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Author Topic: Ripple: A Distributed Exchange for Bitcoin  (Read 65632 times)
JoelKatz
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November 01, 2013, 06:07:22 AM
 #341

I trust the goldsmith for 1 oz. (in Ripple)
I hand the goldsmith 1 ounce of gold (in meatspace)
The goldsmith transfers 1 oz. of Au to me (in Ripple)
I spend those Ripple units somewhere. (Online)
The merchant I bought from wants the physical gold.
He goes to visit the goldsmith (in meatspace)
Merchants transfers 1 oz to the goldsmith (in Ripple)
Goldsmith hands the merchant 1 oz gold (in meatspace).

So far so good, right?

Wrong.

I still trust the goldsmith for 1 oz, but he doesn't have any gold. Unless I am constantly checking my open trust lines I haven't noticed that the balance on that line has dropped to 0.
No harm done, since nobody has any gold issued by the goldsmith to give you. So you trust the goldsmith for gold he doesn't have, but because he doesn't have the gold, nobody can give it to you anyway. No problem.

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The goldsmith can issue another oz. of Ripple gold units, but he has no way at all to redeem them.
Of course. You agreed to trust him. He can betray that trust, in which case you lose. That's how trust works.

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Unless I am constantly checking my open trust lines I haven't noticed that the balance on that line has dropped to 0. The goldsmith can issue another oz. of Ripple gold units, but he has no way at all to redeem them.
Do you trust him or not? You are trying to create some case where you both trust him and don't trust him. It has to be one or the other.

This scenario doesn't make sense in the case of using a trust line to receive a payment. And if you just want a trust line so you can receive a balance from the issuer, you can drop the trust to zero immediately -- as soon as a balance is issued.

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markm
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November 01, 2013, 06:39:00 AM
 #342

Still it could be a nice feature of some types of client or clients for some types of people to have the client watch such things and point them out to you.

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justusranvier
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November 01, 2013, 06:03:22 PM
 #343

Do you trust him or not? You are trying to create some case where you both trust him and don't trust him. It has to be one or the other.
And this is why Ripple will never be anything more than a PayPal clone with severe regulatory liability issues.

In the real world, trust is not binary. That's also why there exists in the world more than one primitive for representing trust in financial terms (credit).
mmeijeri
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November 01, 2013, 06:49:21 PM
 #344

And this is why Ripple will never be anything more than a PayPal clone with severe regulatory liability issues.

Huh? I don't see how Ripple will be more vulnerable to this than existing Bitcoin exchanges. And because of the possibility of rippling between trusted associates I think it is actually far superior to other exchanges. And don't forget that XRP has very similar properties to Bitcoin, your concern only applies to the fiat/crypto exchange layer, not to XRP.

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In the real world, trust is not binary. That's also why there exists in the world more than one primitive for representing trust in financial terms (credit).

What primitives do you think are required?

ROI is not a verb, the term you're looking for is 'to break even'.
justusranvier
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November 01, 2013, 07:06:59 PM
 #345

Huh? I don't see how Ripple will be more vulnerable to this than existing Bitcoin exchanges. And because of the possibility of rippling between trusted associates I think it is actually far superior to other exchanges. And don't forget that XRP has very similar properties to Bitcoin, your concern only applies to the fiat/crypto exchange layer, not to XRP.
The only thing I (potentially) care about with regards to Ripple is everything about it that isn't XRP.

What primitives do you think are required?
A traditional, non-revolving credit line. You could call it a simple, or a one-time use trust line.

It could be implemented as a trust line whose maximum decreases every time the balance decreases by the exact same amount.
JoelKatz
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November 01, 2013, 07:14:27 PM
 #346

A traditional, non-revolving credit line. You could call it a simple, or a one-time use trust line.

It could be implemented as a trust line whose maximum decreases every time the balance decreases by the exact same amount.
Why not just reduce the maximum to zero immediately? Ripple has no problem with a line that's over its limit. Nothing special happens except that the balance cannot increase, which seems to be exactly what you want.

A line that is at or over its limit can't be used to receive payments though. It seems odd to me that you would be willing to hold an asset but not willing to receive it in payment. If there's an actual use case for this, I can't figure out what it is. But you can get it by just reducing the limit to zero when you don't want to acquire more of the asset.

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mmeijeri
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November 01, 2013, 07:18:55 PM
 #347

The only thing I (potentially) care about with regards to Ripple is everything about it that isn't XRP.

OK, but in that regard it still looks superior to existing exchanges to me.

ROI is not a verb, the term you're looking for is 'to break even'.
Valerian77
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November 02, 2013, 01:58:21 PM
 #348

Just found this:

Bitcoin rip-off Ripple peddled shamelessy by Business Week

I think there is not too much to add ...

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November 02, 2013, 02:07:54 PM
 #349

Just found this:

Bitcoin rip-off Ripple peddled shamelessy by Business Week

I think there is not too much to add ...
Old and FUD Smiley

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mmeijeri
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November 03, 2013, 08:01:04 PM
 #350

In order to support exchange functionality between Ripple currencies and real-world currencies, Ripple needs the a non-revolving credit line, but it doesn't have one. Nobody is going to be able to implement a successful P2P currency exchange on Ripple, because of this infinite inflation feature.

How is this different from Mt Gox or Bitstamp? By that reasoning they couldn't exist, but they do.

ROI is not a verb, the term you're looking for is 'to break even'.
justusranvier
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November 03, 2013, 08:05:53 PM
 #351

In order to support exchange functionality between Ripple currencies and real-world currencies, Ripple needs the a non-revolving credit line, but it doesn't have one. Nobody is going to be able to implement a successful P2P currency exchange on Ripple, because of this infinite inflation feature.

How is this different from Mt Gox or Bitstamp? By that reasoning they couldn't exist, but they do.
Are Mt Gox or Bitstamp P2P currency exchanges?
Sukrim
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November 04, 2013, 08:59:17 AM
 #352

*snip*

So far so good, right?

Wrong.

I still trust the goldsmith for 1 oz, but he doesn't have any gold. Unless I am constantly checking my open trust lines I haven't noticed that the balance on that line has dropped to 0. The goldsmith can issue another oz. of Ripple gold units, but he has no way at all to redeem them.

In order to support exchange functionality between Ripple currencies and real-world currencies, Ripple needs the a non-revolving credit line, but it doesn't have one. Nobody is going to be able to implement a successful P2P currency exchange on Ripple, because of this infinite inflation feature.

This is like the following scenario:
You have an accout at MtGox that can hold up to 10k USD (because of AML issues or whatever). Now you are afraid to actually use it, because MtGox might arbitrarily credit your account 5k USD out of thin air.

The proper way to protect against this is fairly easy and known for centuries at the very least: Audits.
Do not trust a goldsmith that might do such things in a way that you (or regulators) won't know about this and require him to have a daily/monthly/quarterly... audit where he gives proof of holding at least the 1337 oz of XAU that the current Ripple ledger states he owes his customers.

You are being afraid to get free money (from the goldsmith) or worthless money (someone else pays you in Au.Goldsmith, even though he is bankrupt in reality). This is why banking laws and regulations exist. If your goldsmith publishes a picture of a big gold bar with the current edition of a popular newspaper right next to it (as a very simplistic way of having an audit) or MtGox would publish a bank statement every month that shows that their funds are actually enough to cover the balances issued to customers (or even just a simple audit...) this might make it more likely that people trust these issuers.


Gox and 'stamp are P2P, you are not dealing with brokers but directly with orders from other users. The biggest issue (and the one that Bitinstant for example tried to solve) is liquidity of the balances on these platforms and their redeemability.
If you only want to use Ripple as trading platform, not as a payment platform (where trading is done at the time of purchase, not beforehand) and you want to make sure you don't receive any payments from others, a first step might be not to accept payments on Ripple from others instead of nulling trust lines. Everything that comes inbound that is not from your trades then is a donation with purpose beyond that.

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cryptoanarchist
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November 04, 2013, 03:39:25 PM
 #353



If Ripple were a horse...
mmeijeri
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November 04, 2013, 06:21:12 PM
 #354

Are Mt Gox or Bitstamp P2P currency exchanges?

No, and that's what makes Ripple superior to them IMO. But I get your point, they aren't a counter example. I still don't understand why you think Ripple cannot be a successful p2p currency exchange.  I'd say it's an operational p2p currency exchange already, though it's perhaps too early to tell if it will be successful.

ROI is not a verb, the term you're looking for is 'to break even'.
justusranvier
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November 04, 2013, 06:30:55 PM
 #355

I'd say it's an operational p2p currency exchange already, though it's perhaps too early to tell if it will be successful.
Ripple is about as P2P as PayPal.
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November 04, 2013, 06:51:21 PM
 #356

Ripple is about as P2P as PayPal.

Huh? Anyone can run a validator and anyone can act as an ad hoc gateway.

ROI is not a verb, the term you're looking for is 'to break even'.
Sukrim
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November 04, 2013, 11:29:39 PM
 #357

I'd say it's an operational p2p currency exchange already, though it's perhaps too early to tell if it will be successful.
Ripple is about as P2P as PayPal.
Depends on the aspects of Paypal you refer to.

Possible to send IOUs to someone you just know the address from? Definitely. The ledger however is distributed and public, not in a private datacenter from the service provider.

The blanket statements and one-liners that creep up again make it quitre hard to discern however what the real issue is.

My guess is that people see several things in Ripple that it isn't and also isn't designed to be:

Ripple != XRP for example. XRP are a part of the system, but they are not really required for users after funding and definitely not the main investment vehicle in Ripple.
Ripple is also not a way to deposit/redeem money or other assets. These are the gateways and YOU are responsible to choose which of them you want to use and trust, not Ripple.
Also, Ripple is just "the other side of the coin" in the struggle to create digital assets. Bitcoin created transactions in a central shared database with units that start off as worthless and that are traded at the borders against other things. Ripple allows you to create anything really that is worth something (a cow, a coin, a cake) but since the thing that is represented is actually existing it can be traded at the borders mostly/only(?) against the real thing while the "IOUs" can be traded inside the system.

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Valerian77
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November 05, 2013, 02:23:09 AM
 #358

My very personal opinion to Ripple:

The inventor worked for years on a concept. Then in 2009 when Bitcoin has been invented he saw the shortcuts of his system and was in fear that he will loose years of work just because a genius and unexpected invention came. He decided then to publish things fast and is running behind Bitcoin with a changed concept.

It is expensive, has some serious shortcuts and nobody needs Ripple because it just extends the exchange ledger that traditional money traders already had. Give me a single use case for Ripple which is not covered without Ripple. And finally Ripple has nothing to do with Bitcoin - what is the reason to discuss this legacy system in this forum ?

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Sukrim
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November 05, 2013, 03:09:11 AM
 #359

Give me a single use case for Ripple which is not covered without Ripple.
Bitcoin also does not cover much (if any) new grounds - it just makes them smoother.

And finally Ripple has nothing to do with Bitcoin - what is the reason to discuss this legacy system in this forum ?
See the title of this thread:
"Ripple: A Distributed Exchange for Bitcoin"

Ripple offers a system to exchange IOUs for assets like Bitcoins or others with each other easily on an open, mostly unregulated market. This thread deals with the methods on how to do so and some misconceptions (as well as some well funded criticism). Ripple is much older than Bitcoin (one could argue that the original concept "Hawala" exists already VERY long) and the current incarnation of RippleLabs is not the first implementation of such a system. In fact, there still exists a Ripple classic client as far as I know.

You as well seem to neglect the trading aspect of money. Within Bitcoin, all you can get are other bitcoin, which stand for themselves (unless you consider IOUs issued as colored coins or mastercoins - though then you have IOUs again). With Ripple all you can get (well, nearly all, there's XRP - but imho you shouldn't "invest" in these) are things that represent something outside of the system. Instead of restriction (which makes sense for an asset that tries to be worth something) you have abundance (which makes sense for a system that can map anything and everything and where tokens actually already represent something).

While Bitcoin tries to be the ultimate fiat money (in the sense of "there shall be money", not in the sense of governmentally issued money) and hard asset, Ripple tries to be the ultimate market and transfer mechanism. These can, do and will go hand in hand - for example since Bitcoin transactions can (nearly) not be reversed, they are also one of the most traded asset IOUs in Ripple right now, as gateways are happy to receive them. It took Google just 2 days or so, to shut down the wallet account of a gateway that used them to buy XRP in contrast (it works again... now you can buy XRP which are easily convertable to BTC with Credit Cards again, probably by far the cheapest way to buy BTC with CCs). In the future, this will get even better and better, with people not even realizing that their Bitcoin payments were bought on the fly on Ripple. Adding in Litecoin support or any other non-reversible, pseudonymous currency/payment system for that matter is also just a matter of coding a small gateway.

Just like some people here boasted that "through bitbills, someone might have already shopped at your service in BTC without you even realizing it", Ripple already works this way in the BTC direction right now. I would say that alone makes it worthy of being allowed a thread here, other projects are unfortunately not that far yet.

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November 05, 2013, 07:19:26 AM
 #360

The inventor worked for years on a concept. Then in 2009 when Bitcoin has been invented he saw the shortcuts of his system and was in fear that he will loose years of work just because a genius and unexpected invention came. He decided then to publish things fast and is running behind Bitcoin with a changed concept.
The inventor of this implementation of Ripple is the original creator and owner of Mtgox Grin

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