Why Ripple is Superior to Bitcoin...

[Come-from-Beyond]

I hope u don't mind if I promote my project in ur thread...

[ANN] Ripple++

[bitaccumulation]

I hope u don't mind if I promote my project in ur thread...

[ANN] Ripple++

I saw that.  Don't fully understand what you're trying to accomplish, but I'll be following along.  All the best to you.

[//v]

So, I've been trying my best to learn about bitcoin and ripple lately as I have essentially no experience with either, but the concept intrigues me. I must say it is very difficult to find non-biased commentary and objective analyses in these forums.

I have a few comments and questions about ripple that I would like to add after reading this thread. I'll point out that I still feel I have a pretty poor grasp of how all of this works, so if anyone would like to jump in to correct anything I've said, please feel free.

One thing I'd like to point out is that I don't think we currently have anything like ripple in our economy. There has been a lot of mention of credit cards and debit cards and paypal and centralized currencies, but those are all different from what ripple proposes to be. On the topic of credit cards and debit cards, these are not free forms of payment. Everybody seems to be forgetting that a fee is charged with every transaction. That is how banks and credit card companies make money. And they make A LOT of money (more on that later). And sure you can get cash back or airline miles from using a credit card because the card companies are making so much more money than they are giving back to you in the form of miles. Somebody is paying for those rewards because AMEX isn't in the giving away free flights business last time I checked... The same goes for paypal; it's not free. Sure when I use my debit card or if I pay with my credit card through paypal it doesn't cost me anything, assuming I don't carry a credit card balance. But that is ignoring the bigger picture of how these payment methods are used in our economy. Somebody is paying a fee and the banks are making money.

Here is the part where I may be way off base, so please correct me if I am wrong. There aren't any fees with ripple. There is the small transaction fee that is destroyed, but it is supposed to be a fraction of a percent so as to have no real monetary value. If that is the case then ripple is absolutely different from paying with a credit card, a debit card, or paypal. Merchants would be flocking to this new payment system, meaning OpenCoin doesn't have to do any of the hard work that Discover or AMEX have had to do in order to force merchants to accept their cards as payment. It will happen on its own. The only "hard" part will be getting the general public to adopt it. But as people tend to flock to new technology it seems reasonable to think that there will be many people eager to try it out. Once adoption is widespread, why would anybody use paypal ever again? Why would you want to use a credit card for every day transactions or online transactions (exception noted for rewards, if that is your thing)?

The way I see it, ripple is just electronic cash. But the advantage is has over cash is that it doesn't have borders. Why pay a bank to exchange money when it can be done instantly with no fees? How else can this be accomplished other than with a system like ripple? Sure I can and do buy things from overseas with my credit or debit cards. The exchange rates are "competitive", but I'd rather not have to go through a bank to exchange money. Not to mention there are other fees that are typically associated with overseas purchases on top of what the bank makes from changing money. And I will admit that I have been caught in a situation where I needed cash and had to pay a fee at an ATM from another bank. Again, ripple would alleviate such a problem. In a way, it makes getting or paying with cash easier if you happen to run out.

As for the whole scam thing, I haven't really seen a convincing argument as to how exactly it is a scam. Simply saying that the founders aim to enrich themselves by hoarding XRP doesn't definitively settle the issue. Since there are no fees, why is it unreasonable that the founders of the system have a way to generate revenue? Visa earns billions of dollars a year from its business of skimming money from every transaction and charging ridiculous interest rates for lending money. The mere fact that the developers will be wealthy if the system takes off does not strike me as suspicious or scandalous in any way.

Please note that I am not taking sides here, I'm just trying to understand. Ripple seems like a good idea to me, and I'm having trouble understanding most of the proposed downfalls of the system. Again, I'm still trying to make sense of these types of currencies or payment systems, so if I am mistaken in my assumptions please feel free to add constructive criticism.

[LaggedOnUser]

So, I've been trying my best to learn about bitcoin and ripple lately as I have essentially no experience with either, but the concept intrigues me. I must say it is very difficult to find non-biased commentary and objective analyses in these forums....

1. Bitcoin will always have "fees" too unless it changes its very inefficient coin security model.  It currently costs $150,000 a day just in electricity (not including other costs) to secure Bitcoin.  These costs are being paid by the users and miners of the coin.  Unless the profits of the miners cover their cost of mining, Bitcoin cannot exist.  So Bitcoin will continue to have either mining profits (a form of fee similar to dollar inflation) or transaction fees in the future, which may even exceed those of credit cards.
2. Ripple has less fees becauses it uses a consensus model with a small number of computers to process transactions, so it doesn't consume all the electricity of Bitcoin and can afford to be profitable with very low fees.
3. Ripple is not a scam.  However, it is similar to other coins that have been considered scams, because it is 100% pre-mined.  In the past, coins that were even partly pre-mined were considered scams because the miners thought it was unfair that they are paying for high costs of equipment and electricity to compete against others who already took the best benefits of pre-mining for themselves.  However, Ripple simply uses a different security model that doesn't involve mining, so their reflexively labeling it a scam is not insightful.  They are biased and prejudiced, and too quick to judge based on their other experiences.  Ripple is not a fly-by-night scamcoin, but a serious effort backed by big names and good money.  It is no more a scam than a stock market offering, where the company keeps a lot of stock for themselves while selling off a portion to the general public.  All companies do this.  Ripple is a for-profit enterprise, not a pure community-based coin, but it is not a scam.

[yvv]

Why everybody say that ripples are pre-mined, if there is no mining in ripple? XRPs are just distributed different way than bitcoins. The distribution of xrp is controlled by commercial company, but this is not pre-mining, since nobody is mining. Early adopters get their xrp for free, late adopters will suck need to buy them. 

[Exoskeleton]

Why everybody say that ripples are pre-mined, if there is no mining in ripple? XRPs are just distributed different way than bitcoins. The distribution of xrp is controlled by commercial company, but this is not pre-mining, since nobody is mining. Early adopters get their xrp for free, late adopters will suck need to buy them. 

Pre-mined is easier to say, and people get the idea. Pre-mined also has a tone of unfairness to it that is rightfully deserved in my opinion. Its like you show up at the mine, but someone already has all the gold. They now charge you 1,000x what its cost them to mine and already gave a bunch out to just a few friends. With Ripple, if your not standing wth your hand out on the right street corner at the right time on the right day you don't get the freebe. You become a ripple crony following around the developers begging for a tiny handout and I just don't have the time for games like that.

[yvv]

Pre-mined is easier to say, and people get the idea. Pre-mined also has a tone of unfairness to it that is rightfully deserved in my opinion. Its like you show up at the mine, but someone already has all the gold. They now charge you 1,000x what its cost them to mine and already gave a bunch out to just a few friends. With Ripple, if your not standing wth your hand out on the right street corner at the right time on the right day you don't get the freebe. You become a ripple crony following around the developers begging for a tiny handout and I just don't have the time for games like that.

I agree that their distribution started strange way. I don't think that we need to stand with a hand on the street corner. Let's wait for grand opening and see if they come out with fair way to give away xrp. As far as I understand, the big issue is to prevent people cheating with multiple accounts.

[LeTanque]

BTW, thank you OP for this thread.  It's a great discussion and relatively balanced opinions. 

Let me sum up the good, bad, and neutral, from my perspective.

Bad:
Close source for the time being
Not enough gateways

Neutral:
OpenCoin is using half of the native currency, XRP, to develop it.  (they needed something to attract investors and talent. Bitcoin couldn't do this)

Good:
Consensus > Proof-of-work.  Read up, it's the best feature.
Use any currency to buy something in any currency
Best payment system to date
Decentralized exchange
Ultra fast transactions; much faster than bitcoin
True microtransactions are possible
Incredibly scalable. No need to worry about the network collapsing under the pressure of the level of transactions Visa does per hour.

[tiberiandusk]

The real reason: "They give them away like candy and I don't have to mine them."

[peonminer]

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).