Ripple Scam: Centralized, Centrally Issued, Bribes exchanges, Closed Source, Tax

[🏰 TradeFortress 🏰]

"Ripple: Open Source Scam Payments".

0. "Trust" (confidence, fiat style) instead of decentralized & provable. Saw that you have 1 BTC on Ripple? You don't. You are TRUSTING that someone has 1 BTC 'for you'. Compare this to a true cryptocurrency - you have 1 bitcoin, you can sign the private keys to spend it. Not someone else who is bribed by Ripple (see #4).

1. Not open source. You can't get the server source code, make changes to it or create your own fork.

2. 100% of the XRPs (which can be traded with btc, usd, etc) are premined, and goes to the founders and OpenCoin Inc.

3. Centralized as only OpenCoin Inc developers can contribute to the code and make whatever changes to the network as they desire.

4. Bribes exchanges with XRPs (NovaScam style), exclusive benefits, so they accept Ripple and otherwise won't have.

5. Distributes small coins to people to encourage usage of them. They plan to only distribute half of it, and keep half it it themselves to dump & bribe people (see #4)

The idea behind Ripple is certainly interesting and novel, but with the current business decisions Ripple is a centralized, centrally issued and non open source scam currency.

This is not a scam in the strictest sense of the word, but rather deceptive business practices that are attempted to be kept secret.

[🏰 TradeFortress 🏰]

By requiring ripple accounts to have at least 200 XRP for it to be functioning, OpenCoin Inc (who I feel is hardly open) is creating an artificial demand for the premined XRP (Ripples). This is akin to tax required in the nation's fiat currency to artificially create use cases for that currency.

Actual quote from Ripple employee:

we want to keep the servers under [..] more central control

Ripple is a trust based currency, and it will collapse. Your 5 "BTC" and 444 "USD" will vanish into thin air, and all you have left over will be the premined XRPs.

[haitispaceagency]

good thing i sold

[🏰 TradeFortress 🏰]

good thing i sold

Great thing you sold them, because Ripple Devs just fairly "giveaway" 50 billion ripples to themselves to buy a mansion and devaluing / inflating XRP. Oh, and develop "open source" software.

[Evan]

good thing i sold

Great thing you sold them, because Ripple Devs just fairly "giveaway" 50 billion ripples to themselves to buy a mansion and devaluing / inflating XRP. Oh, and develop "open source" software.

agreed... its a HUGE scam

[🏰 TradeFortress 🏰]

good thing i sold

Great thing you sold them, because Ripple Devs just fairly "giveaway" 50 billion ripples to themselves to buy a mansion and devaluing / inflating XRP. Oh, and develop "open source" software.

agreed... its a HUGE scam

Just like NovaScam..

[cdog]

I dont think its a scam, I just dont think it will work. A giant digital IOU system is cool in theory, but fairly worthless in practice.

As a person who owes other people $ and has a lot of $ owed to them IN REAL LIFE I will tell you it certainly doesnt make life easier.

Sure, 85% of the people involved are good for it, but being able to collect when you want to and when you need the $ just doesnt happen.

In the gambling world, which I am big in, when someone owes you a lot of $ you can SELL the debt but you usually take a big hit.

Lets say you beat a guy for $5,000 in Backgammon, he cant pay immediately but you know hes good for it and he is a know person in your circles.

What you do is go around to a few people and say, hey, Larry owes me $5k, will you buy it for $3500? So you get your dough NOW, but less...

Owed money doesnt equal the exact amount. Collecting is hard and just because someone owes doesnt mean they will pay on time or all at once.

For the simple reason that $5k in debt isnt actually worth $5k (because of issues collecting and the fact that time = money) ripple will fail.

Oh, and a central authority plans to "give away" the majority of the currency units? I dont see that ever helping the value of them.

Im not signing up for ripple and have ZERO interest in it. I have enough of that whole business in my real life to know its not worth it.

[🏰 TradeFortress 🏰]

For the simple reason that $5k in debt isnt actually worth $5k (because of issues collecting and the fact that time = money) ripple will fail.

Great point. I can't wait till an exchange runs away and all the paid by opencoin ripple fanboys watch as their USD balance change from 500 to 0.

Might even start a bounty, "break Ripple's IOU system majorly and get 100 btc"?

[duckbillp]

For the simple reason that $5k in debt isnt actually worth $5k (because of issues collecting and the fact that time = money) ripple will fail.

Great point. I can't wait till an exchange runs away and all the paid by opencoin ripple fanboys watch as their USD balance change from 500 to 0.

No, it's not a great point. If you dislike the motives behind Ripple, I'd understand, but people seem to be upset with a lot of things that aren't really big issues. A promise of being paid one dollar sure is not the same as one dollar in your wallet, but this is just the same in real life. In real life, you "solve" this by dealing with banks. In Ripple, you will probably deal with gateways having a role very similar to banks. It's a bit of stretch imagining Ripple gateways becoming as large and trustworthy as banks (well, if you really consider banks that trustworthy), but the concepts are in essence the same.

[🏰 TradeFortress 🏰]

For the simple reason that $5k in debt isnt actually worth $5k (because of issues collecting and the fact that time = money) ripple will fail.

Great point. I can't wait till an exchange runs away and all the paid by opencoin ripple fanboys watch as their USD balance change from 500 to 0.

No, it's not a great point. If you dislike the motives behind Ripple, I'd understand, but people seem to be upset with a lot of things that aren't really big issues. A promise of being paid one dollar sure is not the same as one dollar in your wallet, but this is just the same in real life. In real life, you "solve" this by dealing with banks. In Ripple, you will probably deal with gateways having a role very similar to banks. It's a bit of stretch imagining Ripple gateways becoming as large and trustworthy as banks (well, if you really consider banks that trustworthy), but the concepts are in essence the same.

The problem is a line of trust does not work in practice. A trusts B. B trusts C. C trusts D. D trusts E. E trusts F. F defaults.

You ask B, and B tries to contact C. After a few days, B finally got in touch with C, and C looks for D who moved to France a few months ago.

[JoelKatz]

The problem is a line of trust does not work in practice. A trusts B. B trusts C. C trusts D. D trusts E. E trusts F. F defaults.

You ask B, and B tries to contact C. After a few days, B finally got in touch with C, and C looks for D who moved to France a few months ago.

That's not how trust works in Ripple. The trust line only exists for the instant the payment is made. Otherwise, each extension of trust is independent of every other one.

If you trust B, presumably it's because you entered into an agreement with B such that they have an obligation to settle their debts with you. What interaction they have or don't have with C is none of your business. Either B makes good or they don't. If they don't, then they are betraying your trust. Nothing C, D, E, or F does has anything to do with it.

It's like if I send you a check for $50, you deposit it in your bank, and then your bank goes out of business without paying you. It's not my problem. I only chose to trust *my* bank. Once you take the $50 as payment, how you settle with those you chose to trust is your issue. (When you set trust, you are essentially setting what you are willing to accept as payment.)

Owed money doesnt equal the exact amount. Collecting is hard and just because someone owes doesnt mean they will pay on time or all at once.

Because of issues like this, we're not relying on the community/social credit angle. I think long term it has tremendous potential and may even change the way people think about money, but there are a lot of hurdles keeping us from getting there.

[🏰 TradeFortress 🏰]

That's not how trust works in Ripple. The trust line only exists for the instant the payment is made. Otherwise, each extension of trust is independent of every other one.

If you trust B, presumably it's because you entered into an agreement with B such that they have an obligation to settle their debts with you. What interaction they have or don't have with C is none of your business. Either B makes good or they don't. If they don't, then they are betraying your trust. Nothing C, D, E, or F does has anything to do with it.

That's great in theory, but it's not going to work in practice because nobody is 100% trustable. The blockchain, on the other hand, becomes nearly 100% trustable with a high amount of transactions, and/or checkpointing in the client.

It's like if I send you a check for $50, you deposit it in your bank, and then your bank goes out of business without paying you. It's not my problem. I only chose to trust *my* bank. Once you take the $50 as payment, how you settle with those you chose to trust is your issue. (When you set trust, you are essentially setting what you are willing to accept as payment.)

Again, this sounds great if you just have a few hops. But once you get to a large amount, people will start realizing they're losing all their money because of covering for scammers, people who died, etc.

It's not going to work in practice, and is just a disaster waiting to happen once a sufficiently trusted person / gateway collapses.

[Zangelbert Bingledack]

I also think "scam" is an unwarranted accusation. Ugly, brazenly opportunistic crippling of Ripple for profit, false advertizing at this point about bring open source, and misleading statements from some about XRP being valueless - sure. But not a scam. Anyone investing in cryptocurrency has to understand what they're getting into, and that includes investigating these points.

[JoelKatz]

Again, this sounds great if you just have a few hops. But once you get to a large amount, people will start realizing they're losing all their money because of covering for scammers, people who died, etc.

The number of hops is irrelevant. How many people you trust and how reliable they are has nothing to do with how many hops a payment takes.

[poly]

Again, this sounds great if you just have a few hops. But once you get to a large amount, people will start realizing they're losing all their money because of covering for scammers, people who died, etc.

The number of hops is irrelevant. How many people you trust and how reliable they are has nothing to do with how many hops a payment takes.

No, it is relevant because people will stop using Ripple the more times they have to pay for other people. The more hops there are, the more likely this is going to happen.

Holding ripple is just about the worst thing you can do right now.

[JordanL]

I have to agree with TradeFortress here. While I have a great deal of respect for the developers of the project, the way I understand Ripple as it currently functions, I simply do not see it becoming a viable service in the long term. I await further announcements and developments, however.  

[JoelKatz]

No, it is relevant because people will stop using Ripple the more times they have to pay for other people.

As I said, we're not relying on community/social credit. We're promoting Ripple as a payment system based on gateways. The social credit system will always be there should people be ready to use it. I agree that it's difficult to use safely right now, hard to understand, and so on. Much better tools will be needed, and even then it may never catch on. I genuinely believe that one day it will be Ripple's killer app and will transform the way people think about money and finance. But we're not relying on it.

In any event, among people using the same currency, the path will almost always be either:

Payer -> Gateway -> Recipient

or

Payer -> Payer's Gateway -> Middle -> Recipient's Gateway -> Recipient

Where the "middle" will typically be someone who holds IOUs from the recipient's gateway and accepts IOUs from the payer's gateway. Both the payer and the recipient are only necessarily trusting one gateway. You won't have to do more than that to use the system to make and accept payments.

The more hops there are, the more likely this is going to happen.

The number of hops has no effect on the number of people who owe you money. There's just no connection at all.

[poly]

No, it is relevant because people will stop using Ripple the more times they have to pay for other people.

As I said, we're not relying on community/social credit. We're promoting Ripple as a payment system based on gateways. The social credit system will always be there should people be ready to use it. I agree that it's difficult to use safely right now, hard to understand, and so on. Much better tools will be needed, and even then it may never catch on. I genuinely believe that one day it will be Ripple's killer app and will transform the way people think about money and finance. But we're not relying on it.

The more hops there are, the more likely this is going to happen.

The number of hops has no effect on the number of people who owe you money. There's just no connection at all.

It really tells you when one of the employees doesn't even know their own system.

Ask yourself this: Do you want to owe someone money because someone owed you money? Do you want to owe someone money because someone owed you money as another person owed that someone money?

Unless you like paying out of pocket for the mistakes and scams of others, ripple is destined to fail. There's no killer app for something that has a critical flaw in the logic, execution and pure greed of the developers.

[JoelKatz]

Ask yourself this: Do you want to owe someone money because someone owed you money?

Maybe I do and maybe I don't. If I don't, Ripple doesn't force me to. If I do, Ripple lets me. You don't ever have to issue IOUs to use Ripple to make and receive payments. You need never owe anybody anything unless you find it to your advantage to do so.

Do you want to owe someone money because someone owed you money as another person owed that someone money?

Again, you need never owe anybody anything unless you find it to your advantage to do so. Read the very post you're replying to. Nobody but a gateway ever owes anybody anything in the typical payment paths.

Unless you like paying out of pocket for the mistakes and scams of others, ripple is destined to fail. There's no killer app for something that has a critical flaw in the logic, execution and pure greed of the developers.

You have to choose between the certainty of a small loss and the very low probability of a moderate loss. Today, every business that accepts credit cards chooses the former. If you do the numbers, the second makes more sense.

[sublime5447]

Wow i think this maybe the first time me and Trade fortress agree on something.

My reply on a different post

------Set me straight If I am not understanding any of this.

I would love a video of exactly how ripple is intended to work. Though I would suspect it would be hard to create a video explaining that 4 guys are going to create a currency give 50 percent away then hold the other 50 percent in the hopes that it gains in value. Then convince people that they should use it and even though 50 percent of them were given away for free! and the other 50 percent are held by the 4 oligarchs of digital currency! that they are valuable! 
So basically you have designed what could become the worlds most centralized currency with 4 members issuing and controlling the distribution of said currency oh and you have this little problem too

* Since OpenCoin's business model is to "hold XRP and hope they appreciate", we know that no proposals for fully decentralized distribution (e.g. "proof of work") can possibly be taken seriously.

So we know that you cant be trusted because of the nature of your business model.

Does anyone else see this ending in a repeat of the facebook fiasco between these guys all four of them in court suing one another over who did what and who owns what?

Let me know if i am missing something-----