Ripple or Bitcoin

[kodo]

BITCOIN!

[1714253134]

1714253134

[webr3]

There are 3 things at play here:

1) Ripple the concept
2) Ripple the opencoin implementation, "rippled"
3) XRP the currency of (2).

(1) It's a good system which some people will love, some people will hate, it compliments other currencies at it's core, but it competes with many financial systems and financial services offered by companies.
(2) Who knows, it's not generally opensource yet, available on request / to gateways, I know people with the source and they think it does the job but the code could be better quality (poor as in coding standards, not poor as in vulnerable)
(3) XRP is just a currency which is a utility of (2), it can be valued in different ways, either at face value, at what people are willing to pay, and as a utility of the network where 1 XRP is the value of 10k-100k transactions on the public ledger.

Ultimately, (1) and (3) are just different approaches.

(2) is the only real talking point, and time will tell, but it's worth noting the route they are taking and that they are dealing with businesses and investors, as a company they are transparent, even if the software currently isn't.

[ElectricMucus]

Well if you aren't sure an accusation is justified why make it?

That's a safeguard mearure for mental sanity.


There is a saying:

"Be careful when you argue with a zealot, because he might be right"

Yeah

[timeofmind]

But really... Is Ripple going to come down to the user trusting a few servers? One of the primary strengths of bitcoin is that the blockchain encourages competition among nodes and provides an incentive for all participants. Where is the incentive with Ripple?

There is no incentive in Bitcoin to run a client. The only incentive is for mining, which doesn't exist in Ripple.

Will it be left up to the big players in Ripple to provide servers in order to keep  the value of the currency going? In that case, how is it decentralized? If there is no mining of blocks, then it sounds like ripple would be unable to provide transaction fees to those running servers... where is the incentive? Nobody is competing for blocks!

People running clients don't get any compensation in Bitcoin. The Ripple server is analogous to the Bitcoin client.

People will run Ripple servers because they want access to the Ripple network. Otherwise, they'll have to find someone else's server. People who run servers to provide access to the public will expect to provide access to hundreds of low-load clients, not a few high-load gateways, arbitragers, or market makers. The only way to ensure a reliable high-speed path is to run your own server (or pay someone else to do so for you). Then, people won't cut you off because you'll be pulling your weight and cutting you off would mean cutting themselves off.

Once you're running a server that tracks the network, the extra work to validate is negligible. It's just a few crypto operations to sign proposals and validations.

But I do agree that there is a real risk that the network could shrink to a small set of validators. I don't think anyone has any incentive to see that happen and I think everyone who uses the network has an incentive to see that that doesn't happen. We'd like to see a large number of validators around the world run by different groups with different interests, just as we now have a large number of Bitcoin clients running around the world run by different groups with different interests.

I think this is a weak point in Ripple, for the very reason that the Ripple server is analogous with a Bitcoin client. Problem being that the Bitcoin client also has a real risk of decreasing to only a few clients (that actually track all transactions), but that will not affect the security of Bitcoin, because there will still be competition among miners; although there is the risk of mining power being concentrated.... Ripple relies on the server in order to secure the network through consensus. If there ends up being only a few servers, your Ripple ledger is under a much higher security risk than the network of Bitcoin miners is. If Bitcoin is reduced to only a few Bitcoin clients that track the entire block-chain, and if those few bitcoin clients are hacked, it is no big deal because the ledger can not be tampered with, people only use Bitcoin clients to view transactions... clients are read-only. Ultimately, I see Ripple as having most people using light-weight Ripple clients, and major players/investors running Ripple servers. Those few Ripple servers will be the heart of the Ripple network. Will you rely on a trust model? Where Ripple clients must connect only to trusted servers? If you do not do this, then what is the risk that someone might connect to a rogue server? This problem doesn't exist in Bitcoin. I see Ripple having a network topology where ripple clients are forced to rely on trusting certain servers. This is a big drawback. Lightweight bitcoin clients would only need to trust certain full-chain clients for actually reading the blockchain, they would not need to trust such servers to ensure their transactions are correctly written. So I see the weakness in Ripple being that the server (analogous to the Bitcoin client as you described), is also responsible for writing transactions to the ledger. Bitcoin doesn't have this problem of its clients being responsible for verifying the ledger, we leave that to the miners, who compete vigorously for the profits, and watch each other like hawks.

[timeofmind]

Is "consensus" of nodes an improvement over mining?

I think it's too early to tell especially given the extensive testing that proof of work has received. But I'm very optimistic. Two big fundamental differences: Proof of work can also be used to distribute a currency -- there's no known good way to do that using consensus. There's no known good way to handle a 51% attack on a proof of work system.

So to summarize, I think having miners who are rewarded for verifying and recording transactions is a much more resilient system than having voluntary servers consenting with one another. Yes, in Bitcoin running a client is voluntary, and as the # of transactions increase, likely there will be fewer and fewer people tracking them all. Likewise with Ripple, you will likely end up with most people running light-weight clients or using web interfaces. So the fact that your servers are voluntarily run is a weakness. It means the entire Ripple network will be weaker than the Bitcoin network... easier to attack... and entities running these servers will likely be organizations that profit from running public Ripple services, so they will also be sitting ducks; contrary to bitcoin mining which is incentive in and of itself. An entity could have incentive to mine without having any other interests in bitcoin.

[timeofmind]

I think for the reasons stated above by me, a crypto-currency would be even more resilient if the proof-of-work is designed in such a way the encourages mining to be spread out among many nodes (ie. scrypt based proof-of-work). Many bitcoiners are very aware of this; hence the birth of litecoin, novacoin, yacoin... Ripple is going in the opposite direction...

[JoelKatz]

So to summarize, I think having miners who are rewarded for verifying and recording transactions is a much more resilient system than having voluntary servers consenting with one another. Yes, in Bitcoin running a client is voluntary, and as the # of transactions increase, likely there will be fewer and fewer people tracking them all. Likewise with Ripple, you will likely end up with most people running light-weight clients or using web interfaces. So the fact that your servers are voluntarily run is a weakness. It means the entire Ripple network will be weaker than the Bitcoin network... easier to attack... and entities running these servers will likely be organizations that profit from running public Ripple services, so they will also be sitting ducks; contrary to Bitcoin mining which is incentive in and of itself. An entity could have incentive to mine without having any other interests in bitcoin.

I agree that this is a threat that has to be kept in mind. I'm not convinced that it's a more serious realistic risk than the threat of a 51% attack on a proof-of-work based system.

I think for the reasons stated above by me, a crypto-currency would be even more resilient if the proof-of-work is designed in such a way the encourages mining to be spread out among many nodes (ie. scrypt based proof-of-work). Many bitcoiners are very aware of this; hence the birth of litecoin, novacoin, yacoin... Ripple is going in the opposite direction...

This is very bad. Bitcoin got this right. These other schemes are much weaker than Bitcoin's. To attack Bitcoin, you have to invest millions of dollars on mining ASICs that will become worthless if your attack succeeds. To attack these other coins, you just need a botnet or to rent some general-purpose computing power.

[timeofmind]

I think for the reasons stated above by me, a crypto-currency would be even more resilient if the proof-of-work is designed in such a way the encourages mining to be spread out among many nodes (ie. scrypt based proof-of-work). Many bitcoiners are very aware of this; hence the birth of litecoin, novacoin, yacoin... Ripple is going in the opposite direction...

This is very bad. Bitcoin got this right. These other schemes are much weaker than Bitcoin's. To attack Bitcoin, you have to invest millions of dollars on mining ASICs that will become worthless if your attack succeeds. To attack these other coins, you just need a botnet or to rent some general-purpose computing power.

Well, the theory is that encouraging non-specialized computing encourages a larger number of miners, so that quantity offsets quality. You seem to suggest that total proof-of-work can reach higher hights through specialization? Since network power is largely determined by profitability, which is largely determined by difficulty, which is inversely proportional to combined proof-of-work of the network, I would think that the amount of proof-of-work will reach the same levels regardless of whether specialized mining is allowed or not; in that case, the specialized mining gains no advantage against botnets, because the botnets are still fighting against the same amount of proof-of-work, whether mining is specialized or not. In these other "scrypt" coins, the decreased proof-of-work of the asics and gpus is just made-up-for by an increased amount of cpus. The bot-net still has the same amount of proof-of-work to fight against, which is mostly determined by the mining rewards and the value of the currency. Ultimately, the theory is that you have same proof-of-work, dictated by same factors of profitability, but distributed more widely.

[JoelKatz]

Since network power is largely determined by profitability, which is largely determined by difficulty, which is inversely proportional to combined proof-of-work of the network, I would think that the amount of proof-of-work will reach the same levels regardless of whether specialized mining is allowed or not;

For every person who mines on a CPU just for the heck of it, there's an equal and opposite professional miner who is discouraged by the increased difficulty. So while the identity of miners might be more diverse, the proof of work will be the same. However, to mine on a level technological playing field for Bitcoin will mean you have to invest in ASICs. Anyone who tries to attack Bitcoin without ASICs won't even get out of the door.

in that case, the specialized mining gains no advantage against botnets, because the botnets are still fighting against the same amount of proof-of-work, whether mining is specialized or not.

The point is that ASICs do *much* more work, leaving anyone who tries to mine without them at a massive disadvantage.

In these other "scrypt" coins, the decreased proof-of-work of the asics and gpus is just made-up-for by an increased amount of cpus. The bot-net still has the same amount of proof-of-work to fight against, which is mostly determined by the mining rewards and the value of the currency. Ultimately, the theory is that you have same proof-of-work, dictated by same factors of profitability, but distributed more widely.

No. To compete on a level playing field with miners, someone attacking Bitcoin has to invest in ASICs, otherwise they're at a massive technological disadvantage.

Yes, the total amount of proof of work will be the same in both cases. You won't have more mining because you don't need to invest in ASICs, you'll just have more casual miners and thus fewer professional miners.

If you really don't see it, consider two coins with exactly the same money spent on mining except one uses ASICs and one uses CPUs. Which one can you more easily attack with a bot net? Which one can you more easily attack with rented hardware?

Bitcoin got this right and people who don't understand security are mindlessly trying to fix what is not broken.

[timeofmind]

Since network power is largely determined by profitability, which is largely determined by difficulty, which is inversely proportional to combined proof-of-work of the network, I would think that the amount of proof-of-work will reach the same levels regardless of whether specialized mining is allowed or not;

For every person who mines on a CPU just for the heck of it, there's an equal and opposite professional miner who is discouraged by the increased difficulty. So while the identity of miners might be more diverse, the proof of work will be the same. However, to mine on a level technological playing field for Bitcoin will mean you have to invest in ASICs. Anyone who tries to attack Bitcoin without ASICs won't even get out of the door.

in that case, the specialized mining gains no advantage against botnets, because the botnets are still fighting against the same amount of proof-of-work, whether mining is specialized or not.

The point is that ASICs do *much* more work, leaving anyone who tries to mine without them at a massive disadvantage.

In these other "scrypt" coins, the decreased proof-of-work of the asics and gpus is just made-up-for by an increased amount of cpus. The bot-net still has the same amount of proof-of-work to fight against, which is mostly determined by the mining rewards and the value of the currency. Ultimately, the theory is that you have same proof-of-work, dictated by same factors of profitability, but distributed more widely.

No. To compete on a level playing field with miners, someone attacking Bitcoin has to invest in ASICs, otherwise they're at a massive technological disadvantage.

Yes, the total amount of proof of work will be the same in both cases. You won't have more mining because you don't need to invest in ASICs, you'll just have more casual miners and thus fewer professional miners.

If you really don't see it, consider two coins with exactly the same money spent on mining except one uses ASICs and one uses CPUs. Which one can you more easily attack with a bot net? Which one can you more easily attack with rented hardware?

Bitcoin got this right and people who don't understand security are mindlessly trying to fix what is not broken.

OK. Your argument is a bit confusing, because you keep using a qualitative term (technological) in order to convey an advantage; and you convey agreement with my argument that the botnet would be up against the same amount of proof-of-work. I see where my reasoning went wrong: ASICs do the equivalent work for less cost, so an ASIC-based network can reach a higher combined proof-of-work while remaining equivalently profitable as the CPU-based network as a whole. This in turn gives the botnet a lower percentage of the proof-of-work of the entire existing network. Understood.

[JoelKatz]

ASICs do the equivalent work for less cost, so an ASIC-based network can reach a higher combined proof-of-work while remaining equivalently profitable as the CPU-based network as a whole. This in turn gives the botnet a lower percentage of the proof-of-work of the entire existing network. Understood.

Right. And, to be clear, I'm not arguing that means that these other coins are fundamentally broken or anything like that. I am saying that their attempt to "fix Bitcoin" has produced a system that is in fact worse. I do agree that there might be a small advantage in that mining may be more distributed.

[nameface]

ASICs do the equivalent work for less cost, so an ASIC-based network can reach a higher combined proof-of-work while remaining equivalently profitable as the CPU-based network as a whole. This in turn gives the botnet a lower percentage of the proof-of-work of the entire existing network. Understood.

Right. And, to be clear, I'm not arguing that means that these other coins are fundamentally broken or anything like that. I am saying that their attempt to "fix Bitcoin" has produced a system that is in fact worse. I do agree that there might be a small advantage in that mining may be more distributed.

The alt-coins may not be technically broken, but the market has lost faith. People no longer move to alt-coins when Bitcoin price buckles.
I doubt the market will pump up any more alt-PoW coins in a post-ASIC world. For a new idea to succeed it's going to have to be something major. Rightfully so, Bitcoin and Ripple have all the forward momentum.

[mmeijeri]

Bitcoin got this right and people who don't understand security are mindlessly trying to fix what is not broken.

Dan Kaminsky disagrees with you and so does Adam Back. The fear is that while an attack on Bitcoin might require ASICs, such an attack might actually succeed, especially if governments restrict access to mining ASICs, as they could. An attack requiring just a botnet or rented computing power might be easier to mount, but more difficult to bring to a successful conclusion. Then again, something based just on CPUs may be more vulnerable to what Erik Voorhees calls the original 51% attack: democracy. This could lead to some sort of taxation mechanism or taint detection being built into the protocol. Personally I believe we may need a mix of algorithms.

[Este Nuno]

All i have to say is Liberty Reserve...same fate for Ripple.

Completely different situation.

Opencoin operates in the US under US law.

[oakpacific]

How many XRP does OpenCoin still hold? 60%? 95%? 99%? Who knows!

OpenCoin is anything but open, they are completely intransparent about their "monetary policy". I don't know if willfully or out of incompetence, because I'm certain it will end up hurting Ripple.

I don't think it will ever be possible for Opencoin to prove how many coins they actually gave away. Even if they released a list of all the addresses to which they sent XRP, these addresses could just belong to Opencoin themselves. In order to prove a distribution that would be considered fair by the majority of users, they would have to reveal the identity behind those adresses, which is not going to happen in such a semi-anonymous system. The intransparency is unavoidable, I guess.

I actually didn't realize that. Great point.

What if FEDs start telling you"since I can never prove I am not giving preference in the distribution of dollars, I am not going to publish any data any more?"

And the fact that XRP has to remain such a secretive currency is more evidence that it is "defective by design".

[ShadowOfHarbringer]

All i have to say is Liberty Reserve...same fate for Ripple.

Completely different situation.

Opencoin operates in the US under US law.

However it is centralized - so it is possible for FED to close it down pretty easily or dilute the XRP supply like they do with dollar.

[Sukrim]

I doubt there is a "issue more XRP" button/switch in the server interface, so that is quite unlikely. I am willing to bet ("real" block chain issued) Bitcoins on this by the way!
Closing down would be far more of a risk, though volume is so low at the moment that I'd wonder under which warrant authorities would close down a start-up that might eventually be used in the distant future to launder money?

[b!z]

I think that here there are many haters with an hand, but they buying XRP with the other

That's exactly what is happening.

[yocko06]

I think that here there are many haters with an hand, but they buying XRP with the other

That's exactly what is happening.

open coin must be killing it! they will be richer than satoshi

[SamS]

All i have to say is Liberty Reserve...same fate for Ripple.

Completely different situation.

Opencoin operates in the US under US law.

I disagree. The stated issue for Liberty was not following KYC and AML thereby allowing money laundering. My personal opinion is the ATM heist funds allegedly being routed through Liberty was a stake through the heart. That was a big deal for the banks and for government's ability to manage the system. 

This could easily happen if Ripple gateways and exchanges fail to comply with these regulations and "hot" money moves through the system. Of course, the same could be said for bitcoin or any other crypto-currency's exchanges or gateways, so I don't think the issue is Ripple specific.

You can't be a regulator if you can't regulate and I don't see the US in particular but really any government in general not wanting to control their currency and keep out competitors. There was actually a decent length discussion of how this plays out at a recent meet-up I went to. I don't think it's at all obvious that any crypto-currency avoids regulation at the crypto/fiat interface. Others do...