Been living under a rock. What is Ripple?

[Remember remember the 5th of November]

Thread is serious. What the hell is Ripple??

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[temor]

Like Bitcoin, except you don't mine it, and it's all centralized.
( at least that's what I gathered )

[Sukrim]

Instead of buying something that has been created out of thin air (Bitcoins) you can create "IOUs" from thin air of something you already have.

Ripple then allows you to track these and resolves debt circles (there's a story about a guy who goes to check out a hotel and puts down 100 EUR deposit, then the guy from the hotel pays the barkeeper etc. until he gets the money back, then the guest leaves the hotel again and takes the money with him) automatically.

A potential use case would be a Ripple gateway that allows you to deposit USD and hands you USDs tracked on Ripple instead. you can then trade these for example for BTC, EUR or anything else. The person who then gets these USD can either redeem them at the gateway (e.g. get a back transfer) or use them for something else.

As Ripple does not really use mining like Bitcoin (there is no real need for distributing currency randomly as everybody can create their own currencies and consensus comes from who you trust, it doesn't have to be global) they use their XRP currency as some kind of "postage stamp" for transactions - they get destroyed if you do a transaction. It seems that Opencoin (the ones who built the current implementation) want to sell these XRP to cover costs. Currently they are relatively rare as they are only obtainable by the "faucet" in this forum. I guess once Opencoin starts selling them though, they will be worth next to nothing and only serve as anti spam measure after all.

Ripple is as decentralized as it can get, one of the biggest issues atm is that they didn't yet open source the server code to be able to implement changes that would be equivalent to a hard fork in Bitcoin without requiring their community to follow and/or build consensus. The other issue is that all XRP coins were pre-mined and are currently held mostly by Opencoin.

[Luno]

And it's debt based like real money:

Ripple is a Bitcoin like P2P system to track debt between parties. The debt is transferable so you can "trade your debt"!!!

You can also be you own Ben Bernanke by agreeing with a friend that you owe each other $100.000,000. This debt claim can then be Broken up in shares and sold like Ripple XRP is. Instant money out of thin air like a bank!

[mr_random]

Something no-one understands except the creators lol.

[Sukrim]

And it's debt based like real money:

Ripple is a Bitcoin like P2P system to track debt between parties. The debt is transferable so you can "trade your debt"!!!

You can also be you own Ben Bernanke by agreeing with a friend that you owe each other $100.000,000. This debt claim can then be Broken up in shares and sold like Ripple XRP is. Instant money out of thin air like a bank!

Well, Compared to banks however users can decide for themselves which debts they trust and which they don't.

Try not accepting USD from Goldman Sachs debts... with Ripple you could do that!


It is really not THAT hard to understand: Just as you get "IOUs" from MtGox when you deposit (they promise you to transfer you some USD or BTC in the future) you could also get IUOs from someone else. Once you realize that money (e.g. withdrawal request) then you erase the debt. Ripple just lets you trade this debt quicker and easier while still allowing anyone to redeem it. MtGox for example even issues these codes that let anyone redeem some value, Ripple is basically the same. You don't trade BTC there, you trade BTC redeemable on a certain gateway.

[interfect]

Ripple is several things:

• A distributed ledger that does not rely on proof of work. This is accomplished by having every Ripple client keep a list of ledger-signing "validators" that it trusts not to all be in on the same malicious scheme to defraud it. This lack of collusion is what the client relies on for trust instead. The wisdom of this is debatable, but the increased transaction speed isn't.
• A system for exchanging IOUs, on top of that ledger.
• A system for paying someone who does not trust your IOUs, by finding a path of people who trust each other's IOUs through which the value can flow. Hence the name "Ripple". If you don't like this, you can just pay people in IOUs from "Gateways", which are widely trusted people with automated systems allowing you to get or cash in IOUs. The biggest one is Bitstamp, which issues USD and BTC IOUs.
• A distributed currency exchange, that works by trading IOUs from different issuers or in different currencies against each other. This is so that you can pay someone with your USD even if they only want BTC.
• A virtual currency, called XRP, which is what Ripple transaction fees are denominated in. The Ripple creators originally gave themselves all the XRP, then handed out very large amounts of it (relative to the amount needed to pay for the operation of a Ripple address) to Bitcointalk users. It can be bought on Ripple's distributed exchange, but in order to do this you must already hold some XRP. As a spam protection measure, addresses that do not hold a certain "reserve" amount of XRP are unable to make transactions. The reasoning behind this is that some transactions, like deciding to trust someone's IOUs, need to have data persistently stored in the Ripple network, so maintaining this data has to be given a cost.
• The Ripple people themselves, who currently (as far as I know) are still the only ones running any Ripple validation nodes. They provide web-based wallet software at Ripple.com, which does all the cryptography client-side, but which relies on marginally-trusted full Ripple nodes to actually interact with the Ripple network. They also still have a huge amount of XRP left, which they plan to dispense over time in order to fund development.