Ripple or Bitcoin

[mmeijeri]

Yea adoption, not get rich quick schemes...

Investing in a business is not a get rick quick scheme. Venture capitalists don't just pour money into crazy schemes.

[ahbritto]

JoelKatz, can you give us estimate when ripple server will be opensourced?

See: https://bitcointalk.org/index.php?topic=148278.0

[Spekulatius]

Yea adoption, not get rich quick schemes...

Investing in a business is not a get rick quick scheme. Venture capitalists don't just pour money into crazy schemes.

Here's a "get rick quick scheme" for you, enjoy

[r.willis]

https://bitcointalk.org/index.php?topic=148278.0

Vinnie:  ...What's the OpenCoin business model?
Jed:  ...we hold xrp and hopefully they gain value

Heh, and OpenCoin hold all XPR and plan to give avay 50%, and keep other 50% to itself.
Imagine Satoshi putting 10 500 000 BTC in coinbase transaction of genesis block.

[Beepbop]

https://bitcointalk.org/index.php?topic=148278.0

Vinnie:  ...What's the OpenCoin business model?
Jed:  ...we hold xrp and hopefully they gain value

(...)

Here's the thing: XRP will only have real value if Ripple is successful. As in, enough people need XRPs that they'll be willing to buy XRP, or that their gateways buy XRPs for them behind the scenes. OpenCoin can't just sit on their XRP, they have to work at it.

It's just like pre-paid phone minutes from TMobile won't be worth anything unless TMobile actually provides a working service, at a service level that is competitive.

Of course, you guys objected to that because of the "wasted electricity" but unlike Bitcoin, Ripple's XRP production via proof of work would eventually end, with total power consumption dropping to zero (no more mining). After the source is released, anyone can make this change. The total power requirements for using proof of work to distribute XRPs using a stochastic process would be finite.

The point of XRP would be to reward the developers of Ripple, and the guys who run peers that actually perform transactions. The sort of "proof of work" you mention would just reward those who wastes the most electricity, and not those who actually make transactions happen.

Why don't we instead discuss what incentive people would have to run their own Ripple nodes? Perhaps those who buy Ripples from Opencoin and from people who got free Ripple handouts would be the people who have an economical incentive to run their own Ripple nodes? By contributing to the success of Ripple, their hoard of cheap XRP becomes worth more, and they can sell those XRPs to cover the cost of running Ripple nodes. This sounds good at first, but it wouldn't provide an incentive for latecomers to run their own Ripple nodes?

[mr_random]

Except it seems they have a chicken/egg problem. The whole idea of using a crypto-currency is to avoid counterparty risk to the extreme (along with the speed/portability of digital media). That is the principle that most bitcoiners want in their currency. Here, we have Ripple/OpenCoin saying, hey look, theoretically we would have no incentive to dump our coins, stay closed source & centralized, harm other forks, comply with onerous government demands. However, the counterparty risk still currently exists. I don't care if they say, "We won't do that!". I want to know that they can't do that.

Except that Ripple serves TWO functions (not just one, like Bitcoin). You can create a Ripple wallet, deposit money into your preferred gateway, send and receive payments in a cryptographically secure way, and redeem money at your preferred gateway, all without ever using XRP as a currency or holding a position in XRP.

People from Bitcoinlandia tend to view other crypto-currency systems with in a myopic way. XRP are there only if you want them. They can be pretty useful to provide liquidity between U.S. dollar denominated IOUs from different gateways (and with the liquidity provider / arbitrageur making a small profit on the trade). Regular users won't see these behind the scenes activities, they will just enjoy the benefits of highly liquid markets and the network effects that Ripple allows.

I feel very uncomfortable using a currency where one entity effectively controls 99.99% of all currency units.

Right. And as I said you don't have to use XRP as a currency if you don't want to.

Do you have some kind of affiliation or connection Ripple? Just asking because I see a lot of your posts are about Ripple...

[misterbigg]

Do you have some kind of affiliation or connection Ripple? Just asking because I see a lot of your posts are about Ripple...

I'm not officially associated with OpenCoin or Ripple, just a fan of the technology. Ripple attempts to solve a number of important problems in a way that Bitcoin never can. Ripple enhances and complements Bitcoin as well. The amount of resources being poured into Ripple / OpenCoin is staggering. It is like a tsunami of work and money that will wash over the entire crypto-currency ecosystem.

[grondilu]

If Ripple really works as advertised, it would be even more revolutionary than Bitcoin.

Not everybody agrees on what money should be.  But everybody agrees on how an exchange works, what an IOU is, and I'm pretty sure everybody would be happy if all this could be done on a unique decentralized infrastructure.   Everybody except for the brokers of the Forex, the New York Stock exchange and stuff like that, of course.

[misterbigg]

Not everybody agrees on what money should be.  But everybody agrees on how an exchange works, what an IOU is, and I'm pretty sure everybody would be happy if all this could be done on a unique decentralized infrastructure.   Everybody except for the brokers of the Forex, the New York Stock exchange and stuff like that, of course.

Actually...if you pick through the Ripple wiki you will see that there will always be use-cases for dedicated exchanges that provide services or pricing models that are simply not possible under Ripple. For example, extremely high transaction volume, millisecond trade times, or flat monthly rates. Rather than shun Ripple, I would expect that traditional institutions embrace it for the added liquidity it provides.

[Ares]

If it allows near free transfer of fiat to anyone, anywhere, anytime, then doesn't that remove one of the primary advantages of bitcoin?

What gorunds would we have to sell merchants on bitcoin?

This seems to outweigh any benefit brought by ripple

[JoelKatz]

If it allows near free transfer of fiat to anyone, anywhere, anytime, then doesn't that remove one of the primary advantages of bitcoin?

It really depends on whether you see having a currency that can't be devalued as a benefit or whether you would really prefer to trade in fiat. If you'd prefer to trade in fiat but want fast, irreversible transfers across the globe, then Ripple is probably the better choice. Of course, you may have to pay transfer fees and you have to trust someone to hold your fiat for you. That's the cost of using fiat, and maybe when people see that, it will help make the case for Bitcoin to them.

What gorunds would we have to sell merchants on bitcoin?

Well, you don't really have to. If they take fiat on Ripple, you'll be able to pay them with Bitcoins anyway. Seamless Bitcoin gatewaying in both directions is high on our priority list. Of course, if they'd prefer to receive Bitcoins, then Bitcoin (or Bitcoin over Ripple) may be the better choice from them.

This seems to outweigh any benefit brought by ripple

I'm not sure what you mean. I think you're viewing Ripple and Bitcoin through an unreasonably competitive lens. Ripple and Bitcoin are not going to be like Coke and Pepsi any time soon, where every victory for one necessarily comes at the expense of the other. Unless one or the other fails, Ripple and Bitcoin will strengthen each other for a long time to come.

Is your point something like, "Ripple is so much better than Bitcoin that it will destroy Bitcoin". If so, thanks! But it will probably be a very long time before either's success will come at the expense of the other, if ever. Ripple and Bitcoin are both going after a huge group of people who don't know or care much about either and every person either system gets interested in crypto-currencies and decentralized payments will help the other too.

[herzmeister]

If Ripple makes it big, then it's good for Bitcoin as it's quite prominently placed in their list of currencies.

However, Chris Larsen does poke at Bitcoin and does see XRPs as Crypto 2.0:

https://ripple.com/blog/interview-with-chris-larsen-co-founder-and-ceo-of-opencoin-inc/

And the "intrinsic value" of Bitcoin does largely come from its usability as a global borderless non-bureaucratic medium of value transfer, so XRPs potentially do eat a lot of market share of that.

The only thing that Bitcoin has that XRP doesn't is the decentralized issuance model via proof-of-work, and that it enables much more anonymity and privacy. Everything in a Ripple account is quite public. But I bet most regular users out there, be it granny having "nothing to hide", or those who send everything of themselves to Apple, Google and Facebook anyway, just couldn't care less.

[mmeijeri]

Ripple has the same level of anonymity as Bitcoin.

[herzmeister]

you mostly have everything in one account or Ripple address, you can't create any arbitrary number of them like in Bitcoin. Theoretically possible, but costly and very inconvenient. It's basically part of their security model that you can't do it so easily.

[ivanc]

you mostly have everything in one account or Ripple address, you can't create any arbitrary number of them like in Bitcoin. Theoretically possible, but costly and very inconvenient. It's basically part of their security model that you can't do it so easily.

How do they prevent people from creating, say 1 million Ripple addresses?
I mean, without asking for personal information. I don't think it's possible.

[JoelKatz]

How do they prevent people from creating, say 1 million Ripple addresses?
I mean, without asking for personal information. I don't think it's possible.

We discourage it by having a reserve of XRP that is locked to the account. But obviously we have no say over who opens accounts.

[ivanc]

How do they prevent people from creating, say 1 million Ripple addresses?
I mean, without asking for personal information. I don't think it's possible.

We discourage it by having a reserve of XRP that is locked to the account. But obviously we have no say over who opens accounts.

So correct me if i'm wrong, but, to sum up, people in power in the Ripple consensus system are the people with money and/or trust?
As opposed to Bitcoin where the decision power is hold by the people with computing power.
Sorry if my question is naive, I'm new here and haven't read either Ripple or Bitcoin specification fully (i know, i know). But i'm supposed to be able to understand these protocols quite easily.

[JoelKatz]

So correct me if i'm wrong, but, to sum up, people in power in the Ripple consensus system are the people with money and/or trust?

Trust that they won't conspire against you, yes.

As opposed to Bitcoin where the decision power is hold by the people with computing power.

It's hard to say who really has the decision power of Bitcoin. Is it the key developers? Is it the miners? Is it the exchanges? Is it the community that has to agree on changes? Probably, it's a combination. However, you do have to trust that the people with 51% of the mining power won't conspire against you. And you have no control over who that will be.

The way Ripple works, servers come to a consensus about what order to apply transactions. Basically everything else is subject to deterministic rules. As long as everyone agrees on the ordering of transactions, there's no double-spend problem. If transactions conflict, the first one wins.

Server operators set in their servers who they wish to come to a consensus with. A ledger split in Ripple would be the equivalent problem of a blockchain fork in Bitcoin. So it's important that you try to come to a consensus with other major Ripple players. The math is very forgiving because everyone's main priority (after ensuring that the deterministic rules are followed) is coming to a consensus.

We think this is superior to Bitcoin's proof of work algorithm for three fundamental reasons:

1) While they both require you to rely on other people to make the system work, Ripple lets you choose who to come to a consensus with. You aren't stuck with whoever has the most hashing power. If you pick people in Ripple who misbehave you can simply stop listening to them.

2) Everything validators do is signed with the key by which you can decide to add them to your list of nodes you try to come to a consensus with. So if they misbehave in any way, it will be provable via, say, conflicting signed statements or incorrect signed statements that disagree with everyone else. So you'll have to behave until you get your one chance to attack and that that will be that, you'll be back to square one.

3) The worst case failure should be much less severe. With Bitcoin, the worst case failure is constant double spend attacks and requiring more and more confirmations to rely on a transaction. With Ripple, the worst case failure (that an outside attacker can cause for you, I'm assuming your own trust list isn't massively broken) should be a denial of service attack. You'll see that the nodes you need to come to a consensus with don't agree with each other, and you'll know the network can't reliably resolve disputes. The network could be frozen until it is manually fixed. With Bitcoin, you can't tell what block chain mining pools are building on. If there's a fork, you wouldn't know it. It will take manual intervention to know there's a problem

And while this isn't a major reason, it's also interesting that, while being a trusted validator doesn't give you any superior access to the Ripple network, it does give you a say in which new features are added and which aren't. Ripple has a well-defined change process, and consensus is used to enable new feature sets. If a widely trusted validators votes for a feature (or vetos it) that will carry weight in proportion to how many node lists they're on and how influential in turn those nodes are.

Of course, Bitcoin's algorithm is proven and ours is not yet. I'm convinced it's fundamentally sound. But subtle defects or bugs may manifest, of course. We may have growing pains, scaling problems, and the like. I'm confident we'll be able to fix any such problems, and we have an amazing team, but there's no 100% guarantees here.

[grondilu]

1) While they both require you to rely on other people to make the system work, Ripple lets you choose who to come to a consensus with. You aren't stuck with whoever has the most hashing power. If you pick people in Ripple who misbehave you can simply stop listening to them.

We must pick a set of servers, not just regular users only running the client, right?

[JoelKatz]

1) While they both require you to rely on other people to make the system work, Ripple lets you choose who to come to a consensus with. You aren't stuck with whoever has the most hashing power. If you pick people in Ripple who misbehave you can simply stop listening to them.

We must pick a set of servers, not just regular users only running the client, right?

In the near future, if you're running the standalone client and not running a server, you'll be able to select a list of servers to use. Currently, the client trusts the server for pretty much everything except forming and signing transactions (so your private keys never go to the server).

The protocol is designed so that the client doesn't have to trust the server to tell it which transactions have cleared or what their balances are. But currently the client does trust the server to report this information. In the future, if the client is enhanced not to trust the server in this way, it will need its own list of nodes it's willing to trust to sign a statement of which ledger is the valid, last closed ledger. Validators already issue this signed statement every time a new last closed ledger is produced. So a client that doesn't trust the server would also need a list of validators whose signed statements of the hash of the last closed ledger it was willing to trust.

The client would operate like this:

1) The client gives the server a list of validators it trusts.

2) The server tells the client the hash of the last closed ledger and a collection of validations for that ledger from the client's list of ones it trusts.

3) The client verifies the signatures on the validations and then it knows the hash of the last closed ledger.

4) The client can now determine if transactions have cleared, determine current balances, see offers and order books, and so on just by walking hash chains from the ledger's root hash. No further trust is needed. All the client needs to do is say to the server "I need the object that has this hash" and it can walk to past ledgers, past transactions, account histories, and so on. (And it can query different servers or even future nodes whose sole purpose is to retrieve data by hash, taking pressure off the network.)

The ledger was carefully designed to be sufficiently self-descriptive that it can be "walked" in this way.