Although I think what TradeFortress did was very dishonest, predatory, and manipulative I think it's worth pointing out the sum total effect on Ripple of his "experiment".
Some people are claiming this indicates some kind of major flaw in Ripple or that there are now "counterfeit" BTC or some other disastrous result. The reality is bit different.
In reality only those foolish enough to trust TradeFortress "risked" anything. Of those,
only one single account had anything other than dust amounts of BTC/Bitstamp traded out of their accounts. That one account had a 1.0 BTC/Bitstamp balance before they trusted TradeFortress and now has a 1.0 BTC/TradeFortress balance instead. This is exactly what that person told Ripple he was willing to have. He's trusting TradeFortress to hold his BTC for him.
The other result is that now there is a pool of people that are willing send payments around to each other in BTC/TradeFortress. If someone wants to trust BTC/TradeFortress to join this pool they can.
This effects the rest of the Ripple network and Ripple users not at all.The warnings posted were not about any issue with Ripple, but about informing new users that might otherwise be fooled, that extending trust means that you trust the person and that people can abuse that trust.
Some people see a screen shot showing an account with a 1,000,000 BTC balance and get excited/upset/whatever. Why? If I presented a photo of an official document from Bob's Credit Union that says my account there has 1,000,000,000,000 USD would that get you excited/upset/whatever? People would be foolish to deal with me or Bob's Credit Union based on that document just as they're foolish to trust and deal with TradeFortress on Ripple.
There have been a few analogies used that might help to put this into perspective or to make it clear to people what is/was going on here. There are a number of people attempting to spread misleading information or cloud the issue. The solution to bad information is good information. Consider the following:
(follow the links to see the context or rest of their posts, my apologies if I mistakenly take someone out of context or include a quote of someone here that would rather I didn't)[...]
But this little experiment he is doing is unethical, it's like asking newbs to send him their bitcoin private keys so he can deposit 1 btc for free, then stealing back whatever else is on those keys.
[...]
(I included slothbag's quote embeded within another because the orginal post, along with a number of others, was deleted)
What would you think of someone if back when bitcoin was starting out, they had asked new bitcoiners to post their bitcoin private keys in exchange for a small payment or trade and if that same someone knew full well what the consequences of posting private keys would be? Would you excuse it as long as the person claimed to not use the secret keys themselves? Would you think it somehow showed a fundamental problem with bitcoin or with cryptography in general? Would you think it shows that some people are nieve and trust people with things that they don't understand?
Another analogy that I can't find (I think the post was deleted) was made by
themusicgod1. It was something like: imagine "Bob's Credit Services" offering you a credit card with $100 worth of FREE credit on it under the conditiion that you accept Bob's Credit Cards for upto $10,000. The small print is that Bob's Credit Cards are only accepted by others that also take this offer.
Those taking TF's offer are basically giving the network* a blank 100 BTC cheque in exchange for a 1 BTC cheque that TF never really says if he'll ever honour. Since he's said repeated that he thinks IOUs in general are worthless ...
*the network of those holding TF's BTC IOUs
Some other points worth highlighting:
Garbage in, garbage out. Is it a bug in the forums that I can make them say: 2 + 2 = 5
If you tell it to consider something worthless to be worth 1 trillion BTC, then it will tell you that you have something worth 1 trillion BTC. And, worse, it will trade something worth 1 BTC to get it, causing you to lose 1 BTC. It does what you ask it to do. If you tell it do something stupid, it can hurt you.
Scamming doesn't make a system fail, it merely illustrates that con-men can take advantage of the ignorant or the gullible.
