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Author Topic: is ripple a trojan horse that will destroy bitcoin?  (Read 7015 times)
paulie_w
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December 23, 2012, 09:09:42 AM
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controversial subject line, sure, but what about it?

if it is just a carrier of sorts, which has all the advantages of bitcoin but never makes people deal with a currency called "bitcoin", then it seems like something that wins out, where bitcoin will be rather stillborn compared to our grand plans for it.
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Meni Rosenfeld
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December 23, 2012, 10:09:36 AM
 #2

Ripple+Fiat doesn't have all the advantages of Bitcoin. It probably doesn't even have most of them. Ripple+Bitcoin might be a powerful combination though.

If something came up which is superior to Bitcoin hands-down, it could "destroy" Bitcoin and it would be perfectly fine.


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December 23, 2012, 10:17:21 AM
 #3

Bitcoin and Ripple are different things. Bitcoin is P2P cash, and Ripple is P2P banking.

Ripple depends on reputation-based user profiles. No real identities required for now though. But it can't offer the discretion and privacy of Bitcoin.

Ripple might be a setback though for those who hoped that in the future each and every single transaction would be with Bitcoins. Trusted business-to-business relationships may be the main application for Ripple, as they do not require the near-anonymity of Bitcoin and all the overhead that comes with it.

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December 23, 2012, 11:29:04 AM
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then it seems like something that wins out, where bitcoin will be rather stillborn compared to our grand plans for it.

Ripple has the same hurdle as does Bitcoin:  PayPay, VIScAm, Mastercrap, JP Morgue, Western ULose, etc.



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December 23, 2012, 11:50:08 AM
 #5

In a way you could say that simply holding cash is a loan you have given to the world.

As for traditional banking loans I don't think Ripple can replace that, those things are based on police kicking you out of your house if you don't pay.
Trusting family and friends is not really foolproof, I have seen many family members rip each other off and its not pretty.

Ripple is extra risky because a chain of people owe each other money; if any one of the people in that chain or net doesn't pay up then the next link may have no money to pay with or may decide not to as well.

Loans, stocks and contracts are based on police and courts. Honestly I think people should rent or fully buy with savings instead of continuing our failing credit-card-economy.

Tell me; why all this debt slavery and personal bankruptcy when you could rent the first years and then buy, effectively ending with the same final price as a loan would have cost you? Lets do away with the old system.

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December 23, 2012, 05:02:38 PM
 #6

As someone getting to test Ripple, its interesting to watch the hysteria about it.  It is a Bitcoin Complement.  With all the concerns about trust it's time has come.

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December 23, 2012, 06:40:18 PM
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As someone getting to test Ripple, its interesting to watch the hysteria about it.  It is a Bitcoin Complement.  With all the concerns about trust it's time has come.

I got also the test account and tried to read the protocol specifications etc, but currently it is pretty difficult for me to understand the protocol. It is very interesting though.

I will call it "The Bitcoin Killer" just to troll the bitcoin fanatics.

casascius
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December 23, 2012, 07:05:01 PM
 #8

I definitely don't see it as a threat to Bitcoin, and I see it as a complement that, if it works, will reinforce Bitcoin.

The biggest fundamental difference I see is that Bitcoin is a platform that issues "Bitcoins" and keeps track of them, and Ripple is a platform that lets the participants issue IOU's and keeps track of them.

A ripple IOU is only as valuable as you deem it to be, and how the law deems it as well.  Here's a problem the way I see it: Ripple will have chargebacks enforced by law, regardless of whether the technical design allows for them!

Ripple will have interesting security and legal implications all its own that differ vastly from Bitcoin.  With Bitcoin, if someone hacks your computer and steals your bitcoins, the consequences are limited to a) your coins are gone, b) the thief gets away with coins in numbers no greater than what you originally had, and c) the coins are now arguably tainted to the extent they can be traced back to the theft.  No laws can change any of that.

With Ripple, imagine someone hacks your computer and uses your private keys to create an IOU to them for a million dollars.  A lot of big questions remain to be settled.  A Ripple IOU for an amount like that is totally dependent on its legal collectibility, and in the US (and probably most other jurisdictions), you can't create a legally binding debt on someone else's behalf just by forging their signature, even if your forgery is convincing.  A dispute over collectibility would boil down to whether the digital signature was judged to be genuine - and not in a mathematical sense, but whether it accurately represents a commitment intentionally made by the key's owner.  If the mathematical validity can be set aside by a judge, it longer has any value and there is no point in depending on it.

The problem gets even more complicated: if it's for a million dollars, it's easy to point out that that must "obviously" be bogus, but what if it's fraud for a much smaller amount and comes with a much less ridiculous and more believable story?  What if it crosses international borders?  What if the participants are subject to conflicting laws, where one party's jurisdiction recognizes a debt and the other's doesn't?  What happens when uncollectible debt is traded from participant to participant, numerous "links" deep?  At some point, what's the value of Ripple's decentralization in the first place if its proper functioning is so dependent on socially-based agreements?

All it takes is a few high profile incidents where people repudiate large Ripple debts because they were "hacked", and suddenly the whole thing is threatened by the premise that any obligation you buy might be bogus because somebody along the way can claim the original obligation doesn't exist because they were hacked.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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December 23, 2012, 10:33:11 PM
 #9

This again...?

https://bitcointalk.org/index.php?topic=128413.0

and many other topics...

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December 23, 2012, 11:29:04 PM
 #10

I don't see Ripple IOU's as debt. I see Ripple IOU's as the price of a friendship or if you like the price of trust you have in some other person. If business relations are concerned I see Ripple IOU's as the price of a business reputation!

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December 23, 2012, 11:40:53 PM
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I definitely don't see it as a threat to Bitcoin, and I see it as a complement that, if it works, will reinforce Bitcoin.

The biggest fundamental difference I see is that Bitcoin is a platform that issues "Bitcoins" and keeps track of them, and Ripple is a platform that lets the participants issue IOU's and keeps track of them.

A ripple IOU is only as valuable as you deem it to be, and how the law deems it as well.  Here's a problem the way I see it: Ripple will have chargebacks enforced by law, regardless of whether the technical design allows for them!

Ripple will have interesting security and legal implications all its own that differ vastly from Bitcoin.  With Bitcoin, if someone hacks your computer and steals your bitcoins, the consequences are limited to a) your coins are gone, b) the thief gets away with coins in numbers no greater than what you originally had, and c) the coins are now arguably tainted to the extent they can be traced back to the theft.  No laws can change any of that.

With Ripple, imagine someone hacks your computer and uses your private keys to create an IOU to them for a million dollars.  A lot of big questions remain to be settled.  A Ripple IOU for an amount like that is totally dependent on its legal collectibility, and in the US (and probably most other jurisdictions), you can't create a legally binding debt on someone else's behalf just by forging their signature, even if your forgery is convincing.  A dispute over collectibility would boil down to whether the digital signature was judged to be genuine - and not in a mathematical sense, but whether it accurately represents a commitment intentionally made by the key's owner.  If the mathematical validity can be set aside by a judge, it longer has any value and there is no point in depending on it.

The problem gets even more complicated: if it's for a million dollars, it's easy to point out that that must "obviously" be bogus, but what if it's fraud for a much smaller amount and comes with a much less ridiculous and more believable story?  What if it crosses international borders?  What if the participants are subject to conflicting laws, where one party's jurisdiction recognizes a debt and the other's doesn't?  What happens when uncollectible debt is traded from participant to participant, numerous "links" deep?  At some point, what's the value of Ripple's decentralization in the first place if its proper functioning is so dependent on socially-based agreements?

All it takes is a few high profile incidents where people repudiate large Ripple debts because they were "hacked", and suddenly the whole thing is threatened by the premise that any obligation you buy might be bogus because somebody along the way can claim the original obligation doesn't exist because they were hacked.
Do you really think the ability to interface with legal system for enforcement is important to a borderless technology like Ripple or Bitcoin?

There plenty of theoretical work describing how reputation systems are a more reliable way of enforcing good behaviour than legal system and the recent drama with blockchain.info provided a glimpse of how this would work.

It's a waste of effort to worry about legal enforcement because all of that work is pointless as soon as two people transact who are located in incompatible jurisdictions. At that point you need some alternative to legal enforcement anyway so you might as well just use those methods from the beginning.

casascius
Mike Caldwell
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December 24, 2012, 12:15:12 AM
 #12

Do you really think the ability to interface with legal system for enforcement is important to a borderless technology like Ripple or Bitcoin?

Yes for Ripple.  No for Bitcoin.

Yes for dollars.  No for oil.

Yes for euros.  No for gold.

What do all the yes's have in common?  They are all based on promises, upon which the promiser can default.
What do all the no's have in common?  They are what they are, no more, no less.

There plenty of theoretical work describing how reputation systems are a more reliable way of enforcing good behaviour than legal system and the recent drama with blockchain.info provided a glimpse of how this would work.

I'm looking forward to seeing it be practical.  But it won't be very revolutionary if it is good for nothing more than a bunch of coworkers settling up on who pays for lunch.  It may as well be a facebook app.

It's a waste of effort to worry about legal enforcement because all of that work is pointless as soon as two people transact who are located in incompatible jurisdictions. At that point you need some alternative to legal enforcement anyway so you might as well just use those methods from the beginning.

That's true only up to a certain dollar amount.  When the transactions get big enough, the parties start to have the resources to invoke the law and to pursue things across borders.  Other developed countries have laws enforcing contracts and property rights too - they're just too expensive for you and me to invoke from home.  A reputation in a "system" is only so valuable and a large percentage of the population is willing to totally trash their reputations - look at how many people have crappy credit in real life, let alone how much worse it gets if people can start over with a new "profile" any time they want like they can online.  One certainly isn't enough for a major transaction like real estate or an overseas shipment of several shipping containers of goods, but sure, it's good enough for lunch money.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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December 24, 2012, 12:17:32 AM
 #13

Yes for Ripple.  No for Bitcoin.

Yes for dollars.  No for oil.

Yes for euros.  No for gold.

What do all the yes's have in common?  They are all based on promises, upon which the promiser can default.
What do all the no's have in common?  They are what they are, no more, no less.
It's just as easy to promise, and then fail to deliver, oil as it is for dollars.

casascius
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December 24, 2012, 12:19:50 AM
 #14

It's just as easy to promise, and then fail to deliver, oil as it is for dollars.

"Promises to deliver oil" would, of course, go in the yes column, away from the "oil" itself.

The oil will not renege on delivering heat when submitted with oxygen into a chemical reaction.  And if I control a bitcoin and have its private key to myself, I will always have one bitcoin, regardless of what anyone else does or doesn't do.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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December 24, 2012, 12:28:04 AM
 #15

Is there more information other than the wiki page on how it works?

I picture it working like this:

I go to my chinese restaurant who accepts ripple. My bill is $50. Instead of paying the restaurant directly, I pay off one of his ripple debts by giving one of his employees a $50 hard drive. The restaurant gets $50 USD settled of its obligation to the employee, I get $50 of food, and the employee gets a $50 hard drive.

Yes?

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December 24, 2012, 12:30:08 AM
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But it won't be very revolutionary if it is good for nothing more than a bunch of coworkers settling up on who pays for lunch.
Reminds me how bitcoin started with the first to buy pizza with bitcoins agreeing upon paying 10,000...

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ShadowOfHarbringer
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December 24, 2012, 01:52:57 AM
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(...)  PayPay, VIScAm, Mastercrap, JP Morgue, Western ULose, etc. (...)

Hahaha



Seriously, you made my day.

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December 24, 2012, 02:29:02 AM
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All the old stuff about the old Ripple thing all took the idealistic stance that you would issue credit to your neighbors/friends out of nothing, basically giving them a line of credit.

But surely you could equally well only issue credit in an amount equal to actual "deposits"?

Afterall, banks tend to have two types of credits they give you, the easiest to get is your account balance, which you get by making deposits and they grant in amoujnt equal to your deposits. Getting an actual "line of credit" is harder.

So here is how I see it non-idealistically working, taking that hard drive at the restaurant case for example:

1) The restaurant deposits with/in you a meal worth one hard drive, so you issue them credit equal to one hard drive.

2) The restaurant gives the employee one hard drive, so the employee issues them credit equal to one meal.

I am not sure why you give the hard drive to the employee, it seems to me you'd give it to the restaurant, and any deal they make with the employee is out of scope. So lets try again:

1) The employee deposits the meal with/in you, so you issue the employee the hard drive (deposit the hard drive with the employee).

2) The employee buys the meal from the restaurant with their wages.

That maybe works.

The important thing is, you don't issue credit until you receive a deposit, in this case a meal, and the employee does not issue credit to you until you deposit the hard drive.

This way it works like the credits known as "bank account balances"; the credit represents a deposit you already received.

The old Ripple system's documentation/propaganda/literature  jumped right over that stage, directly to "lines of credit", in which you issue credit before receiving the corresponding deposit, which is, of course, risky.

There is risk the other way around though too: the restaurant takes the risk that after depositing the meal in your stomach you will not see fit to assign them any credit in the Ripple system...

So its still the same old same old "who sends first" thing...

TL;DR: Want me to grant you $10 credit? Easy peasy: just send me $10 and once I have it secure in hand, I will grant you $10 credit...

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December 24, 2012, 02:34:25 AM
 #19

All the old stuff about the old Ripple thing all took the idealistic stance that you would issue credit to your neighbors/friends out of nothing, basically giving them a line of credit.

But surely you could equally well only issue credit in an amount equal to actual "deposits"?

Afterall, banks tend to have two types of credits they give you, the easiest to get is your account balance, which you get by making deposits and they grant in amoujnt equal to your deposits. Getting an actual "line of credit" is harder.

So here is how I see it non-idealistically working, taking that hard drive at the restaurant case for example:

1) The restaurant deposits with/in you a meal worth one hard drive, so you issue them credit equal to one hard drive.

2) The restaurant gives the employee one hard drive, so the employee issues them credit equal to one meal.

I am not sure why you give the hard drive to the employee, it seems to me you'd give it to the restaurant, and any deal they make with the employee is out of scope. So lets try again:

1) The employee deposits the meal with/in you, so you issue the employee the hard drive (deposit the hard drive with the employee).

2) The employee buys the meal from the restaurant with their wages.

That maybe works.

The important thing is, you don't issue credit to until you receive a deposit, in this case a meal, and the employee does not issue credit to you until you deposit the hard drive.

This way it works like the credits known as "bank account balances"; the credit represents a deposit you already received.

The old Ripple system's documentation/propaganda/literature  jumped right over that stage, directly to "lines of credit", in which you issue credit before receiving the corresponding deposit, which is, of course, risky.

There is risk the other way around though too: the restaurant takes the risk that after depositing the meal in your stomach you will not see fit to assign them any credit in the Ripple system...

So its still the same old same old "who sends first" thing...

-MarkM-

I can see this working in a B2B context, as an alternate way of resolving the trade credit they are already extending each other.

If all the businesses in a town use each other's services on net 30 terms with each other they could use Ripple to exchange the credit directly and save the step of actually transferring dollars unnecessarily.

casascius
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December 24, 2012, 03:20:24 AM
 #20

I can see this working in a B2B context, as an alternate way of resolving the trade credit they are already extending each other.

If all the businesses in a town use each other's services on net 30 terms with each other they could use Ripple to exchange the credit directly and save the step of actually transferring dollars unnecessarily.

I just wonder what happens when Acme owes Bobtech, but Bobtech sells that debt to Corpco, and then Corpco can't collect on it because Acme can't afford to pay.  What's Corpco's recourse?

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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