2013-01-23 motherboard.vice.com - Ripple, a Peer-to-Peer Financing Network, Coul

[julz]

Ripple, a Peer-to-Peer Financing Network, Could Make Bitcoin Great (Or Destroy It)

Alec Liu
2013-01-23

http://motherboard.vice.com/blog/the-ripple-economy-could-make-bitcoin-great

Until now, one of main flaws of bitcoin is that still relies on centralized exchanges.

...

These confidence-sapping breaches have hampered bitcoin's spread and made ordinary people wary, leaving the crytpocurrency banished to the nether-regions of the ‘net where it’s used mainly for drugs, sex, and generally dark arts, like child porn and Craigslist hitmen.
...
A concept called Ripple could change all of that, by essentially turning us all into our own banks, Facebook-style.

...
The marriage will be official in a few weeks when the latest version of Ripple is released, which will include a built-in exchange platform, according to Jed McCaleb, who was one of the original developers of MtGox.

There’s one caveat: Ripple could conceivably destroy Bitcoin, if it ever got successful enough.
...
That’s a big if. More likely, the two alternative finance systems will continue to complement each other and ultimately find their own niches.
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[knight22]

bitcoin + ripple = bye bye banks

[paraipan]

Been there, done that. Debt money is not useful without a way of enforcing it's rules to people, but we know how it all ends when that happens. I prefer commodities, virtual or not, which is what real markets use in the end.

The article gives the impression it has an agenda behind, just thinking out loud here.

[finway]

Ripple is very ambicious.
but just like Gavin said,
bad incetives probably will destroy it.
Human relations are too complex,
expicially when money get  involved.

Credit can't be designed at a social level.
This is soviet central planning.

[grondilu]

I'll try to summarize my opinion on Ripple like this:

Ripple is to debt-based money what Bitcoin is to gold.



So really Ripple will destroy bitcoin if it can convince everyone that a debt-based money system is better than a commodity-based one.

[julz]

Perhaps I'm misunderstanding.. but in my experience - debts with family and friends are not fungible.

e.g settlement may need to occur fairly quickly with certain friends in order not to really strain things - but may have an entirely different timeframe with other friends or with a family member.

I'd be interested to know how,  Ripple handles this.   
Is it just that you need to always only give such tiny credit amounts that the debt period is easier to be kept short?
Even so - one can imagine certain hypersocial types amassing a large total debt, and waves of bad credit in some circles.

It seems Ripple is something I'll need to play with in order to 'get' - because intuitively it seems creepy. Anyway - it annoys me when people make ignorant comments about Bitcoin, so I should probably shut up about my unease with Ripple until I've tried it!

[Peter Todd]

If Ripple succeeds I think it'll turn out to be much more useful for business-to-business, especially bank-to-bank, money transfers. Businesses and banks are already used to dealing with complex debit/credit relationships, and those relationships tend to have a lot less emotion attached to them. It's also a matter of scale, dealing with the complexity has a minimum fixed overhead cost, but pretty much any medium-sized business has enough accounting knowledge to understand payments. Finally unlike people businesses, especially banks, are far many and far more symmetric relationships with each other. Your average person has one funding source, their job, and a whole bunch of people they owe money too, which gives ripples fancy "who-owes-who" stuff nothing to work on. Meanwhile even a small bank probably will have dozens of relationships moving money in and out, and lots of opportunities to cancel debts within that relationship graph.

[TTBit]

Any innovation that gives choices to the traditional banking system is a positive for the people. Money doesn't have to be these pieces of paper with numbers on them issued by a government. These pieces of paper  have turned out to be a joke - some work 50 hours per week for them, some just print it. It used to be difficult to get on the side of printing, but that has been relaxed in the last 5-10 years. At some point all the people who work for paper are going to feel like suckers.

If ripple works the way it works in my head, it should put another nail in the coffin of government issued currency.

[n8rwJeTt8TrrLKPa55eU]

Even so - one can imagine certain hypersocial types amassing a large total debt, and waves of bad credit in some circles.

Yep, I guess the new goal for scammers will be to amass 1000000 superficial friends all of whom feel totally comfortable lending you $1 each.

If you thought the concept of friendship had already been devalued by the advent of Facebook and Twitter...wait till people's credit starts depending on it.  You're gonna be getting frivolous friend requests every 15 seconds.

Nevertheless, Ripple still seems like an improvement over the current system where credit is created and controlled by banksters.  Decentralizing annd breaking the monoply on credit is an attractive goal.  But personally, being quite paranoid about counterparty risk, I'd monetize any Ripple credit into Bitcoin on a regular basis.

[TraderTimm]

One thing I didn't get about Ripple were debts cancelling themselves out.

So if Bob owes Alice $500, and Alice owes Bob the same amount for some reason - that makes sense it would cancel. But since Ripple allows you to make a 'chain' of debt-issuance, I don't see how a third party would take a passed along debt and cancel it out that way.

Maybe I'm missing something, but honestly I don't see the point of bolting on debt issuance in the first place.

[TTBit]

One thing I didn't get about Ripple were debts cancelling themselves out.

How I see it working:



* You want to buy a pizza that costs $10 USD.
* You don't have USD, you have BTC or €.
* You are the landlord of the pizza employee

Currently, you have to go to MtGox and trade your BTC / EUR for USD, then buy pizza.  This is the bottleneck.

But with ripple, you have more options:
* Pizza owner buys his pepperoni from someone who takes BTC, you can pay the pepperoni guy in BTC for a $10 pizza.
* Pizza owner buys his olive oil from Italy, which means if you have an EUR bank account, you can satisfy some of the debt (or give credit to) the olive oil producer.
* You take $10 off of the employee's rent to satisfy payment.

Ripple is just a way to keep track of all this. Most importantly, it keeps track of the relationships between pizza owner/employees/olive oil producer.

Or, maybe I'm 100% wrong. It is confusing.

[paraipan]

...

Ripple is just a way to keep track of all this. Most importantly, it keeps track of the relationships between pizza owner/employees/olive oil producer.

Or, maybe I'm 100% wrong. It is confusing.

Great, but this begs a question, where is all the accounting info kept?

[TTBit]

...

Ripple is just a way to keep track of all this. Most importantly, it keeps track of the relationships between pizza owner/employees/olive oil producer.

Or, maybe I'm 100% wrong. It is confusing.

Great, but this begs a question, where is all the accounting info kept?

its a p2p system, everyone holds the ledger, which is updated every few seconds

[paraipan]

...

Ripple is just a way to keep track of all this. Most importantly, it keeps track of the relationships between pizza owner/employees/olive oil producer.

Or, maybe I'm 100% wrong. It is confusing.

Great, but this begs a question, where is all the accounting info kept?

its a p2p system, everyone holds the ledger, which is updated every few seconds

So it works like Bitcoin? Having a blockchain with all the transactions and stuff.

[TTBit]

...

Ripple is just a way to keep track of all this. Most importantly, it keeps track of the relationships between pizza owner/employees/olive oil producer.

Or, maybe I'm 100% wrong. It is confusing.

Great, but this begs a question, where is all the accounting info kept?

its a p2p system, everyone holds the ledger, which is updated every few seconds

So it works like Bitcoin? Having a blockchain with all the transactions and stuff.

I don't know. From what I have gathered, it is a distributed database. Users would only need to hold their own data, but available to everyone upon demand. It wouldn't be a 'blockchain' with every transaction.

[paraipan]

...

Ripple is just a way to keep track of all this. Most importantly, it keeps track of the relationships between pizza owner/employees/olive oil producer.

Or, maybe I'm 100% wrong. It is confusing.

Great, but this begs a question, where is all the accounting info kept?

its a p2p system, everyone holds the ledger, which is updated every few seconds

So it works like Bitcoin? Having a blockchain with all the transactions and stuff.

I don't know. From what I have gathered, it is a distributed database. Users would only need to hold their own data, but available to everyone upon demand. It wouldn't be a 'blockchain' with every transaction.

I understand.

Offering 250mBtc to the person that does research on Ripple

http://www.rugatu.com/questions/6452/what-is-ripple

[JoelKatz]

So if Bob owes Alice $500, and Alice owes Bob the same amount for some reason - that makes sense it would cancel. But since Ripple allows you to make a 'chain' of debt-issuance, I don't see how a third party would take a passed along debt and cancel it out that way.

Think about the way banks settle. I write you a check for $50. You deposit it. Now, my bank owes me $50 less and your bank owes you $50 more. If you then write a $50 check to someone who uses my bank, our banks can just cancel them out and don't need to do any settlement. If there's a net imbalance, they can settle.

Maybe I'm missing something, but honestly I don't see the point of bolting on debt issuance in the first place.

So you don't see the point of bank accounts, credit cards, checks, and Bitcoin exchanges? All of these are based on debt issuance, debt exchange, and settlement chains.

I don't know. From what I have gathered, it is a distributed database. Users would only need to hold their own data, but available to everyone upon demand. It wouldn't be a 'blockchain' with every transaction.

Nodes that wish to process transactions must have all current state information. They don't have to have a historical record of past transactions. You don't need to run a node that processes transactions to use the system.