The price difference will cease to exist if people are confident in mtgox.   More likely the other exchanges get a bump due to increased confidence in bitcoin in general.  If they do drop there's no reason to think it'll be a major one like you suggest.   People who end up having bought cheap coin on gox will do whatever they rationally see fit to do with it at that point, which won't necessarily be selling it on another exchange.   They can no longer buy cheap coin on gox so the price difference you speak of won't exist anymore.  

Why does Gox allowing withdrawals create a massive price drop on the external exchanges?  If anything I would expect them to trade up on such an event, not down, but in any case the vast majority of the equalising price changes would take place on Gox, not on the external exchange. 

Sorry, but you haven't given any valid mechanism that's going to equalise the market on gox and the external markets without gox reinstatating their withdrawals or otherwise regaining the public confidence.  Gox has dropped much further than the other markets over the same day, so your final observation doesn't support your point at all. 

I don't, that isn't what I'm saying.  Gox can obviously directly manipulate their own market if they want to, but for them to bring down the price on another market to $400 (for a non-insignificant amount of time) they would have to sell more coin than they actually have ... i.e. they can't. 

Gox don't have an unlimited supply of actual BTC.   No way they can "sell" enough elsewhere to equalise the markets without the public perception of Gox's liquidity changing. 

Again we're (mostly) in agreement.  I think there's just confusion caused by your somewhat ambiguous OP wrt "Reason why MtGox can go to 0 - without arbirage opportunity with Bitstamp" and 
Perhaps you were just aiming to explain why the BTC price was dropping on Gox, which isn't quite the same as it going to zero (zero as in no activity on the exchange?  zero as in they enter liquidation and end up paying out a percentage of the fiat debts but zero on the BTC?)  I also don't know what the "no arbitrage theory" is.

In either case, I would have expected there to have been other threads explaining the price on Gox for those that require it.  It's been going on for days. 

Well, obviously we're in agreement there because it's almost exactly what I put in my post.  I also agree that people clearly currently want to be in GoxFiat rather than GoxBTC

So what are we not agreeing about?


They won't be withdrawn though, as the only people who can currently "withdraw" BTC from MtGox are MtGox themselves.  Gox actually opening up BTC withdrawals again should see a large price jump on their exchange. 

I'm not saying that Gox can get out of any position by using an external exchange.  I'm saying that if Gox purchase 1 GoxBTC on their own exchange then they now owe $200 instead of 1BTC, so they've clearly reduced their overall debt (assuming a you consider BTC and fiat liabilities to be equally important, certainly debatable)

It was always GoxBTC you were buying on Gox, rather than real BTC.  You were paying with GoxUSD too, for that matter.  For a while previous to this current incident, GoxBTC has been valued at close to what other exchange's BTC was worth, while GoxUSD was worth less than USD on other exchanges.

If they can buy GoxBTC on their own exchange for less than they can sell it for elsewhere then they can reduce their BTC liability (i.e. they now "owe" the customer that sold them the GoxBTC fiat instead of BTC, and in fact they owe them less in fiat than what the BTC was "worth". 

What was the case against not letting them alter it at all once set?  As in, if they want to start issuing new debts with a new fee they can create a new address.  My issue is that the cost of transferring the debt would be a key ingredient in how I value it.  One of the better things I'm seeing in Ripple is that it would give debt issuers less control over the transference of their debt, and less ability to suddenly make arbitrary rules or fees about how that happens.  Fees would be set up front.  They can charge a fee, perhaps they can even decrease it, but I don't see why you would allow them increase it.  Particularly as you (being Ripple) ultimately want people to keep their IOUs in the system rather than cash them out. 

JK can chime in if any of this is wrong, but ...

Yes, mostly OpenCoin and its founders.

Yes.

No, only which ripple addresses it's currently held by.  OpenCoin started with 80%, 50% for "giving away", 30% for supporting itself.  The founders held on to 20% personally.   I don't know how much OC has actually gifted as of yet, perhaps JK can tell us. 

Haven't actually studied the proposal but this would almost certainly not be within OpenCoin's power after the network gets fully decentralized. i.e. it would require a code change that supported the new coins being adopted by all the servers, and logically they would refuse to do so.

JK,

Is the Transfer Fee stored in an address's root node alterable or will it be permanent once set?

That's basically the same as the double spend problem.  https://ripple.com/wiki/Consensus_Graphic

You're assuming XRP has to be something more than a necessity to stop the network being flooded.  Screw XRP.  It's clearly a toy currency, but if you want to replace it as an anti-DOS device then come up with something better.  Bitcoin's distribution via mining was ingenious, but there's no mining in Ripple (ie there's no voting with computing power).

In your example they'd crash the price of XRP, but as I say screw XRP, it's only there out of necessity. 


Sorry, you're right that wasn't you at all.  Just because that's OpenCoin's business model doesn't have to make it their reality.  I do agree that XRP's are the most troublesome portion of Ripple, particularly when trying to sell it to the mindset of the typical bitcoiner, but I'm not sure it's a showstopper.  This isn't bitcoin and it isn't a libertarian's wet dream, it's something in between. 

Absolutely.  This is where I think the Ripple website doesn't do them justice.  They're well aware of that.  This is a more unified and open system of what's going on at the moment.  And while it's far from completely open due to XRPs it's still considerably more open that what's in place.

Again, completely agree, but the argument is that that's the state we're in at the moment anyway.  For one thing there's no reason that the entities have to be Bitinstant, they can be PayPal or BoA and have whatever regulation they want.  If there are regulated portions they don't have to trust unregulated portions.

Well, I certainly agree that Opencoin can only be trusted to care about Opencoin.  However, the exchange doesn't have to involve XRP (apart from the transaction fee, i.e. one side doesn't have to be denominated in XRP).  To be fair, you're saying you've seen it but you flat out asked where it was a second ago, which is the only reason it was brought up.

I'd really need to do some research and maths.  As I understand it all the fees and figures are set by consensus of the set of nodes that end up most trusted.   So, if there was later a movement against opencoin the fees and reserves could be adjusted by consensus so that whatever had already been distributed was sufficient to run an economy.  That said OpenCoin's control of the XRP supply is a clear avenue of attack against the system.  Also, apart from XRPs all the debts in Ripple represent actual debts and can be removed from the Ripple system if Ripple becomes infeasible.  If ripple is actually no better than what's in place at the moment then there would be no massive problem doing that.

They will almost certainly charge fees unless they're fractional reserve or have some other incentive, see https://ripple.com/wiki/Transit_Fees .   If it all works as envisioned then the system will be more open than what we have which should allow for tighter competition, hence lower fees. 

I think it's just currently badly explained rather than difficult to understand ... but then, perhaps my understanding of it is incorrect!



OpenCoin will ultimately have no direct control over who is a gateway or not, or any means of setting rules for what they charge.  The only control they'll have will be via XRP.  I'd suggest that if that control is enough to dictate rules to gateways in practice then Ripple has failed to be an open system. 

No small group of people have 99.9% of all bitcoins, and in fact only half of the bitcoin money supply has even been allocated.  Even if the bitcoin creators mined up a significant portion of coins before other people got on board, that's still profoundly different to what's intended for XRP. 

Their website would often not make you think so, but they agree with you on this.  When you say that you have a dollar, for most people this actually means a dollar in the bank rather than in their pocket.  So basically they have an IOU from the bank.  Ripple just provides a way of transferring this IOU securely without the cooperation of the issuer.   It also provides a secure exchange (have you seen Advanced->Trade?), where the distributed system will guarantee that you get the IOU you're bidding for and not be ripped off. 

That would imply that everybody in the world trusts this entity.  I don't see that being the case, although that would be up to individuals as it should be. 

You do not need to install closed source software for ripple, the client is open source.  The server is currently closed source but they intend it to be open source.  They also intend the ledger to be decentralized.  That's their stated intention and we have no real reason to doubt them at the moment.  Liberty Reserve do not have this intention. 

I don't see how your decentralized vitual USD with bitcoin would be better than ripple rather than worse.  Each Gateway/Exchange/Whatever would have to issue their own coloured coins, and there would be no decentralised mechanism for exchanging one Gateway's coloured coin for another at parity or otherwise unless one is built separate to the bitcoin network. I haven't seen a solution for this in the bitcoinx documentation, can you describe it?

I agree, and the free transfer of debt that they allude to on a social scale is difficult to see ( Trust is A -> B -> C, so when C decides to send A and IOU it ends up with C owing B and B owing A, a frankly ridiculous position for B to be in.  Unless, of course, B was being paid for this service, but then we're talking about business not friends).  Some of the examples they give on their website, such as the restaurant one, while intending to be helpful are actually just confusing and give the wrong idea.



The remaining XRP that haven't been distributed would be controlled by Opencoin but everything else would be distributed.  Lots of trusted people would have to be forced to cooperate and even then there's trust agility so trust could be assigned elsewhere.

I don't think I agree with this.  You can't really stop specific computing power from taking part in building the BTC block chain, but Ripple is based on designated trust.  I'm not suggesting that you promote people actually running their own servers, but if they did then clients would be mad to trust them at this point and the whole system is based on people rationally assigning their trust.

Anyway, that's almost beside the point.  I really think you need to go through all the documentation and change "is open source" to "will be open source".  That's all that's required.  As things stand at the moment people are disappointed because they're reading one thing and finding out that it isn't true.

Texting and interacting with their friends vs accruing debt?

This is similar to the open source thing.  I read your site and I see free(ish) and $0.0001 and 0.00001 XRP, "While Ripple does not charge a typical fee for profit", all of which sounds reasonable.  Then I start thinking about whether that's realistic and I notice an link called "Transit Fees" whereas we were talking about "Transaction Fees" before.  Now, everything on that Transit Fees page makes perfect sense, in fact it was exactly what I was trying to describe (and more, I didn't envision a Transfer fee), but it isn't free or free(ish).  It's simply more open which will hopefully result in it being cheaper than what we have at the moment.  However, again I feel like I was initially mislead into thinking there would only be Transaction Fees and had to dig further to find the truth.

Technical Q: It says the Transfer Fee will be stored in the addresses root node.  I haven't got that far into the ledger yet, but it seems important to me that this figure can never be changed once set.  Is that the implication?

Anyway, I'm starting to like Ripple a lot.   I think XRP is the weakest part of it though, at least with regards to XRP being a fully-fledged currency rather than just oil for the system.