Ripple or Bitcoin

[Taz]

Could Ripple XRP replace bitcoin before it is widely accepted?
If ripple allows users to send money instantly and almost fee free, with a pretty and easy to use UI.
Plenty of money to burn on advertising and reputation building.
Business and Financial connections likely to get them accepted on large merchant sites.
Why would the average person have any interest in Bitcoin?

More important could Ripple become controlled by business or government?

I'm not suggesting any of this is fact.
Just wanna hear the opinions of people that actually know stuff.

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[Mike Christ]

It is fact; Ripple is controlled by the founders of Ripple, and XRP are distributed completely at their discretion.  The two aren't very comparable; Ripple would be like fiat, if Ripple were a government.  It's mostly just used as an anti-spam mechanism; Ripple would do nothing but cater to USD etc if BTC wasn't around.

[Taz]

Ok, the small fee destruction makes sense.
What I'm ineloquently asking is, why would the average person be interested in bitcoin, now there is a business offering an instant, free-ish, currently anonymous way of sending money?

[herzmeister]

it complements and will boost Bitcoin (as it's a built-in currency), but it will also compete in a way. Much value transfer can indeed be done via Ripple only.

But, besides the more centralized model, Ripple cannot offer the privacy that Bitcoin does. A Ripple account, despire requiring no ID (yet?), exposes quite a lot of information and can pretty well be data-mined. Not that Hipster Jane would care though.

[Mike Christ]

Ok, the small fee destruction makes sense.
What I'm ineloquently asking is, why would the average person be interested in bitcoin, now there is a business offering an instant, free-ish, currently anonymous way of sending money?

Ripple does several things; one of the upsides is decentralized exchange.  Completely private debt-based exchange to anyone who has Ripple (for example, you can issue "Taz-Debts" to a friend you owe, and when you give them something in exchange for the Taz-Debts, they go away and all is equal again.  This can also work with BTC, LTC, MikeCoin, or whatever else you invent.)  It does a whole lot of things that would be phenomenal to the Bitcoin user.  But the ripples (XRP) themselves don't make sense to me.  As I said, it's supposed to be anti-spam; they're not supposed to be a currency.

I suppose one side of the story would be this: say you want to send Jill 100 BTC, but it's taking an ass-load of time for the six confirmations.  Instead, you could give Jill an IOU worth 100 BTC, and if she trusts you, she'll take that instead.  Then, when she needs the 100 BTC, she can cash in your IOU.  You're basically your own bank, issuing debt-based currency, just on a very small scale, among trusted individuals.

[Taz]

What's Mikecoin worth these days?
I could trade you some Taz-debt, I've got a hell of a lot of that.

[ffe]

I suppose one side of the story would be this: say you want to send Jill 100 BTC, but it's taking an ass-load of time for the six confirmations.  Instead, you could give Jill an IOU worth 100 BTC, and if she trusts you, she'll take that instead.  Then, when she needs the 100 BTC, she can cash in your IOU.  You're basically your own bank, issuing debt-based currency, just on a very small scale, among trusted individuals.

You could have made an earlier deposit of 100 BTC at a trusted Ripple Gateway (your Bank in effect) and then give their IOU of 100 BTC to Jill (a check in effect) and if she trusts your bank (or the Ripple Gateway she trusts in turn trusts your bank) then she will take that instead of real coins and she can cash that any time at her Ripple Gateway.

Much faster and cheaper than a transfer of real coins through the blockchain but it's Banking. Distributed banking but banking nonetheless.

[Mike Christ]

You could have made an earlier deposit of 100 BTC at a trusted Ripple Gateway (your Bank in effect) and then give their IOU of 100 BTC to Jill (a check in effect) and if she trusts your bank (or the Ripple Gateway she trusts in turn trusts your bank) then she will take that instead of real coins and she can cash that any time at her Ripple Gateway.

Much faster and cheaper than a transfer of real coins through the blockchain but it's Banking. Distributed banking but banking nonetheless.

Ahh, so that's what those are for   That's interesting.  I still don't trust it!

[Taz]

You could have made an earlier deposit of 100 BTC at a trusted Ripple Gateway (your Bank in effect) and then give their IOU of 100 BTC to Jill (a check in effect) and if she trusts your bank (or the Ripple Gateway she trusts in turn trusts your bank) then she will take that instead of real coins and she can cash that any time at her Ripple Gateway.

Much faster and cheaper than a transfer of real coins through the blockchain but it's Banking. Distributed banking but banking nonetheless.

Sort of like a cheque?

It's true it includes BTC, which is nice, but what motivation would a person have for changing their USD to BTC when they can just as easily send USD.
No one likes banking, but its what we are used to, most of us need some serious motivation in order to change our ways.
Ripple accepting BTC, kinda seems like Amazon providing internet sales service for Borders. If people really wanted borders, they would by through amazon. If they wanted anything else, they'd still buy through amazon.

[Alonzo Ewing]

I don't know everything about Ripple, but I do have hints of understanding.

Ripple is highly distributed credit.  Credit has counter-party risk.  Credit requires trust.

Bitcoin is a commodity.  Bitcoin has no counter-party risk.  Bitcoin itself, as a protocol, requires not trust.

The two are complementary, not rivals.

Gold was always valued even when Bills of Exchange existed.

There will always be a wealth asset that's valued for its lack of counter-party risk.  There will also be be a need for easy ways to transfer those wealth assets via credit relationships.

The two are complementary, not rivals.

[Terpie]

I don't necessarily believe Ripple's unit (XRP) is not meant to be a currency. They even say that plan on funding their operations with it. And if it gained widespread acceptance then why use any other currency within their framework at all? In addition, A VC like Andreesen Horowitz would not be involved unless their was some serious bank to be made if things went well. I say that as a former senior associate at a VC fund.

I just don't appreciate the shadiness of the operation. It's clearly a competitor. They need to release the source code and show us the pitch deck (business model) they showed Andreesen. Otherwise why should I promote a cryptocurrency framework with 100% of the money supply in the hands of the founder with their discretion on how they will distribute. No thanks.

[Mike Christ]

I don't necessarily believe Ripple's unit (XRP) is not meant to be a currency. They even say that plan on funding their operations with it. And if it gained widespread acceptance then why use any other currency within their framework at all? In addition, A VC like Andreesen Horowitz would not be involved unless their was some serious bank to be made if things went well. I say that as a former senior associate at a VC fund.

I just don't appreciate the shadiness of the operation. It's clearly a competitor. They need to release the source code and show us the pitch deck (business model) they showed Andreesen. Otherwise why should I promote a cryptocurrency framework with 100% of the money supply in the hands of the founder with their discretion on how they will distribute. No thanks.

Yeah that's the biggest thing.  Once they're out of beta and they release the source, I pray the first thing a developer does is fork it to remove any trace of XRP from the whole thing.  I like a lot about this system, I just don't like them keeping millions (billions?) for themselves, or using XRP to do anything within the Ripple system at all.

[CasinoBit]

There would be nothing separating ripple from a government if they had reached that position of authority.

There is also nothing decentralized about them except them implying so a thousand times on their website, they are like any other bank, only difference is they are trying to promote their agenda with Bitcoin charlatanism/demagogism.

[evoorhees]

Let me first state that I have nothing but respect and admiration for the Ripple team, especially Arthur, Jed, Stefan, and JoelKatz.

However, here's how I see it in comparison to Bitcoin. My issues can be broken into three parts:

1: Functionality and Purpose
Ripple is promoted as a "way to send any currency to anyone." Yet it is not this. It is simply a way to send IOU's of fiat currency to anyone, and this is a very different proposition.

Bitcoin, on the other hand, is a way to transact actual assets - or more specifically, one asset called Bitcoin. It moves beyond fiat currency entirely, and because it moves the actual asset anywhere instantly, there is no need for IOU's.

Ripple may be a great way to trade in normal fiat currencies, but I don't really care to do that anymore, now that Bitcoin exists. Yes, it's true that Ripple has XRP which is a cryptocurrency with many similar features to Bitcoin, but it offers no advantage over Bitcoin, and thus why do I care to use it? I might as well use LiteCoin 

2: Security

Ripple supporters will say that XRP is superior because it doesn't require mining, but this is a seriously contentious issue - let's remember that the Bitcoin mining process is not arbitrary. It introduces a specific type of security based on proof of work. While Ripple removes the proof of work concept, it may not require burning CPU cycles, but it is thus not protected by any proof of work system. Maybe proof of work isn't necessary, but Ripple will need to prove that over time, whereas Bitcoin's system has proven amazingly resilient over four years in the wild, with every hacker in the universe trying to exploit it.

3: Centralization

Ripple is far more centralized than Bitcoin. I worry if it took off, it'd suffer the same fate as eGold. It's very unclear what power OpenCoin (the company behind Ripple) actually holds over the system. Today, OpenCoin holds basically all power. They claim that in the future OpenCoin will "release" this power out into the wild and the company will no longer be centrally important. I am extremely skeptical of this. I'm also extremely skeptical that OpenCoin can't/won't create more XRP's, and it bothers me that it's structured in a way to dish out the existing XRP's from a central postion (I see uncomfortable similarities with how central banks operate, though I'm not ideologically opposed to Ripple since it's voluntary).

Further, I think the following is a fair statement: Any company that enables private (non ID verified) person-to-person transactions will be taken down by the US government, period. I believe it is far more likely that OpenCoin/Ripple will be forced to submit to the regulatory apparatus, and will at some point (though its advocates will deny this) require ID verification and all the AML/KYC compliance that a company like Paypal faces. If they do this, the system is pointless. If they don't comply, they will have to close and Ripple will be on its own. I am unsure what kind of community is there to support and build Ripple in the future if the OpenCoin company shut down, as its early-phase development has been structured like a startup (with the founders earning salary and getting paid in "stock" ie - XRP's).


Now, none of my contentions mean Ripple will fail, but I am simply skeptical of its future. Frankly, Ripple may have been exciting before Bitcoin happened... but then Bitcoin happened.

[JoelKatz]

Ripple may be a great way to trade in normal fiat currencies, but I don't really care to do that anymore, now that Bitcoin exists. Yes, it's true that Ripple has XRP which is a cryptocurrency with many similar features to Bitcoin, but it offers no advantage over Bitcoin, and thus why do I care to use it? I might as well use LiteCoin  

The primary advantage is seamless interoperation with fiat currencies. Sure, this calculus would be different if we lived in a world where fiat currencies were irrelevant, but at a minimum, that's a long way off.

Ripple supporters will say that XRP is superior because it doesn't require mining, but this is a seriously contentious issue - let's remember that the Bitcoin mining process is not arbitrary. It introduces a specific type of security based on proof of work. While Ripple removes the proof of work concept, it may not require burning CPU cycles, but it is thus not protected by any proof of work system. Maybe proof of work isn't necessary, but Ripple will need to prove that over time, whereas Bitcoin's system has proven amazingly resilient over four years in the wild, with every hacker in the universe trying to exploit it.

Personally, I've never agreed with the "mining is a waste of resources" crowd. And I agree that Bitcoin's proof of work system has proved to work extremely well while Ripple's consensus system is relatively unproven. I personally was a skeptic at first, both believing that the technical obstacles were insurmountable and that the result would be brittle.

I'm personally convinced we'll have roughly the same degree of success in this area as Bitcoin has. Will there be problems? I'm pretty confident there will be. Might there be real double spends and rollbacks if something goes horribly wrong? I can't promise there won't be. Will the system survive and be stronger because of it? I'm quite confident it will be.

We designed Ripple after seeing the strengths and weaknesses of Bitcoin's proof of work system. The biggest weakness is a 51% attack. If that happens, fixes get really ugly. For example, changing the mining algorithm would cause all miners using ASICs to lose their investments in ASICs. Basically, you are trusting that the majority of mining power will be in honest hands forever.

So we reduced the problem to one of agreeing on a transaction order and established a mechanism just to do that. In addition, we designed a scheme that doesn't rely on rewriting the past rather than one that is based around doing this. And we ensured you could always tell whether others were on the same "blockchain" you were and that network splits were detectable.

Ripple is far more centralized than Bitcoin. I worry if it took off, it'd suffer the same fate as eGold. It's very unclear what power OpenCoin (the company behind Ripple) actually holds over the system. Today, OpenCoin holds basically all power. They claim that in the future OpenCoin will "release" this power out into the wild and the company will no longer be centrally important. I am extremely skeptical of this. I'm also extremely skeptical that OpenCoin can't/won't create more XRP's, and it bothers me that it's structured in a way to dish out the existing XRP's from a central postion (I see uncomfortable similarities with how central banks operate, though I'm not ideologically opposed to Ripple since it's voluntary).

You really don't see how enormously to our benefit it is to decentralize the network? Do you think Satoshi was a fool when he opened Bitcoin to the public and decentralized it? Do you think he would have done better had he tried to control it? Any monetary system that betrays the commitments it makes slits its own throat. Long before it will make any sense for OpenCoin to create more XRP, it won't have that power. All of these things are in our interest.

Further, I think the following is a fair statement: Any company that enables private (non ID verified) person-to-person transactions will be taken down by the US government, period. I believe it is far more likely that OpenCoin/Ripple will be forced to submit to the regulatory apparatus, and will at some point (though its advocates will deny this) require ID verification and all the AML/KYC compliance that a company like Paypal faces. If they do this, the system is pointless. If they don't comply, they will have to close and Ripple will be on its own. I am unsure what kind of community is there to support and build Ripple in the future if the OpenCoin company shut down, as its early-phase development has been structured like a startup (with the founders earning salary and getting paid in "stock" ie - XRP's).

We expect gateways, which handle the movement of actual money, will be subject to AML/KYC compliance issues. We have excellent legal advice and we will continue to follow it. You are certainly correct that this is a major issue.

[BubbleBoy]

We expect gateways, which handle the movement of actual money, will be subject to AML/KYC compliance issues. We have excellent legal advice and we will continue to follow it. You are certainly correct that this is a major issue.

Anti- money laundering legislation is not restricted to "actual money". Anything that constitutes a transfer of wealth can fall under AML if the transfer is designed to obscure the origin and destination of trade that could be illicit. Transferring deeds to a house, a bunch of diamonds, stock or gold all can be used for money laundering. So Ripple as a whole falls under AML, as does Bitcoin, as does SecondLife linden dollar. With the major difference that currently Bitcoin is the only one that can't be regulated short of a complete ban.

Since Opencoin is a US company it will accept any government interference if it wants to keep it's investment, and that's a single point of failure for a distributed currency scheme. As I've detailed in other posts, even if you publish the source there's no way for the network to fork if people don't like your newest changes; you will maintain complete control of both your ledger and any alternate ledgers for the foreseeable future.

[cypherdoc]

Ripple may be a great way to trade in normal fiat currencies, but I don't really care to do that anymore, now that Bitcoin exists. Yes, it's true that Ripple has XRP which is a cryptocurrency with many similar features to Bitcoin, but it offers no advantage over Bitcoin, and thus why do I care to use it? I might as well use LiteCoin  

The primary advantage is seamless interoperation with fiat currencies. Sure, this calculus would be different if we lived in a world where fiat currencies were irrelevant, but at a minimum, that's a long way off.

Ripple supporters will say that XRP is superior because it doesn't require mining, but this is a seriously contentious issue - let's remember that the Bitcoin mining process is not arbitrary. It introduces a specific type of security based on proof of work. While Ripple removes the proof of work concept, it may not require burning CPU cycles, but it is thus not protected by any proof of work system. Maybe proof of work isn't necessary, but Ripple will need to prove that over time, whereas Bitcoin's system has proven amazingly resilient over four years in the wild, with every hacker in the universe trying to exploit it.

Personally, I've never agreed with the "mining is a waste of resources" crowd. And I agree that Bitcoin's proof of work system has proved to work extremely well while Ripple's consensus system is relatively unproven. I personally was a skeptic at first, both believing that the technical obstacles were insurmountable and that the result would be brittle.

I'm personally convinced we'll have roughly the same degree of success in this area as Bitcoin has. Will there be problems? I'm pretty confident there will be. Might there be real double spends and rollbacks if something goes horribly wrong? I can't promise there won't be. Will the system survive and be stronger because of it? I'm quite confident it will be.

We designed Ripple after seeing the strengths and weaknesses of Bitcoin's proof of work system. The biggest weakness is a 51% attack. If that happens, fixes get really ugly. For example, changing the mining algorithm would cause all miners using ASICs to lose their investments in ASICs. Basically, you are trusting that the majority of mining power will be in honest hands forever.

So we reduced the problem to one of agreeing on a transaction order and established a mechanism just to do that. In addition, we designed a scheme that doesn't rely on rewriting the past rather than one that is based around doing this. And we ensured you could always tell whether others were on the same "blockchain" you were and that network splits were detectable.

Ripple is far more centralized than Bitcoin. I worry if it took off, it'd suffer the same fate as eGold. It's very unclear what power OpenCoin (the company behind Ripple) actually holds over the system. Today, OpenCoin holds basically all power. They claim that in the future OpenCoin will "release" this power out into the wild and the company will no longer be centrally important. I am extremely skeptical of this. I'm also extremely skeptical that OpenCoin can't/won't create more XRP's, and it bothers me that it's structured in a way to dish out the existing XRP's from a central postion (I see uncomfortable similarities with how central banks operate, though I'm not ideologically opposed to Ripple since it's voluntary).

You really don't see how enormously to our benefit it is to decentralize the network? Do you think Satoshi was a fool when he opened Bitcoin to the public and decentralized it? Do you think he would have done better had he tried to control it? Any monetary system that betrays the commitments it makes slits its own throat. Long before it will make any sense for OpenCoin to create more XRP, it won't have that power. All of these things are in our interest.

Further, I think the following is a fair statement: Any company that enables private (non ID verified) person-to-person transactions will be taken down by the US government, period. I believe it is far more likely that OpenCoin/Ripple will be forced to submit to the regulatory apparatus, and will at some point (though its advocates will deny this) require ID verification and all the AML/KYC compliance that a company like Paypal faces. If they do this, the system is pointless. If they don't comply, they will have to close and Ripple will be on its own. I am unsure what kind of community is there to support and build Ripple in the future if the OpenCoin company shut down, as its early-phase development has been structured like a startup (with the founders earning salary and getting paid in "stock" ie - XRP's).

We expect gateways, which handle the movement of actual money, will be subject to AML/KYC compliance issues. We have excellent legal advice and we will continue to follow it. You are certainly correct that this is a major issue.

Joel, once again a long post claiming a list of noble attributes but totally lacking any substantive details about how they are to be implemented.

Just release the source code and let us decide once and for all.

[Alex Zee]

Just release the source code and let us decide once and for all.

LOL, what is it with you and the insatiable desire to see other people's source code 

I think they are absolutely right not to release it yet. As they've explained, they work hard on it and do a lot of tweaks. It is much easier when you don't have to sync it with anybody else.

No reason to hurry them - let them do things right.

[ab8989]

Ripple is far more centralized than Bitcoin. I worry if it took off, it'd suffer the same fate as eGold. It's very unclear what power OpenCoin (the company behind Ripple) actually holds over the system. Today, OpenCoin holds basically all power. They claim that in the future OpenCoin will "release" this power out into the wild and the company will no longer be centrally important. I am extremely skeptical of this. I'm also extremely skeptical that OpenCoin can't/won't create more XRP's, and it bothers me that it's structured in a way to dish out the existing XRP's from a central postion (I see uncomfortable similarities with how central banks operate, though I'm not ideologically opposed to Ripple since it's voluntary).

You really don't see how enormously to our benefit it is to decentralize the network? Do you think Satoshi was a fool when he opened Bitcoin to the public and decentralized it? Do you think he would have done better had he tried to control it? Any monetary system that betrays the commitments it makes slits its own throat. Long before it will make any sense for OpenCoin to create more XRP, it won't have that power. All of these things are in our interest.

There are about a thousands banks in operation in fiat world that are not decentralized and they ( greedy capitalist pigs ) do not think they are fools and they think they are doing just fine fighting decentralization to tooth and nail.

Any commitments are also subject to be changed in the future. For example if somebody sees a hugely lucrative  market that you could tap with a change of commitments it is a nobrainer move to make and it might be very possible to do without sliting any throat. You just leave the early adopters behind and retarget your customer base to be the new group that does not care.

Any commitment that you do not fulfill today right now but postpone for some unspecified later date is not something that feels to be important deep inside your heart and any bunch of customers that do not demand it today right now do not keep that commitment that important either. If it is okay to postpone it for some unspecified later date it is certainly candidate to be postponed forever and nobody would care very deeply it that happens.

Because there are much more money some centralized party can make without decentralization it is right to be sceptical of such thing happening later. There is just no precedent of that happening ever. Satoshi started the bitcoin decentralized right from the start and that was critical part of it gaining first acceptance. If you are able to gain the first acceptance and first huge market success to ripple without decentralization there is absolutely no incentive for you to do it at some later date.

[moni3z]

https://bitcoinfoundation.org/blog/?p=163

The guidance pulled no punches with respect to a “creator” of a de-centralized virtual currency. The creator of Bitcoin, known as Satoshi Nakamoto, falls squarely within these rules to the extent he is “a person that creates units of convertible virtual currency and sells those units to another person for real currency”.

Replace Satoshi with Ripple dev's names who forgot there's a reason Satoshi is anonymous

Use Open Transactions instead