Why Ripple is a bad idea.

[misterbigg]

Isn't this what got the economy into the subprime mortgage mess?

No. The reason we got into the "mess" is because the government coerces citizens at gunpoint to behave in certain ways. The most egregious being that we are forced to use Federal Reserve Notes as legal tender, and that the production and use of alternatives are punishable.
 

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[markm]

3. Ripple would make it easy for anyone to become the central bank and issue their own currency (however, I don't see that on ripple.com yet). If ripple enables online community currencies, will they be better money than a global bitcoin-like currency?

That is what the Brits, the Canucks, the Martians, General Mining Corp, General Retirement Funds, the (galactic) United Nations and the BitNickels folk have been experimenting with all this time in the background. They tried setting up as blockchains because blockchains looked promising, then found out getting people to merged-mine them enough to secure them was looking to be way too much of a problem, especially with all the hostility of bitcoiners toward more blockchains. Currently they are implemented using Open Transactions. Next up to explore the potential suitability of as a platform for such projects is Ripple...

-MarkM-

[Sunny King]

Yes, I think this is the key.  With Ripple we can each be like banks before banking regulation, e.g. you can deposit your "gold" (e.g. BTC) in my bank in exchange for my banknotes (IOUs).  That's what trust really is in this context.  When we make a deposit in a bank, we are trusting the bank not to close in three months and run away with our money.  So ripple essentially lets each of us be a bank.  So if you trust me, e.g. deposit money in my bank, you risk me "failing."

I am a newb and may be totally off, but this is a lot like what it sounds like reading the wiki and the various threads.  What makes it extra confusing is the parallel currency that is used to "pay" for our IOU transactions.

Exactly. The IOU game has been around for hundreds of years if not more, 'ripple' is just a new fancy term to describe it. What it is trying to do is to reinvent the entire banking system on top of a block chain. Although a main difference is this is known as free banking (practiced in the US 1837-1862) .

[dancupid]

The focus of many replies here is based on comparing Ripple to Bitcoin - but shouldn't we really be comparing it to Visa or Paypal?
Currently I have to have a paypal account if I want to send money to another person who has a paypal account.
It seems the point of ripple is that it allows us to pick our own gateway - the gateways do not need to be dependent on each other, we just need to trust our chosen gateway.

[ultimateteam4]

Anything would be appreciated. New to this!


 

rPQgi2bqKmRxXq3dypBkttWJQbS3N7Hh1L

[JoelKatz]

The focus of many replies here is based on comparing Ripple to Bitcoin - but shouldn't we really be comparing it to Visa or Paypal?
Currently I have to have a paypal account if I want to send money to another person who has a paypal account.
It seems the point of ripple is that it allows us to pick our own gateway - the gateways do not need to be dependent on each other, we just need to trust our chosen gateway.

Short term: Yes, exactly. Ripple is perfect for this.

Long term: People may use Ripple to do things completely different from what they currently do with Bitcoins and with payment systems.

[ultimateteam4]

The focus of many replies here is based on comparing Ripple to Bitcoin - but shouldn't we really be comparing it to Visa or Paypal?
Currently I have to have a paypal account if I want to send money to another person who has a paypal account.
It seems the point of ripple is that it allows us to pick our own gateway - the gateways do not need to be dependent on each other, we just need to trust our chosen gateway.

Short term: Yes, exactly. Ripple is perfect for this.

Long term: People may use Ripple to do things completely different from what they currently do with Bitcoins and with payment systems.

what else could they use it for?

[nyusternie]

Anything would be appreciated. New to this!


 

rPQgi2bqKmRxXq3dypBkttWJQbS3N7Hh1L

i got u for 500.
when they reach $42/each, maybe u can return the favor

edit:
hey, it looks like there's currently a ripple giveaway https://bitcointalk.org/index.php?topic=145506.0

[ultimateteam4]

Anything would be appreciated. New to this!


 

rPQgi2bqKmRxXq3dypBkttWJQbS3N7Hh1L

i got u for 500.
when they reach $42/each, maybe u can return the favor

edit:
hey, it looks like there's currently a ripple giveaway https://bitcointalk.org/index.php?topic=145506.0

hahaha thanks man!

[JoelKatz]

The focus of many replies here is based on comparing Ripple to Bitcoin - but shouldn't we really be comparing it to Visa or Paypal?

Short term: Yes, exactly. Ripple is perfect for this.

Long term: People may use Ripple to do things completely different from what they currently do with Bitcoins and with payment systems.

what else could they use it for?

Community credit (borrowing money from strangers). Social credit (borrowing money from friends). Self-executing contracts. Holding preferred currencies as stores of value and switching to preferred currencies for exchange as needed. Providing liquidity for a profit. And who knows what else.

[herzmeister]

Also:


It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.
The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.
The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel.
The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the taverna.
The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.
The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note.
The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory,pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism.


This is an example why we have monetary politics and money printing. The tourist essentially extendend money supply. Only this enabled the villagers to cancel debt. Obviously, we don't want this anymore, as the central banks today never remove these additional €100 eventually like the tourist did, and this is what's leading to perpetual inflation.

The real problem here is simply lack of information. Ripple is a much more elegant solution as it can clear mutual debt instantly and automatically.

[jago25_98]

 I always like Ripple and it's great to see it finally being used.

A few things though.

1) It's supposed to be decentralized and thus protected.. but only coinInc has most of the XRP at the moment, so we are going through a bootstrapping situation... but unlike Bitcoin which had an early adopter and proof of work setup we aren't a messier distribution?

2) The interlinking still makes me nervous even with the instant IOU cancelling out possibility. I'd like to see an example of this with say 3 of us users. For example, Barclays is the most connected company in the world so what can we do if we wanted to get rid of them?

 Another way to describe Ripple is to call it a bit like digital Hawala.

Am I right in thinking XRP aren't intended to have massive worth in of themselves and are instead intended just for use in stopping spam? -or are XRP actually valuable? Do they have a price now? -even with a big entity holding the cards and flooding the market regularly (and hopefully can continue)

[JoelKatz]

2) The interlinking still makes me nervous even with the instant IOU cancelling out possibility. I'd like to see an example of this with say 3 of us users. For example, Barclays is the most connected company in the world so what can we do if we wanted to get rid of them?

I'm not quite sure I follow you. You decide who you trust to hold money for you. If you don't trust someone to hold money for you, just drop their trust to zero and add trust for others.

Am I right in thinking XRP aren't intended to have massive worth in of themselves and are instead intended just for use in stopping spam? -or are XRP actually valuable? Do they have a price now? -even with a big entity holding the cards and flooding the market regularly (and hopefully can continue)

Jed McCaleb has stated that Opencoin's business model is to hold XRP. XRP are intended for use in stopping spam (to be more precise, to judge the relative importance of transactions at times when transaction fees are scarce and to impose a "cost" on space in the ledger), but there are certainly other ways people could use them.

[notme]

Isn't this what got the economy into the subprime mortgage mess?

No. The reason we got into the "mess" is because the government coerces citizens at gunpoint to behave in certain ways. The most egregious being that we are forced to use Federal Reserve Notes as legal tender, and that the production and use of alternatives are punishable.
 

We are not forced to use Federal Reserve Notes, except in the sense that everyone else uses them, so we need them to transact. The production and use of alternatives is completely legal, otherwise Bitcoin would be against the law. Go sit in a corner.

I'm pretty sure he's right that men with guns show up if you make enough money and don't pay your taxes.  The government requires taxes be paid in USD.  Additionally, the US government has confiscated gold previously.  Don't think they won't do it again.

[justusranvier]

Paying your taxes is paying for a service.

No it isn't, because...

taxes are a necessary evil if you want the government to do shit for you.

...you're never given the choice. The services are a ex post facto justification. They take the money first and then make up a story about it to explain why what they do isn't armed robbery.

If I steal your wallet at gunpoint, and then shine your shoes for you before I leave, you wouldn't accept that you owed me your wallet because I gave you a service that you didn't ask for an couldn't refuse.

[unabridged]

2) The interlinking still makes me nervous even with the instant IOU cancelling out possibility. I'd like to see an example of this with say 3 of us users. For example, Barclays is the most connected company in the world so what can we do if we wanted to get rid of them?

I'm not quite sure I follow you. You decide who you trust to hold money for you. If you don't trust someone to hold money for you, just drop their trust to zero and add trust for others.

Is there anyway to set a fractional amount of trust, for example trust someone at 50% face value of their IOUs? The biggest problem I see is if you hold good money (trustworthy IOUs) in your ripple, quick acting people (or people running smart scripts) who you trust will quickly swap out this good money for their not so good IOUs

example situation:
A holds $100 of mtgox IOU (assume very trustworthy)
A has acquaintances B1 to B100 who A doesn't know very well, maybe from a forum, so only trusts them with $1 each
As soon as $100 mtgox IOU hits A's account, B's scripts quickly notice and swap their own IOUs for part of this mtgox IOU
Now A has $100 in $1 IOUs from B1 to B100 which may only be worth $50

[markm]

Its in the spec but maybe not provided yet with a user-interface in the GUI client.

-MarkM-

[JoelKatz]

Its in the spec but maybe not provided yet with a user-interface in the GUI client.

That is correct. It's implemented in the server and works on the network but there's no easy way to set or view it yet.

[3nrg]

Two interesting reads on RIPple outlining inherent flaws as described by the authors...

http://blog.phauna.org/2013/05/the-trouble-with-ripple_25.html
http://polimedia.us/trilema/2013/ripple-the-definitive-discussion/



on a side note i went and took a peak the Ripple forums... ran by a bunch of abusive admins who crap all over their members... not a very nice place

[JoelKatz]

http://blog.phauna.org/2013/05/the-trouble-with-ripple_25.html

As he mentions, we're already adding a way to control this. If that's his only complaint, then he'll have none when this is changed. (You will be able to set an option on a pathway. When that option is set, funds can only flow out from your account along that path if it's the source of a transaction, if the input pathway to you had a negative balance, or if you placed an offer.)

http://polimedia.us/trilema/2013/ripple-the-definitive-discussion/

He just doesn't get Ripple and he doesn't look interested in understanding it either. His core argument is that Ripple is bad because it allows people to do bad things. I reject that argument fundamentally. The right question is whether Ripple makes it possible for people to do good things without forcing them to do bad things.

on a side note i went and took a peak the Ripple forums... ran by a bunch of abusive admins who crap all over their members... not a very nice place

Can you post a link or two? I'd like to see what you're referring to.