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Author Topic: 2013-01-14 spectrum.iee.org - Ripple Credit System Could Help or Harm Bitcoin  (Read 1090 times)
julz
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January 14, 2013, 10:16:31 PM
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Ripple Credit System Could Help or Harm Bitcoin
Decentralized, peer-to-peer credit could either be the exchange Bitcoiners want—or the nascent currency’s first credible competition

Morgen E. Peck
2013-01-14

http://spectrum.ieee.org/telecom/internet/ripple-credit-system-could-help-or-harm-bitcoin

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January 15, 2013, 12:25:18 AM
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I am not knowledgeable about Ripple, but it is described as a lending system in this article.
Then why do they compare it to an exchange?
I mean, sure, you could get bitcoins for a while, but you have to pay them back.
In an exhange, you exchange one good (for example dollars) for another, permanently, because you want to own the other thing.
If you want to own bitcoins and have the capital for it, why pay interest on it?
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January 15, 2013, 01:22:20 AM
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I am not knowledgeable about Ripple, but it is described as a lending system in this article.
Then why do they compare it to an exchange?
I mean, sure, you could get bitcoins for a while, but you have to pay them back.
In an exhange, you exchange one good (for example dollars) for another, permanently, because you want to own the other thing.
If you want to own bitcoins and have the capital for it, why pay interest on it?

I think the idea is that you can just buy anything with your promise to pay, so if it can be used for anything it could be used for purchasing bitcoins. I'm not really sold on it seems messy as hell even once it gets the critical mass that is absolutely required in order for it to function at all. I mean bitcoin might have been 'pointless' too when there were only 100 users, but the system worked, but ripple just doesn't help at all until there are many relationship 'coincidences'. I don't see how it bootstraps like bitcoin did.

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January 15, 2013, 01:57:05 AM
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Interesting read!

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January 15, 2013, 04:37:57 AM
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I am not knowledgeable about Ripple, but it is described as a lending system in this article.
Then why do they compare it to an exchange?

Because an exchange is always, to some extend, a lending system.  Two people exchanging stuff have to accept the idea that one of them will have to "pay" first and wait a bit until the other one pays his part.  It can never be simultaneous.   So there has to be some trust at some point.  In a centralized exchange, this is more or less solved since the central server acts as an intermediary, but it does not solve the fundamental problem, it just moves the risk to the third party.

Bitcoin-otc is a decentralized way of dealing with this, basically using a reputation system.

Ripple goes beyond that and generalizes the whole concept by allowing debts to be transferred.  It's more or less like the existing debt-based money but it is decentralized.

I think they are right when they say that Ripple is both a complement to bitcoin (since it can do what bicoin-otc does) and a competitor (since it proposes to replace a commodity based money with a debt-based money).
julz
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January 15, 2013, 04:53:02 AM
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Because an exchange is always, to some extend, a lending system.  Two people exchanging stuff have to accept the idea that one of them will have to "pay" first and wait a bit until the other one pays his part.  It can never be simultaneous.  

Well.. except between cryptocurrencies perhaps?
It seems to me that 2 bitcoin-based cryptocurrencies could be exchanged atomically by each understanding enough about the other's blockchain to do some sort of multisignature scripted transaction which either succeeds completely or fails completely.

I know that's a bit of 'hand waving' - but it should be possible right?

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January 15, 2013, 05:00:06 AM
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Because an exchange is always, to some extend, a lending system.  Two people exchanging stuff have to accept the idea that one of them will have to "pay" first and wait a bit until the other one pays his part.  It can never be simultaneous.  

Well.. except between cryptocurrencies perhaps?
It seems to me that 2 bitcoin-based cryptocurrencies could be exchanged atomically by each understanding enough about the other's blockchain to do some sort of multisignature scripted transaction which either succeeds completely or fails completely.

Indeed.  I think that's the kind of things you could do with smart-contracts.
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