Ripple or Bitcoin

[virtualmaster]

We all thrust some private companies to install their products without knowing the source code. What is the difference by Ripple ?
The difference is the money. You are not playing games or just editing some pictures with Photoshop about your grandmother but you are moving money.
Let us say that Ripple really publish 99% of the source code and will keep just 1% for some plausible reason. Just like Google by Android. But this small piece would play a crucial role.
Would you keep greater amount of money on an android tablet ? If yes then you can keep it in Ripple also. But if you wouldn't keep on a tablet where 1% of the code is controlled by Google than you don't keep ether in Ripple.
Modern governments are interested in emerging technologies.
It is well known which governmental organization financed Facebook and who has the most gain from this huge collection of information.
It wouldn't be very surprising if the same organization would be interested to have a hidden control even about the last percent of the financial transactions of the world.

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[Alex Zee]

We all thrust some private companies to install their product without knowing the source code.

They will publish the full source code, of course.

It's just they didn't do it yet for the reason that it's easier to make changes, which are numerous at this stage.

[JoelKatz]

We all thrust some private companies to install their products without knowing the source code. What is the difference by Ripple ?

Two big differences:

1) You don't have to install the client. It's pure Javascript and can run in your browser.

2) We have released the source code to the client, the only software that runs on your computer.

[virtualmaster]

We all thrust some private companies to install their product without knowing the source code.

They will publish the full source code, of course.

It's just they didn't do it yet for the reason that it's easier to make changes, which are numerous at this stage.

That will be wonderful.
I promise I will make a Ripple account when this will happen and I will try it but probably not before.

[mmeijeri]

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 

I see Ripple as a great way to help the transition from fiat to crypto. Even if it succumbs to the threats you mention, it may still have helped Bitcoin or some other cryptocurrency gain acceptance.

[herzmeister]

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.

Because there's no reliable way to find consensus by IPs or anything network related, Bitcoin's method of finding consensus is proof of work: once CPU (cycle) one vote.

The way I understand it, the important difference and reason why Ripple does not need proof of work is because it has something reminiscent of actual accounts. JoelKatz compares Ripple's method of finding consensus with how people in a room would come to consensus. That's only possible because you know what people are, what a person actually is (as opposed to within the Bitcoin system).

So the security in Ripple is rooted conceptually in its social aspect, not in the code. It's actually not free (you need XRPs) and it takes effort (setting up trust relationships and/or gateways) to create an account, which is something that cannot be so easily automated. Kind of like a clever CAPTCHA.

[FreeBit]

In my opinion ripple is the answer of the establishment to bitcoin.

This is about assimilation of decentralized crypto currencies, rather than to destroy them.

Ripple/OpenCoin will be the Google of crypto currency, inclusively the connections to the intelligence service (like Google). Intelligence service (NSA, CIA, ...) will remove every obstacle in the way of ripple, in exchange for access to the currency control and data.

This is what's going on behind the curtains. Learn about Google, intelligence operations and modern population control. Think it through. Be aware. Make a profit by pumping tax payers money to you. Stupid as they are, they deserve it.

[JoelKatz]

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.

It's a single point of failure for a non-distributed scheme, like pretty much every payment system out there. If we are successful, Ripple will be different.

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.

I hope not. We don't want that kind of control. It doesn't benefit us in any way and it will decrease adoption. Our financial interest is in seeing the value of XRP go up and the primary way for us to achieve that is broad adoption of Ripple as a payment system.

Think about Satoshi and Bitcoin. His financial interest was in seeing the value of his Bitcoins go up as much as possible. Do you think he would have done better had he retained strict control over Bitcoin or tried to suppress altcoins? Or do you think he realized that broad adoption was the key and that required decentralization. The originators of Ripple were all Bitcoin people. These are things we fully appreciate. (And think about it. Would we even try to build trust with such a fundamental lie when trust is clearly essential to growing the network?)

[FreeBit]

I hope not. We don't want that kind of control. It doesn't benefit us in any way and it will decrease adoption. Our financial interest is in seeing the value of XRP go up and the primary way for us to achieve that is broad adoption of Ripple as a payment system.

Think about Satoshi and Bitcoin. His financial interest was in seeing the value of his Bitcoins go up as much as possible. Do you think he would have done better had he retained strict control over Bitcoin or tried to suppress altcoins? Or do you think he realized that broad adoption was the key and that required decentralization. The originators of Ripple were all Bitcoin people. These are things we fully appreciate. (And think about it. Would we even try to build trust with such a fundamental lie when trust is clearly essential to growing the network?)

In fact, despite your words, you have that control. Satoshi didn't.

Maybe in five years, in the middle of some establishment induced crisis, OpenCoin will announce something like that: "The goverment asked us to put some extra XRP into circulation, because of ... the crisis. We will, because of the severe nature of this very surprisingly and unexpected crisis, be responsible and inject xxx RP into the economy to help everyone (and to protect the country/world against this libertarian terrorists)". Satoshi cannot do this.

By the way, no ones knows about the real motivations and interests of the founders/the founders of bitcoin. This is stuff for a religious legend.

[bitcoinbeliever]

Joel, since you mentioned the incentive question regarding XRP, can you help me out please?  I just can't seem to get an answer to this question:

Would it have been possible to create Ripple without XRP?  Could you have just tracked the liabilities in their native currencies?

If the answer is "yes, it would have been possible, but the system with XRP is so much better," could you please touch on the reputational question.

That is, wouldn't the system be so much easier to trust, and your company be so much more secure from criticism, if you had chosen not to create an independent currency controlled solely by your company?  Wouldn't all the rhetoric have been so much more believable if you hadn't reserved the right to print money?

Looking forward to your response.

[BubbleBoy]

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.

I hope not. We don't want that kind of control. It doesn't benefit us in any way and it will decrease adoption. Our financial interest is in seeing the value of XRP go up and the primary way for us to achieve that is broad adoption of Ripple as a payment system.

Think about Satoshi and Bitcoin. His financial interest was in seeing the value of his Bitcoins go up as much as possible. Do you think he would have done better had he retained strict control over Bitcoin or tried to suppress altcoins? Or do you think he realized that broad adoption was the key and that required decentralization. The originators of Ripple were all Bitcoin people. These are things we fully appreciate. (And think about it. Would we even try to build trust with such a fundamental lie when trust is clearly essential to growing the network?)

There's one critical difference: Satoshi held no more coins than he mined himself, while Opencoin holds all coins in existence. Please follow this train of thought and, tell me where I'm wrong:

- Ripple becomes highly successful enabling huge internet trade, people love it and Opencoin valuation grows into the billions, has it's own NASDAQ IPO etc.
- Opencoin still owns the majority of coins in existence and plans to sell them for decades to come
- The US government/congress is concerned about the anonymity features of Ripple and asks Opencoin to backdoor it to make tracking easy, or face repercussion
- Since you can't make money as a US company by ignoring the law, the only way to realize your investment and sell the coins on the long run is to comply with the US demands; your board of directors will cave and if not the stockholders will force them
- There is an outcry in the community, people fork your public source and vouch not to upgrade to your trojanized version; a forked chain emerges that doesn't do tracking, in parallel with the official chain
- Since you are either the owner or the grandfather of all coins in existence, the forked chain has no idea what are the coins you still hold and what coins you have given away/sold in the past, thus the forkers can't purge your control form their chain
- You will therefore end-up holding the majority of coins in the alternate chain too and there's no way to prevent it, except the trivial case where you still keep the bulk of the funds in an easy identifiable private key
- You institute a free for all in the alternate chain (it doesn't cost you anything) and crash it's value, therefore killing it, or at least vaporizing 99% of the duplicated wealth there, so that it makes no sense for anyone to switch to it

The way I understand it, the important difference and reason why Ripple does not need proof of work is because it has something reminiscent of actual accounts. JoelKatz compares Ripple's method of finding consensus with how people in a room would come to consensus. That's only possible because you know what people are, what a person actually is (as opposed to within the Bitcoin system).

You should not confuse ripple accounts holding the money with actual servers running the consensus algorithm. So you don't have to trust anyone to use XRP, except maybe the server you connect to if you have a thin client. When running a verifier node (for example a ripple gateway or large merchant), you need to carefully chose your peers so as to have a global and uncorrupted view of the network. Verifiers essentially form a darknet; you can freely connect as in a "whitenet", but you can't participate in consensus.

It's an intriguing idea that needs to be formally explored, but I can't fault it for the time being. I cannot but wonder if convergence is possible after a network split; in Bitcoin the most powerfull subnetwork will force it's world view, while here all subnets will have 100% consensus and it's not clear how the local views can be reconciled to form a global view.

[JoelKatz]

Joel, since you mentioned the incentive question regarding XRP, can you help me out please?  I just can't seem to get an answer to this question:

Would it have been possible to create Ripple without XRP?  Could you have just tracked the liabilities in their native currencies?

If the answer is "yes, it would have been possible, but the system with XRP is so much better," could you please touch on the reputational question.

It depends what you mean by "create Ripple". It would have been possible to create a system that does some of what Ripple does without a native currency. But it would be very different from the Ripple system we actually created.

That is, wouldn't the system be so much easier to trust, and your company be so much more secure from criticism, if you had chosen not to create an independent currency controlled solely by your company?  Wouldn't all the rhetoric have been so much more believable if you hadn't reserved the right to print money?

First, we didn't reserve the right to print money. 100 billion XRP is all there will ever be, unless in some distant future there's a consensus of validators to change it.

Second, it's hard enough to design a system that's immune to rational criticism. Trying to design one that's immune to irrational criticism is a fool's errand. The native currency allows us to have something to give away to drive adoption. The native currency allows the development of the software to be funded. And I've yet to hear of any plausible way it could harm the use of Ripple as a payment system.

And in truth, the rhetoric is actually more believable with OpenCoin having a profit motive. For example, if we had no profit motive to do so, why should people be confident we're actually going to decentralize the system? Why should they be confident that we'll work as hard as we can to drive adoption so they can feel comfortable putting their own resources into Ripple? Because we have a big stake, there's no reason not to believe us when we say we'll work to make that stake worth more.

[Terpie]

Joel, since you mentioned the incentive question regarding XRP, can you help me out please?  I just can't seem to get an answer to this question:

Would it have been possible to create Ripple without XRP?  Could you have just tracked the liabilities in their native currencies?

If the answer is "yes, it would have been possible, but the system with XRP is so much better," could you please touch on the reputational question.

It depends what you mean by "create Ripple". It would have been possible to create a system that does some of what Ripple does without a native currency. But it would be very different from the Ripple system we actually created.

And in truth, the rhetoric is actually more believable with OpenCoin having a profit motive. For example, if we had no profit motive to do so, why should people be confident we're actually going to decentralize the system? Why should they be confident that we'll work as hard as we can to drive adoption so they can feel comfortable putting their own resources into Ripple? Because we have a big stake, there's no reason not to believe us when we say we'll work to make that stake worth more.

I'm still learning about Ripple, but if you had very quick, widespread adoption of Ripple prior to you open sourcing the server code, then wouldn't you have a very big incentive to keep Ripple centralized? Also, I think you could relieve some of the distrust people have by showing us your pitch deck you gave Andreesen. That would show all of us your motivations/strategy pretty clearly.

[JoelKatz]

I'm still learning about Ripple, but if you had very quick, widespread adoption of Ripple prior to you open sourcing the server code, then wouldn't you have a very big incentive to keep Ripple centralized?

I don't think so. You'd have to suppose that adoption is so widespread that open sourcing the code wouldn't significantly increase it and that would still outweigh the harm done by not open sourcing as we had promised. That seems pretty far fetched to me.

Also, I think you could relieve some of the distrust people have by showing us your pitch deck you gave Andreesen. That would show all of us your motivations/strategy pretty clearly.

I'll see what I can do about it, but I wouldn't expect it will change anything. You can't refute a conspiracy theory with evidence.

[FreeBit]

First, we didn't reserve the right to print money. 100 billion XRP is all there will ever be, unless in some distant future there's a consensus of validators to change it.

"..., unless in some distant future there's a consensus of validators to change it." is exactly reserving the right to print money.

I think the critics here are not about a company making profit. I don't think that most people here have problem with a private company issuing a crypto currency to the free market with the intention of making profit.

The critics here are much more about the deceptive propaganda. Like that double-tongued piece above.

[FreeBit]

ar fetched to me.

Also, I think you could relieve some of the distrust people have by showing us your pitch deck you gave Andreesen. That would show all of us your motivations/strategy pretty clearly.

I'll see what I can do about it, but I wouldn't expect it will change anything. You can't refute a conspiracy theory with evidence.

On the other hand, it is not possible to talk with someone in the sense of open, sincere communication and "truth"-finding, who is part of a conspiration.

[Ares]

No one seems to be answering the question of "why would the public use bitcoin if ripple allows free/low cost transfers of fiat money anywhere anytime?"

Would it also make the incentive for businesses to accept bitcoin go away?

The general public doesn't know anything about central banks, so the whole "financial freedom from banks" deal alone won't be enough to get them to switch from fiat to bitcoin

[bitcoinbeliever]

So the answer is yes, it would have been possible to create the Ripple distributed banking system without creating a new currency.  As for the justification:

The native currency allows us to have something to give away to drive adoption. The native currency allows the development of the software to be funded. And I've yet to hear of any plausible way it could harm the use of Ripple as a payment system.

... I'm left wondering why I could not use the same reasoning to introduce a new currency along with my new taco catering venture, or airline, or chain of car washes.  Of course many such ventures do just that in the form of "miles" etc, they just don't have the ambition to take over the role of money worldwide.

I asked because I like the Ripple idea.  But I can't help concluding that dreams of being a kinder, gentler, and richer Ben Bernanke have seriously distorted the incentives of the venture.

[Melbustus]

I think most of this discussion is so far not relevant. It isn't terribly interesting to discuss what happens if OpenCoin is untrue to their stated intent.

Let's assume they're honest, and further, that they're correct in some fundamental assumptions, namely:

1) They will have incentive to open-source it, and they will.
2) Ripple is better with XRP than without it.
3) They have/will-have neither the means nor incentive to create more XRP.

Now let's discuss... I honestly don't really know how to think of this system yet. I'd need to use it in practice to get a better sense of it. Does it just boil down to a better way to transfer existing units of value electronically? Whereas bitcoin is both the asset and the transaction network, Ripple is just the transaction network?

And how does XRP factor in exactly? How much is needed to execute a transaction? Can this change and how? XRP are used-up (eliminated) after a transaction is complete, right? How will they not run out?

[mmeijeri]

"..., unless in some distant future there's a consensus of validators to change it." is exactly reserving the right to print money.

No more than is the case with Bitcoin. A large enough consensus can always change the rules, possibly leading to a fork.