Is Ripple a Bitcoin Killer or Complementer? Founder of Mt Gox will launch Ripple

[mobile4ever]

My problem with the rest of your argument is that information is not scarce, so if bitcoins were nothing but information then they wouldn't be scarce and couldn't function effectively as money.

Bitcoins are not just made up of information, they are created (mined) from people around the world who used their machines to do the mining. That is/was work accomplished. Part of the value of the gold used is that it also is mined.

[franky1]

Having done a bit of research on Ripple after stumbling upon this thread last night, it seems very very interesting. It definitely seems like it'll complement, rather than compete with BitCoin. From what I've read, it seems like an extension of MtGox.

I understand how the IOU's will work, and it's quite an interesting idea. But I'm not going to focus on those, I'm just going to write what I interpreted from reading about the system to see whether someone has any other interpretations. Please guys let me know if you think I've hit it bang on or whether you've interpreted their information differently.

Basically the impression I get is that the Ripple system intends to become a holding (bank) and exchange market for every currency (fiat and crypto) in the world, whilst also creating their own cryptocurrency (XRP). Basically, I can send GBP to Ripple, and with one click of a button, I can instantly convert (or send to another Ripple user or shop that accepts Ripple) this in USD, BTC, XRP, Yen, or whatever currency I want with no fees involved. And I can deposit/withdraw any currency I want WITHIN the Ripple system with no need for 3rd party exchanges. So basically, as I said above (an extension of MtGox) Ripple is a massive currency exchange market who intend to make profit only off of their own cryptocurrency (XRP), which they're hoping will become worth something (which it should do, as it will become a central medium of currency exchange).

And on top of this, they have the 'contacts' list which can be used to allow people you trust to borrow a maximum amount from you whenever they want.

This, is a fucking outstanding idea and I'm very surprised someone hasn't thought of something like this before. Instant payments/conversions to any currency within the system, obviously it'll take a few days to bring money (fiat) outside the system.

-

And this won't kill BTC, it will complement it. Why do I think this?

BitCoins have a value, because of the black market mainly. XRP's, do not (currently) have a value. And won't do unless (like BitCoin) people perceive them as worth something. In order for XRP to replace BitCoin, they would have to become widely used in the black market, which I highly doubt will happen because look at the identity checks MtGox requires. If Ripple takes off though, XRP could gain a value based on the fact that every Ripple user has access to it, and it will be the 'central' unit used for currency exchange within the system.

Definitely going to follow this development.
This has the potential to kill PayPal. And if that happens, through Ripple, BitCoin will gain in popularity.

I will admit, I don't currently use MtGox because of their requirement for identity, and I don't really want my identity associated with BitCoin. However, Ripple intends to serve a completely different purpose to BitCoin. I would use Ripple, without a doubt.

Very excited to see what happens here.

your 99% right.

the bit that i find most unique and powerful is that if i held GBP and you held bitcoin we can swap them and leave them held within ripple, without banks involvement, we can then use those funds for further trades spreading the types of currency we all hold without restrictions.

i dont think the ripple concept is based on loans in the manner that BTCJam consider loans. but more on the concept of reserves and allowing / trusting other people to manage X amount of my funds for me.

but for my personal use i wont be involved with loans, i would only consider the currency transfer concept without banking rules/restrictions/fee's

[markm]

My problem with the rest of your argument is that information is not scarce, so if bitcoins were nothing but information then they wouldn't be scarce and couldn't function effectively as money.

There are many meanings attirbuted to the term information. Consider ones where the value of information is the difference that information makes to the probability of an event.

For example the probability of a shop shipping me a pair of alpaca socks without that information as compared to the probability of their shipping me such socks given that information...

The fact that the whole world knows the information (account X send Y bitcoins to account Z) actually enhances its value, doesn't it?

Would the shop be as likely to ship me the socks if only they and I possesed that information, the rest of the world not knowing it?

-MarkM-

[nybble41]

Your argument is essentially that if [some] members of a set are not scarce, then members of a subset of that set cannot be scarce. That is clearly false.

No, my argument is that if all members of a set are not scarce, then members of a subset of that set cannot be scarce. That is clearly true.

Bitcoins are not just made up of information, they are created (mined) from people around the world who used their machines to do the mining. That is/was work accomplished.

In other words, bitcoins are not information. I'm glad we agree.

There are many meanings attirbuted to the term information. Consider ones where the value of information is the difference that information makes to the probability of an event.

For example the probability of a shop shipping me a pair of alpaca socks without that information as compared to the probability of their shipping me such socks given that information...

The fact that the whole world knows the information (account X send Y bitcoins to account Z) actually enhances its value, doesn't it?

Would the shop be as likely to ship me the socks if only they and I possesed that information, the rest of the world not knowing it?

I'm not quite sure where you're going with this. It would be more correct to say that there is value in the fact that others believe and act on the information, which is a service, not a good. If they simply knew it, but didn't act on it--for example, if they accepted conflicting or otherwise invalid transactions--then it wouldn't matter how widely the information was distributed.

[markm]

I'm not quite sure where you're going with this. It would be more correct to say that there is value in the fact that others believe and act on the information, which is a service, not a good. If they simply knew it, but didn't act on it--for example, if they accepted conflicting or otherwise invalid transactions--then it wouldn't matter how widely the information was distributed.

I tried some Googling to find a specific reference but couldn't find one; but in the large amount of reading I have done over the decades on information, probability, and entropy I am sure there was an approach to or concept of information in which the value (as in measure, quantification, quantity) of information is, exactly, the chance of an event in the absence of that information compared to the chance of that same event in the absence of that information. So if for example you only enough about me, bitcoins, and the alpaca dealer to calculate a 50% chance of the socks being sent, the value/quantity of alpaca sock delivery information required for you to calculate a 100% chance of that delivery would be precisely the missing 50%. For example when you know for sure the delivery did in fact happen, that is 100% information.

Maybe it might even be something to do with "Bayesian" information/probability calculations, I am not sure, a few quick Googles on value of information, probability value of information and such didn't find me a handy link to such a definition unfortunately.

-MarkM-

[bitcoinbeliever]

they could settle using btc or something.

Bingo, If Ripple did that, it might have had a fighting chance.  But they just couldn't resist the temptation of creating their very own currency.  It has corrupted many over the centuries.

[JoelKatz]

Your argument is essentially that if [some] members of a set are not scarce, then members of a subset of that set cannot be scarce. That is clearly false.

No, my argument is that if all members of a set are not scarce, then members of a subset of that set cannot be scarce. That is clearly true.

It's not true for information. There's all kinds of information that's scarce -- for example, tomorrow's stock prices or the factors of this near prime expressed in hex:

    00:c7:4d:7d:6e:dc:d1:c4:b1:8b:31:6b:0d:21:90:
    59:f6:f3:3e:9d:87:2b:04:de:99:39:4e:4d:a6:b1:
    bd:2a:55:25:ac:33:82:3e:68:19:1c:27:34:50:55:
    88:ba:9f:00:d0:5e:02:95:50:aa:d9:6a:67:62:ff:
    23:24:6d:d2:83

Say you hold the private key corresponding to a Bitcoin account that holds 1,500 BTC. Since that private key is just information and no information is scarce, you should be willing to give me that key for $1, right?

[Monster Tent]

Will XRP be the first alternative currency used on Mt Gox ?

[Spekulatius]

Will XRP be the first alternative currency used on Mt Gox ?

We expect all major Bitcoin exchanges to operate as ripple Gateways too.

https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiners

Sounds like.

[Spekulatius]

I have to say, I dont like the fact that the creators of Ripple just decided to keep 50% of all XRP ever in existance.
What prevents people to just make a new fork and have no "premined" coins at all?

[JoelKatz]

I have to say, I dont like the fact that the creators of Ripple just decided to keep 50% of all XRP ever in existance.

What prevents people to just make a new fork and have no "premined" coins at all?

Our system would give everyone who participated in the giveaway a free account and millions of free transactions. There's wouldn't. Our system would be promoted and supported by a company with expertise and funding. There's wouldn't. Which system would you rather use?

I helped build a *payment* system with community credit features. Doing it this way allowed it to have no central authorities and (we hope) be nearly free, or free, forever.

I think you're trying to position Ripple as a currency and a competitor to Bitcoin. Ripple was built by Bitcoin people, people who love Bitcoin. That's not what they wanted to do. Look at this from the point of view of the people the system was built for -- people who want an alternative to PayPal or checks.

(Again, speaking only for myself and not as a representative of OpenCoin.)

[alexanderanon]

I have to say, I dont like the fact that the creators of Ripple just decided to keep 50% of all XRP ever in existance.
What prevents people to just make a new fork and have no "premined" coins at all?

Or prevent someone from making their own "foundation" with ripple fork and keep only 40%...30%...etc..

Ripple seems interesting, but the logical imperative doesn't strike me as clearly as bitcoin does.

[JoelKatz]

Or prevent someone from making their own "foundation" with ripple fork and keep only 40%...30%...etc..

We honestly believe we struck the right balance between giving as many people free use of the system as possible and being able to maintain the system and fund its development. This is not a "more is better" or "less is better" thing -- it's a compromise.

[slothbag]

It's well known that OpenCoin has received funding to continue development, and you are advertising for more developers so there must be a sizable amount..

So whats the incentive? How does your investor plan to capitalize on their investment from a free, open source, no fee earning system?  I had assumed that the XRP was part of that investment return..

If you had created 20million XRP then the price would have to be equal to bitcoin to make a decent return, but when there are 100 billion, XRP doesn't have to rise much over a few cents to make some serious return.

Anyway, very excited about the project, happy to see you guys make some money from it.

[misterbigg]

What prevents people to just make a new fork and have no "premined" coins at all?

Correct me if I'm wrong...but...

It seems to me that the biggest obstacle for anyone who is trying to understand Ripple is to already understand Bitcoin. XRP is NOT the equivalent of a Bitcoin, although it might appear that way in the beginning. They are supposed to have just enough scarcity to discourage spam, but no so much value that trading and hoarding them becomes profitable. From the little information on the subject, I guess that the Ripple protocol has some mechanism for nodes to come to a consensus on tuning network parameters (like the amount of XRP required to fund an account, or the cost per transaction) to ideal values.

Everyone keeps thinking of XRPs as some sort of currency but they are more akin to a low-value postage stamp.

[JoelKatz]

From the little information on the subject, I guess that the Ripple protocol has some mechanism for nodes to come to a consensus on tuning network parameters (like the amount of XRP required to fund an account, or the cost per transaction) to ideal values.

That's correct.

I'm going from memory here, but this should be roughly correct: Every 256 ledgers is a "flag ledger". Validations for a flag ledger can include fields for what you think the XRP cost for a transaction and reserves should be. During the ledger interval after the flag ledger, nodes collect validations from the flag ledger and make their own determination of what the values should be (based both on what they want and what nodes they trust want). Nodes can then introduce pseudo-transactions to change these values into the transaction set of the next ledger. If one of these pseudo-transactions gets accepted, then the fees are changed.

Everyone keeps thinking of XRPs as some sort of currency but they are more akin to a low-value postage stamp.

Before the system was named "Ripple", ripples were called "stamps".

[FlipPro]

Buying mass amounts of XRP, got any I want em.

[Monster Tent]

From the little information on the subject, I guess that the Ripple protocol has some mechanism for nodes to come to a consensus on tuning network parameters (like the amount of XRP required to fund an account, or the cost per transaction) to ideal values.

That's correct.

I'm going from memory here, but this should be roughly correct: Every 256 ledgers is a "flag ledger". Validations for a flag ledger can include fields for what you think the XRP cost for a transaction and reserves should be. During the ledger interval after the flag ledger, nodes collect validations from the flag ledger and make their own determination of what the values should be (based both on what they want and what nodes they trust want). Nodes can then introduce pseudo-transactions to change these values into the transaction set of the next ledger. If one of these pseudo-transactions gets accepted, then the fees are changed.

Everyone keeps thinking of XRPs as some sort of currency but they are more akin to a low-value postage stamp.

Before the system was named "Ripple", ripples were called "stamps".

See also http://en.wikipedia.org/wiki/Hashcash

[misterbigg]

Buying mass amounts of XRP, got any I want em.

Why are you buying mass amounts of XRP? Did you read what I said? Have you used Ripple yet? Do you realize that it costs 0.00001 XRP to perform a transaction? Why do you need mass amounts?

[mrvision]

Can anyone speak about ripple's inflation? How many XRP are there? How many will be there?