Perhaps only money becomes credit just for having an exchange value in the future. Yet if so, then what makes it money? Let us assume it must be credit in order to be money. Then, how can money be the only thing to become credit for having an exchange value in the future (if it must already be credit)?
See, presuming that money and credit are different things gets you into a circular paradox. It is resolved quite elegantly when you realize that money and credit are the very same thing. |
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If I have an ounce of gold and a pair of shoes worth two ounces of gold and you have two ounces of gold and a knife worth an ounce of gold, I can give you my pair of shoes while you give me an ounce of gold and your knife. In the end, we still own three ounces of gold each, both in monetary (golden) and commodity form.
How could money (gold) be credit in this example?
To simplify, let's also assume that we're the last two people on earth. The only reason I'm willing to accept an ounce from you, in exchange for my knife, is because I trust that you won't kill me with the knife and take back your shoes. If I thought that you would use the knife to kill me, I would never trade it for gold, and therefore the gold would be worthless (there's nobody else on earth we can use it to trade with). So let's assume I trust you, first and foremost that you won't kill me. But I also trust that in the future, I can use the gold to haggle with you and trade it for something else you might have. If I didn't expect that I could use it to pay you in the future (say for some of the meat you hunted with your new knife), it would have no value and I would never have accepted it from you as payment for the knife. So the gold is only credit, and its value is strictly limited by how much we trust each other to use it for trades. |
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Where can I go to short this thing? |
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Notice anything? LTC bashers have become very quiet and Ripple bashers will get even quieter. If you listen carefully you can hear them grinding their teeth.  It seems like the LTC shills are biggest ripple bashers. Very noisy around here.. |
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Your argument reads like this:
Bitcoin is centralized because everyone must be on the same blockchain. Bitcoins are artificially printed tokens that claim to be money. Bitcoin claims to be distributed but it is not. It is claimed that you can run your own node and verify transactions. But truth is that you cannot: only powerful miners and the big three mining pools control the network, because they are the only nodes which have enough hashing power to actually add new blocks. Secondly, the proof-of-work system ensures that there is only one blockchain - the most common one. In practice, it is not possible to mine your own bitcoins and dethrone Satoshi and the big mining pools, because you have to be on their blockchain!
Also, you have to pay fees to buy bitcoins. If you buy through bitInstant, you pay a 3% fee! If you want to buy or sell on mtgox, its a 0.6% fee!
And so on...
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tldr: The value of bitcoin comes most directly from trust in exchanges (or trust in the ability to sell bitcoin at a certain price). What would Mitchell-Innes think? This excerpt from " Debt: the first 5,000 years" by David Graeber, is enlightening: Mitchell-Innes was an exponent of what came to be known as the Credit Theory of money, a position that over the course of the nineteenth century had its most avid proponents not in Mitchell-Innes's native Britain but in the two up-and-coming rival powers of the day, the United States and Germany. Credit Theorists insisted that money is not a commodity but an accounting tool. In other words, it is not a "thing" at all. You can no more touch a dollar or a deutschmark than you can touch an hour or a cubic centimeter. Units of currency are merely abstract units of measurement, and as the credit theorists correctly noted, historically, such abstract systems of accounting emerged long before the use of any particular token of exchange.
The obvious next question is: If money is a just a yardstick, what then does it measure? The answer was simple: debt. A coin is, effectively, an IOU. Whereas conventional wisdom holds that a banknote is, or should be, a promise to pay a certain amount of "real money" (gold, silver, whatever that might be taken to mean), Credit Theorists argued that a banknote is simply the promise to pay something of the same value as an ounce of gold. But that's all that money ever is. There's no fundamental difference in this respect between a silver dollar, a Susan B. Anthony dollar coin made of a copper-nickel alloy designed to look vaguely like gold, a green piece of paper with a picture of George Washington on it, or a digital blip on some bank's computer. Conceptually, the idea that a piece of gold is really just an IOU is always rather difficult to wrap one's head around, but something like this must be true, because even when gold and silver coins were in use, they almost never circulated at their bullion value.
...
What credit theorists like Mitchell-Innes were arguing is that even if Henry gave Joshua a gold coin instead of a piece of paper, the situation would be essentially the same. A gold coin is a promise to pay something else of equivalent value to a gold coin. After all, a gold coin is not actually useful in itself. One only accepts it because one assumes other people will.
In this sense, the value of a unit of currency is not the measure of the value of an object, but the measure of one's trust in other human beings.
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Ripple is a parasite that sucks the life out of bitcoin. Ripple can not exist without bitcoin. Bitcoin can exist without ripple.
Whereas bitcoin transfers actual value around, ripple merely transfers debt. It's a shitty system and one that no one here should support.
By that logic, then no one here should support exchanges. Because exchanges just transfer debt. Why would someone think trying to sell the ability to create IOUs to bitcoiners would give them anything but shit and drama? Debt Stinks... I should know   |
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Ripple's market cap is not justified in my view. Huge over supply of premined "coins".
There is no proof-of-work, so no mining (therefore no pre-mine). Doing "consensus" instead of proof-of-work is what allows ledgers to be validated every 5-10 seconds without paying massive hardware and electricity bills. Furthermore, instead of coin supply increasing through mining, total coin supply is decreasing since all transaction fees paid get destroyed. Which increases the value of all XRP holders (instead of just benefiting miners). Consensus is just another fancy word for centralization. For Ripple to work, it MUST have an authoritative ledger. That requires the majority of the network to be trusting the same validators (opencoin inc + bitstamp). And for bitcoin to work, the majority of the network must all be on the same blockchain. Which means that the biggest mining pools must decide which version of bitcoind they trust enough to run, otherwise the chain will fork. With ripple, the biggest gateways make the decision on which ledger they will be on by choosing which validators they trust. Your argument is like saying that bitcoin is centralized because everyone has to be on the same blockchain. Bitcoin is decentralized because there is no central authority which can seize your coins (same with ripple). Ripple is a centralized payment service with a federal reserve (being OpenCoin Inc). It doesn't matter how they word it - if the federal reserve printed 100 trillion dollars but will only release drops through the economy to further their agenda, it's the same as printing money
Essentially the same argument has been used all along by bitcoin detractors - that bitcoin mining is a high-tech pyramid scam to print useless e-currency and then sell it for real money, with the end goal being nothing more than to enrich themselves. That fact that ripple is backed and bootstrapped by a for-profit corporation is, for some, a bitter pill to swallow. I'm not exactly thrilled about it, but I see how it could have benefits over a non-profit community-driven open-source-from-the-start technical project: paid developers (no need for donations or separate employment), simple and transparent profit model, cohesive and unified marketing strategy, etc. Furthermore, for anyone to claim that they will refuse to buy shares because its a for-profit corporation, in order to be consistent they must be completely divested from AAPL, EBAY, GOOG, etc. There's basically no difference from buying XRP and buying stock shares in any of those companies (except that the shares of XRP have a hard-coded total cap in the protocol, are continually decreasing in number, don't come with a bunch of wall street shenanigans and requirements, etc). For the time being, I still live in the real world, not an anti-capitalist participatory inclusive utopian democracy. Either swallow the pill, get dragged onto the train kicking and screaming, or get left behind. |
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Ripple's market cap is not justified in my view. Huge over supply of premined "coins".
There is no proof-of-work, so no mining (therefore no pre-mine). Doing "consensus" instead of proof-of-work is what allows ledgers to be validated every 5-10 seconds without paying massive hardware and electricity bills. Furthermore, instead of coin supply increasing through mining, total coin supply is decreasing since all transaction fees paid get destroyed. Which increases the value of all XRP holders (instead of just benefiting miners). |
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Yes Bitstamp jacked up their price about 30% in the last few hours. It is about .015 when you can get XRP for about .01 right now.
do you use the $125 bitcoin value from bitstamp for this? I don't see the trades dropping below 12000 XRP/1 BTC inside the ripple client, ever, which at $139 gox weighted average would be 0,0115 USD per Ripple.  Also far more than this site reports: http://www.rippleprice.com/There are two ways to get XRP through bitstamp. One is on https://www.bitstamp.net/market/xrp/, where you buy direct from bitstamp at whatever price they have set. The second way is withdraw BTC or USD IOUs at https://www.bitstamp.net/account/withdraw/ripple/, and then trade them for XRP yourself on the ripple market. Can you even read the markets or do you just dripple crap constantly? You are just starting to piss people off as they realise they have been duped into buying expensive XRP at the expense of those who are dumping because it isn't going higher. Do the maths, people are getting ripped off. Here is the latest spread since no one updates the other side of the story in this bias rhetoric.
Since you claim to be smarter than the market and know what is over-priced and what isn't, will you tell us what the fair price is for XRP? People were dumping at 100, 200, then 300 thinking that it wasn't going higher. But it bounced back. It is true that the spreads are big and liquidity is low. It reminds me of the earlier days on mtgox. Hell, even in the later days, spreads are big on mtgox during volatile times. |
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I'm sure i'm not the only one with this thought, because it seems obvious that ButterCoin exchanges will, sooner or later, also become ripple gateways. It will be very difficult to compete as an exchange, if the sole method of USD transfer is ACH/SWIFT. |
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There might be other people with different valuations etc. but the basic principle is still that of an open and free market for price (and through price: risk) discovery. Just like what's currently happening still with USD.MtGox vs. USD.Bitstamp. You're correct in saying that markets calculate the value of IOU's among banks already. It works beautifully, so what's the point of ripple again? ACH and wire transfers do not work "beautifully", they work like a system designed in the 1900s to function over a telegraph during business hours. With ripple, exchanging IOUs becomes as seamless as sending bitcoins. ACH and SWIFT are bureaucracies, Ripple is a protocol. Its like comparing snail-mail to e-mail. |
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1000 XRP is $10 worth.
Nowhere else in cryptocoin history has someone given something that was $10 worth at the time. I guess XRP is still hugely overpriced. iirc, Gavin's bitcoin faucet was originally giving away 5 BTC per ip address. That was right around the time they were approaching $1. The snapswap giveaway started at 1500 XRP, but that was in exchange for verifying a bank account. They've lowered it to 500 XRP, and that's only with a $10 dwolla deposit. |
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You also have no idea about what OpenCoin will choose to distribute the rest.
And OpenCoin knows exactly where and when they will distribute the rest, and are therefore in a position to play the market accordingly. True, but, OpenCoin interest is aligned with all XRP holders. And the ripple market is also much more transparent than conventional markets. Anyone can watch the OpenCoin addresses (like we can watch Satoshi addresses). And everyone can see the amount of funds entering and leaving gateways. Compare this to the current bitcoin exchanges, where whales and exchange insiders have an exclusive knowledge of fund flows, and therefore a huge information edge. |
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Oh, I get that, and the fact that most XRP was sitting idle in people's wallets unaware they could sell it helped a lot with the previous bubble.
But here's the thing:
You can still get XRP in large quantities by giveaways.
You also have no idea about what OpenCoin will choose to distribute the rest.
However, you do know exactly how it is going to happen with Bitcoin.
I agree with you, we do know how the bitcoin float will change. And about those large quantity XRP giveaways, PM me please (lol). And you're right, we don't know how exactly OpenCoin will distribute the rest. What we do have is their pledge to give away 50% (fwiw). And the common-sense expectation that they will do so in a way to maximize long-term XRP value (their explicit profit-model). The OpenCoin monopoly on XRP is (for non-employees) a bitter pill to swallow. But it comes with advantages (a simple profit-model strictly aligned with interest of XRP holders, aggressively pay developers, bootstrapping new exchanges/gateways with strong incentive, giveaway "faucet" to entice new users, etc). There might be other "non-profit" ways of developing a next-gen crypto-currency (eg community debate on vague proposals of p2p distributed exchanges in various forum threads). But I haven't seen them amount to anything. |
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At this rate and with the absolute usefulness of the Ripple network, it's not beyond the realm of possibility, to start thinking about XRP reaching parity with the USD. LTC is sitting at $2 and is just another digital currency with a limited payment network.
Except there are 100 billion XRP, and 84 million LTC. Do you even understand supply and demand? But we should estimate the current value based on the current float (amount in circulation), not what it might be in 2030. Back of the envelope: current BTC float approximately 11 million. rough estimate of current XRP float is between 1.5 and 3 billion ( source). But let's be generous and bump it up to 10 billion. 11 million btc at $100 is a market cap of $1.1 billion USD. If XRP were to have similar value, then it gets the same market cap (over 10 billion coins instead of 11 million). So $1 billion USD / 10 billion XRP = $0.10 per XRP. Now I'll reserve judgement on whether XRP should be valued similarly to BTC (let the market decide). But this is the same back-of-the-envelope reasoning commonly used to justify an LTC price relative to BTC. |
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Closed-source, centralized and 100% premined is shit no matter what you do with it later. There are already so much better alternatives.
I won't argue that its a shining light of egalitarianism, but certainly moreso than the conventional bitcoin exchange (and its more transparent to boot. IOU deposits aka "gateway capitalization" are public in-the-ledger knowledge, currently standing at $284k USD and 2,250 BTC). Where can you see this? The gateway cap isn't charted anywhere (yet). But in IRC, ripplebot gives an update whenever it changes. You can use the web IRC client http://webchat.freenode.net/ and join the channel #ripple-market to see them (gateway cap updates are the "CAP" messages). |
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