Ripple XRP distribution requires immediate formalization

[rini17]

Throwing my 2c in - practice had shown fairest systems are these where rules are known equally to all players. Ripple creators seem to think they can get better than this. NOPE. At best we'll end up in Google PageRank situation where central authority has to change the rules continuously to maintain semblance of fairness. At best.

[markm]

Brilliant! Send ripples to domains, equal to the total cumulative pagerank of the pages on that domain! You're a genius!



-MarkM-

[Ignore@YourPeril]

... forcing the community to use specifically XRP as a means of transaction capability is wrong.

As I've tried very hard to explain, it was mandated by technical reasons. We honestly didn't know any other way to do it. And, to this day, nobody has suggested any.

My complements on your great work with Ripple, it is extremely exiting by its disruptive potential.

Here is my suggestion for a solution:

You need some native anti-spam coin, which by default will have to carry some value. You also need funding to cover your investment; for coders to work on it for the future, etc. These are legitimate concerns that seems to call for some kind of a currency, to solve both problems at once.

But from this line of thought you immediately hit the big scary initial distribution problem - if you are successful: Hoarding; tulip mania; acrimony over the fairness over the give-aways. All this because what you have made easily will become not a postal stamp but the native currency for the network.  You have just set yourself up for the possibility of a particularly nasty death by success.

Solution: Freicoin with a twist, actually SpamFreiCoin.

You start off with premine of 1000 trillion antiSpamRipples. You sell them for 1 US cent (or a few sathoshis) each, or give them away for 3 years - the rest is destroyed. After these 3 years replacement of the destroyed ripples will be by demurrage, like Freicoin, about 5% every year. This is the miner grant for making new antiSpamRipples to somewhat replace those destroyed, and to have a distributed way of securing the network. Tulip mania is averted by making antiSpamRipple useless as a currency by having an extra large destruction of antiSpamRipples transferred from one Ripple account to another, above the mandatory tx fee. Like 10%: enough for you not to shrink from sending a few to your auntie and nephew, but enough to prevent any speculation on it becoming a currency.

[misterbigg]

Distributing half of the remaining stock of XRP every four years sounds  OK to me.

That's a fantasy. The Ripple wiki explicitly states that the 100 billion XRP will be enough for thousands of years worth of transactions. Distributing XRP according to your schedule would make them no longer scarce, and thus no longer capable of functioning in an anti-spam role.

XRPs have to be metered out slowly. Coincidentally this is also the way to profit the most from them. Coincidence?

[alexkravets]

XRPs have an effective floor on their price b/c people of opencoin will slurp up enough to ensure spamming is infeasible, however
just like Bitcoin there cannot be an effective ceiling on their price in the long run b/c total amount is fixed and the price can only be held down by selling them off until OpenCoin, Inc eventually runs out.

It seems like ripple can and possibly will have a much faster bootstrapping than Bitcoin though, which has remained pretty "autistic" until very recently b/c it's so unlike all the other fiat systems around it.

[misterbigg]

I hadn't seen Meni's post before making my own but coincidentally he came to the same conclusions regarding the suitability of XRP as currency.

[misterbigg]

I've explained why Bitcoins don't work...why proof of work doesn't work

What's wrong with proof of work?

[misterbigg]

..the claim of being able to balance personal financial interests with altruistic goals is inherently self conflicting, and dishonest in a sense to a community upon which you will thrive and succeed.

This, this, this!!

OpenCoin:

"Don't worry, we will distribute XRP fairly just trust us"
"Don't worry, the algorithm works and we will prove it. Soon."
"Don't worry, it will be open source soon."
"Don't worry that our list of employees is secret."

Translation:

"Just trust us, we're a bunch of altruistic humanitarians who have nothing but the best of intentions. In the meanwhile, we encourage you to invest money in our system not because it has been rigorously reviewed or open sourced, and despite that we have kept control over the entire volume of currency units, but because we have given our promise and word as upstanding citizens to forgo our own potentially vast economic best interests in lieu of the greater good."


Are you kidding me? What upsets me the most is how insulting this is. Coming a close second is how Ripple has pimped the goodwill generated by Bitcoin for its own self interest.

[JoelKatz]

I've explained why Bitcoins don't work...why proof of work doesn't work

What's wrong with proof of work?

If you mean using PoW to submit transactions directly: Whatever PoW algorithm you use, an attacker can set himself up to solve it optimally. Legitimate users are stuck with mobile phones, smart credit cards, or Javascript in browsers with limited PoW capability. An attacker can create as much proof of work as he wants without depleting any finite resource. So you're trying to ration based on something that is available to an attacker in literally infinite supply. Then what do you do? Replace your computer with a faster one?

If you mean using PoW to distribute a currency: Sure, that works. But it's arbitrary, unfair, and wasteful. It makes perfect sense for bitcoin because it's needed to secure the blockchain. It's functionally equivalent to auctioning off the currency as the people willing to invest the most in obtaining it wind up with it, except the money is wasted instead of put to anything remotely resembling good use.

[misterbigg]

Whatever PoW algorithm you use, an attacker can set himself up to solve it optimally. Legitimate users are stuck with mobile phones, smart credit cards, or Javascript in browsers with limiting PoW capability.

I disagree, and I outlined a solution here. You guys didn't think hard enough.

When I say proof of work, I don't mean proof of work to validate the transaction I mean proof of work to create the XRPs. Users with mobile phones, smart credit cards, etc.. would have to go out and buy their XRPs on the open market. Which is the end-game for Ripple anyway once all the XRP are given out.

Eventually, the requirement that Ripple users fund their new accounts through XRP purchase on the open market is the ONLY WAY for XRP to serve in the anti-spam role.

[JoelKatz]

Eventually, the requirement that Ripple users fund their new accounts through XRP purchase on the open market is the ONLY WAY for XRP to serve in the anti-spam role.

This is exactly what will happen once 50 billion XRP have been given away.

The only real difference between your PoW approach and our giveaway is that yours requires people to waste money and resources on needless PoW computations and ours doesn't. And ours allows giveaways to be used to promote the system and drive adoption and yours doesn't at least, not as much. Your scheme also allows people who put effort into building optimal PoW setups to get larger shares of XRP than ordinary people who don't. Your scheme is easier to implement. As I said, using PoW as a giveaway mechanism is still very much on the table.

[misterbigg]

The only real difference between your PoW approach and our giveaway is that yours requires people to waste money and resources on needless PoW computations and ours doesn't.

There are more differences than that:

1) Proof of work allows anyone to participate in the production of XRPs

2) The resources used to create the proof of work are not wasted, they contribute to the decentralization of the distribution

3) There is already a large user base of SHA-256 miners (the Bitcoin miners), the amount of "wasted" resources used to mine XRPs is negligible since people are already mining Bitcoins

4) Any additional mining participants that the demand for mined XRPs brings in can also contribute to increasing the Bitcoin hash rate, which is not a waste of resources

The distasteful aspect of Ripple is that the creators gave themselves all 100 billion currency units. I greatly prefer "wasted money and resources" going towards mining than this alternative. But I don't even consider it wasted resources. That's YOUR opinion, and you're hardly unbiased. How much effort really went in to thinking about ways of distributing the XRPs that don't involve starting with a hoard of the entire stash of them?

Developers MUST BE RELIEVED of the responsibility of XRP distribution AS SOON AS POSSIBLE!

If you mean using PoW to distribute a currency: Sure, that works. But it's arbitrary, unfair, and wasteful. It makes perfect sense for bitcoin because it's needed to secure the blockchain. It's functionally equivalent to auctioning off the currency as the people willing to invest the most in obtaining it wind up with it...

No it is not unfair nor is it wasteful. You said it yourself that XRPs are needed to prevent transaction spam and that they have to have some marginal value for this to work (or else they could be cheaply obtained by spammers). You are right that XRP mining would not be "securing the blockchain" but instead it would be "making spam expensive."

You claim that the mining of XRP leads to wasted energy and resources but wasting energy and resources is a requirement of the Ripple system to prevent spam! If in the future the acquisition of XRPs does not require an expenditure of energy or resources, then it cannot function to prevent spam.

What's the difference if someone works at Burger King flipping burgers and then pays OpenCoin $5 to get XRPs for opening an account (after XRPs are no longer given away for free), versus a miner who works at Burger King to pay for the electricity and equipment depreciation to merge mine Bitcoin and Ripple for some millibitcents and drops per day?

There is no difference...except that with a proof of work system the creators do not gain unjust control over the entire money supply.

[JoelKatz]

You claim that the mining of XRP leads to wasted energy and resources but wasting energy and resources is a requirement of the Ripple system to prevent spam! If in the future the acquisition of XRPs does not require an expenditure of energy or resources, then it cannot function to prevent spam.

I completely disagree. So long as the supply is limited, XRP can prevent spam, even if they are given away for free. The waste you are advocating is entirely needless. There is simply no need for anyone to ever waste anything to acquire them. You are arguing for huge amounts of wealth to be destroyed and power to be wasted for absolutely no reason whatsoever.

[misterbigg]

There is simply no need for anyone to  ever waste anything to acquire them.

After all the XRPs are given away, how will new users acquire them? They will have to buy them. That means they had to forgo consumption of something else in order to get XRPs. This is no different than the energy consumed for mining; They had to forgo the consumption that the energy could have allowed, in order to create XRPs. The only difference is that the respective electric company was the counterparty instead of OpenCoin.

But anyway the definition of "fair" and "wasteful" is going to be rather subjective and really there's no way for someone who works for the company that owns all the currency to answer in an objective fashion.

[JoelKatz]

After all the XRPs are given away, how will new users acquire them? They will have to buy them. That means they had to forgo consumption of something else in order to get XRPs. This is no different than the energy consumed for mining; They had to forgo the consumption that the energy could have allowed, in order to create XRPs.

It's hugely different. In one case, resources and energy that exist only in finite supply and could have gone to productive uses are wasted. In the other case, there is no waste at all.

But anyway the definition of "fair" and "wasteful" is going to be rather subjective and really there's no way for someone who works for the company that owns all the currency to answer in an objective fashion.

I'm making reasoned arguments, not offering opinions. Arguments are valid or invalid regardless of who makes them.

[markm]

There is simply no need for anyone to  ever waste anything to acquire them.

After all the XRPs are given away, how will new users acquire them? They will have to buy them. That means they had to forgo consumption of something else in order to get XRPs. This is no different than the energy consumed for mining; They had to forgo the consumption that the energy could have allowed, in order to create XRPs. The only difference is that the respective electric company was the counterparty instead of OpenCoin.

But anyway the definition of "fair" and "wasteful" is going to be rather subjective and really there's no way for someone who works for the company that owns all the currency to answer in an objective fashion.

People can buy XRP using proof of work based coins, including bitcoins. So those who want to spend proof of work to obtain them are free to do so.

-MarkM-

[misterbigg]

People can buy XRP using proof of work based coins, including bitcoins. So those who want to spend proof of work to obtain them are free to do so.

The problem is that you advocating proof of work along side central distribution of XRP, while I am advocating proof of work in lieu of central distribution.

[misterbigg]

It's hugely different. In one case, resources and energy that exist only in finite supply and could have gone to productive uses are wasted. In the other case, there is no waste at all.

I disagree completely (shocker!). Even if the sole purpose for consuming energy by mining XRP is to prevent OpenCoin from having total control over the distribution of the currency, it would be worth it in my eyes. Obviously you will have a different opinion.

But my proof of work proposal for distribution of XRP is compatible with Bitcoin merged mining so how much is really being wasted? Certainly not all the energy. Maybe some of it (very little).

[markm]

People can buy XRP using proof of work based coins, including bitcoins. So those who want to spend proof of work to obtain them are free to do so.

The problem is that you advocating proof of work along side central distribution of XRP, while I am advocating proof of work in lieu of central distribution.

No, remember I also said once we get the source code we can make a fork, divide all the RIpples evenly between all the people who claim to have thought of a more fair distribution method, and let them all apply their method to their share.

-MarkM-

[misterbigg]

No, remember I also said once we get the source code we can make a fork, divide all the RIpples evenly between all the people who claim to have thought of a more fair distribution method, and let them all apply their method to their share.

If OpenCoin waits until there are already a fair number of well established gateways that have regular transaction activity, it will be virtually impossible to convince these gateways to accept a fork. Especially if these gateways would lose their generous bribe of XRPs from the OpenCoin billionaires stash. It would have the same chances as one of the alt coins like Litecoin surpassing Bitcoin (i.e. impossible).