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

[kwukduck]

haha this is crazy, everybody yelling it's a scam, and everybody still jumping the scamwagon xD
This way it may become a greater success in a few months then bitcoin has ever dreamt of.
And the founders? Oh well, they are already enjoying the full extent of their premined coins

100 million xrp (full) premine, exchanging at what.. 50.000 xrp per 1 btc... That is a very very profitable scam imho.

[Prattler]

100 million billion xrp (full) premine, exchanging at what.. 50.000 xrp per 1 btc... That is a very very profitable scam imho.

10¹¹ XRP is at the moment priced at around $100,000,000.

[haitispaceagency]

how can i make me own digital currency so i get rrich like these guys

[drawingthesun]

how can i make me own digital currency so i get rrich like these guys

Notice how most of the alt-coins are worthless, its because they are not different enough to warrant faith in their value to the same degree as Bitcoin.

However, ripple is a novel system that is apparently worth $100,000,000 at current market rates. Under the hood the xrp is simply another pre-mined alt-coin, however its this new IOU magic that is running on top that brings something new and unique into the world.

I personally think the centralized nature of this new ripple system will be its ultimate downfall but it is very unique and people are willing to have faith in this system and that might be enough.

[JoelKatz]

I personally think the centralized nature of this new ripple system will be its ultimate downfall but it is very unique and people are willing to have faith in this system and that might be enough.

We understand this risk well. That's why we want to decentralize the system as quickly as we can.

[bitcool]

I personally think the centralized nature of this new ripple system will be its ultimate downfall but it is very unique and people are willing to have faith in this system and that might be enough.

We understand this risk well. That's why we want to decentralize the system as quickly as we can.

If serious, releasing Windows client build will be a good first step. 

Last time I checked, couldn't find it.

[JoelKatz]

If serious, releasing Windows client build will be a good first step.  

Last time I checked, couldn't find it.

The client source is available.
https://github.com/rippleFoundation/ripple-client

As discussed elsewhere, the server source is not available yet. (The primary reason is that once other people are participating in the network, changes are as difficult as Bitcoin hard forks. That would slow the rollout of new features. So we'll delay releasing the server source at least until the feature set is reasonably complete. Once the network is distributed, we want people to be able to rely on settled expectations even if that means not adding new features.)

Technical details are available on our wiki and, if necessary, simply by asking us. I can't promise that I'll have time to answer every question, but we aren't hiding anything and so far I've been able to answer every technical question that's been asked. You can also find ledger and transaction structures available for download.

[smoothie]

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.

So if this is the case...why not just use the current monetary system? Same setup basically. Based on debt and trust of the government that the paper they print their name on is worth what they say it can buy (i.e. $5 dollars worth etc.).

I see no advantages with ripple other than more smoke and mirrors and another opportunity for the originators to either get shut down by a government entity or run with the funds given its centralized nature.

[Vladimir]

So if this is the case...why not just use the current monetary system? Same setup basically. Based on debt and trust of the government that the paper they print their name on is worth what they say it can buy (i.e. $5 dollars worth etc.).

Banks are using ripple-like system for interbank money transfers for decades. It is called SWIFT. This is one of their greatest assets.

All ripple does is democratization of that idea by bringing it to anyone willing to use it. Power to the people. Take it or leave it.

[smoothie]

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.

It isnt about how much 1 person trusts a ton of people. It is the inter-trusting of different parties that are all linked together. Just because I trust B and B trusts C doesn't mean I trust C. And in fact if I know that B could be trusting known scammers or people I don't trust, the entire thing collapses because at some point B isn't going to want to trust A, D, F, G, H, J, K, ....Z.

A system based on TRUST is a flawed system. The current monetary system is based on that...."full faith and credit of the US govt"...as an example...means shit. Broken system.

[smoothie]

So if this is the case...why not just use the current monetary system? Same setup basically. Based on debt and trust of the government that the paper they print their name on is worth what they say it can buy (i.e. $5 dollars worth etc.).

Banks are using ripple-like system for interbank money transfers for decades. It is called SWIFT. This is one of their greatest assets.

All ripple does is democratization of that idea by bringing it to anyone willing to use it. Power to the people. Take it or leave it.

Anything where I have to trust someone else, is a broken system. I rather trust the mathematics behind Bitcoin and Litecoin than an entity called "Opencoin Inc." ...or anyone who wants to use the system.

I trust me, I trust the bitcoin network as well as the litecoin network. Perhaps I also trust verifiable gold and silver products (after being tested).

That is the beauty of bit coin/litecoin, I don't have to trust anyone.

[Vladimir]

That is fine. If you do not trust anyone at all and nobody trusts you, you then will not be able to accept or send any ripple payments. However, if some entities could still trust you, this would enable you to send payments and then accept payments within some limits.

Trust just like risk is not something binary. Risks could be very small, so small that it is unwise to not ignore it. It is like refusing to exit ones house because there is a chance that one can be hit by lightening. The same is with trust. It is not reasonable to refuse to trust some modest amount of money to some reasonably trustworthy entity if it enables your participation in an important market.

In any case if you say that you trust no one and you have made a single trade ever on any Bitcoin exchange or held any amount of money in any financial institution then you are less than honest here.

I think you simply do not get what ripple as money is, I mean the concept itself. You do not see the forest behind the trees yet.

[smoothie]

That is fine. If you do not trust anyone at all and nobody trusts you, you then will not be able to accept or send any ripple payments. However, if some entities could still trust you, this would enable you to send payments and then accept payments within some limits.

Trust just like risk is not something binary. Risks could be very small, so small that it is unwise to not ignore it. It is like refusing to exit ones house because there is a chance that one can be hit by lightening. The same is with trust. It is not reasonable to refuse to trust some modest amount of money to some reasonably trustworthy entity if it enables your participation in an important market.

In any case if you say that you trust no one and you have made a single trade ever on any Bitcoin exchange or held any amount of money in any financial institution then you are less than honest here.

I think you simply do not get what ripple as money is, I mean the concept itself. You do not see the forest behind the trees yet.

I suppose our definitions of "money" differ. that is okay. Ripple to me is not money, nor is bitcoin. Bitcoin is just a better currency than fiat paper and ripple.

Yes I have little risk-tolerance for trusting others with my "money" or value. I prefer to not have to put my trust in a system (ripple) that has a single point of failure.

To each his own I guess.

[JoelKatz]

It isnt about how much 1 person trusts a ton of people. It is the inter-trusting of different parties that are all linked together. Just because I trust B and B trusts C doesn't mean I trust C. And in fact if I know that B could be trusting known scammers or people I don't trust, the entire thing collapses because at some point B isn't going to want to trust A, D, F, G, H, J, K, ....Z.

I think you still don't understand how trust works in Ripple. For one thing, most people will wind up trusting just gateways, and gateways don't need to trust anyone to function.

Say there's a gateway that's a regulated financial institution, and you and I each trust that institution. First, all we're trusting is that their IOUs will retain value. We don't need to trust them to do anything. We don't have to be their customers. Now, you and I can pay each other by exchanging this gateway's IOUs. None of us need to do any business with the gateway, the gateway doesn't need to do anything (except maintain the value of its IOUs by performing redemptions for other people), and the gateway doesn't need to trust anyone.

And say you trust gateway A and I trust gateway B. Gateways A and B don't trust anyone. We can still pay each other so long as there's someone who holds IOUs from one gateway and accepts IOUs from the other gateway. All we've had to do is trust one institution that doesn't trust anyone else, and we don't have to do business with that institution or rely on them to do anything specific for us. All we're trusting is that they will continue to do business and thus their IOUs will hold value. And we only need do that for as long as it takes us to move money.

Similarly, the person in the middle who makes the exchange possible just finds that his gateway A IOUs turn into gateway B IOUs, two conditions he prefers equally anyway. Nobody has had to trust him at all because the IOU exchange is atomic and instantaneous.

And, of course, we all agree that if you trust B and B trusts C, you don't trust C. But that's fine, you don't have to. The system can act just as if you do even though C's default can never harm you.

[Deprived]

Similarly, the person in the middle who makes the exchange possible just finds that his gateway A IOUs turn into gateway B IOUs, two conditions he prefers equally anyway.

This has an embedded assumption that has concerned me a bit about ripple from the start.

Just because I "trust" gateway A and gateway B does NOT necessarily mean that I have no preference over which IOUs I hold.  I may well trust A a lot and only begrudgingly extend trust to B because I need to for some specific reason.  In that circumstance there's no way I'd want IOUs I hold from A exchanged into ones from B involuntarily just to let someone else avoid having to trust B.

Now I know in theory I can avoid this to an extent - by micro-managing trust.  But ideally I should be able to extend trust whilst locking it against being filled by any action other than my own (which would include filling of orders I had placed of course).  Or alternatively I should be able to lock specific IOUs in so that they can't be changed to different ones - regardless of what other trust I have extended.

Note that my preference for A over B may not be because of an actual lack of "trust" - it could be for reasons such as A being faster at redeeming IOUs on request or A offering other non-ripple functionality that I used or A offering cheaper cashout.  As it stands I can easily see a situation where I'd have to run multiple accounts with different trust profiles just to be able to swap my held IOUs BACK to my preferred debtors.

[herzmeister]

If we only "trust" "gateways" though, then it's not much different to today's banking system.

[Matthew N. Wright]

If we only "trust" "gateways" though, then it's not much different to today's banking system.

Ripple is a fascinating concept. The current explanations are dead on-- it's a decentralized (or centralized) modern SWIFT system where all the daily high value trust decisions are made by individuals without financial training instead of banks whose very business it is is to provide such services.

It will either end badly or it will start badly and end well. That is the gamble that the Ripple group are taking and they're fully aware of it. Joel is right to not focus on the "trust" part of things too much because those elements really are a breeding ground for scammers and deadbeats and everyone will get burned a little until everyone agrees that trust is worth money (something not many outside of finances and business owners really understand yet).

[JoelKatz]

If we only "trust" "gateways" though, then it's not much different to today's banking system.

In terms of what it does, yes. The biggest exception would be flexible currency support for things like Bitcoins or silver dimes and cross-currency transactions. Of course, a lot of people and companies do find today's banking system to be pretty useful. If Ripple can be cheaper, faster, provide truly irreversible transactions, and be decentralized and open source so that anyone can participate and nobody can force anything down your throat, that's more than good enough in my book. That's where we're trying to go.

From this point of view, all the other things we're trying to do, like contracts, a native crypto-currency, and person-to-person credit lines are just extras. They might revolutionize money in the future or they could all fail entirely and Ripple can still succeed as a payment network.

[tclo]

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.

I read it was 20%.

[manface]

I think scams in Ripple will be about 100x worse than Bitcoin. You can essentially invent currency, try and social engineer your way into getting people to believe you have X amount of funds. Gateways (exchanges essentially) will be trusted for a while before they fold and take everything with them creating huge losses because they can invent funds they don't have.

A decentralized financial system based around human trust is pretty ridiculous. Banks work because they have the police and politicians on their side able to protect themselves (which is both a pro and con). People in ripple will nave nothing. I bet thieves would be licking their lips at the concept of Ripple.