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Author Topic: Why Ripple™ is against everything Bitcoin  (Read 45113 times)
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May 13, 2013, 07:33:31 PM
 #381

"The design doesn't require any central authorities."

What? Do you not consider banks to be central authorities?
Actually, I don't. But the fact that central authorities can participate is not the same as the network requiring central authorities.

Even gateways are, strictly speaking, not required. A gateway is basically just an ordinary issuer that offers redemption and issue agreements (outside the Ripple network) to the public. This makes it easier to use Ripple as a payment network, but the network works does nothing without them.


FTFY

If I understand it correctly, every participant can be a gateway and issue IOUs (though not sure how to do it, perhaps need to use something else in addition to existing javascript client). So it is not that centralized. I can imagine the network, where people exchange IOUs without touching the actual money and without involving any bank transfers.

Update: moreover it can be used to exchange cryptocurrencies, so there is no hard need in banks at all.

Of course, barter systems work between trusted parties using any system. That's nothing new. This system is attempting to create trusted parties. I don't see that working as expected.

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May 13, 2013, 07:35:47 PM
 #382

I think I'll stick with Bitcoin.

If by "stick with Bitcoin" you mean that you will only conduct transactions entirely in Bitcoin then you might have a point.

But if you ever need to buy or sell Bitcoins for fiat, or interact with Bitpay or any other Bitcoin payment processor, then you will need to extend trust to someone. The prime example being MtGox. Almost the entire Bitcoin ecosystem is dependent on MtGox to sell Bitcoins in exchange for fiat money.

Until all of your creditors accept Bitcoin you will be forced to extend trust. Ripple just makes this explicit, and gives you control over to whom and by how much trust you extend.


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May 13, 2013, 07:38:16 PM
 #383

Until all of your creditors accept Bitcoin you will be forced to extend trust. Ripple just makes this explicit, and gives you control over to whom and by how much trust you extend.

It also allows you to exchange currencies with strangers and settle with people you know and trust outside the banking system, up to self-chosen risk limits.

ROI is not a verb, the term you're looking for is 'to break even'.
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May 13, 2013, 07:40:30 PM
 #384

I think I'll stick with Bitcoin.

If by "stick with Bitcoin" you mean that you will only conduct transactions entirely in Bitcoin then you might have a point.

But if you ever need to buy or sell Bitcoins for fiat, or interact with Bitpay or any other Bitcoin payment processor, then you will need to extend trust to someone. The prime example being MtGox. Almost the entire Bitcoin ecosystem is dependent on MtGox to sell Bitcoins in exchange for fiat money.

Until all of your creditors accept Bitcoin you will be forced to extend trust. Ripple just makes this explicit, and gives you control over to whom and by how much trust you extend.


I need to trust no one to use a SR type business. I can purchase btc from individuals in person and spend them directly. IF there were an economy being established around Ripple I would change my viewpoint.

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May 13, 2013, 07:40:57 PM
 #385

"The design doesn't require any central authorities."

What? Do you not consider banks to be central authorities?
Actually, I don't. But the fact that central authorities can participate is not the same as the network requiring central authorities.

Even gateways are, strictly speaking, not required. A gateway is basically just an ordinary issuer that offers redemption and issue agreements (outside the Ripple network) to the public. This makes it easier to use Ripple as a payment network, but the network works does nothing without them.


FTFY

If I understand it correctly, every participant can be a gateway and issue IOUs (though not sure how to do it, perhaps need to use something else in addition to existing javascript client). So it is not that centralized. I can imagine the network, where people exchange IOUs without touching the actual money and without involving any bank transfers.

Update: moreover it can be used to exchange cryptocurrencies, so there is no hard need in banks at all.

Update2: so I think Ripple has great future, but I wouldn't use XRP as store of value, I believe it is overpriced currently, considering how much belongs to OpenCoin and will be given away.

I see some of these comments as backlashes against "central authority" banks. Banks can act as gateways. So too can Bitcoin startups, exchanges, and independent companies in the Ripple  network. Bitcoin does not work without independent companies operating exchanges and transfer services. In the Ripple protocol, banks are placed on equal footings with even the smallest independently run gateways as long as those gateways are trusted and do not attempt to mess up signed ledgers. I would rather have 100,000 trusted sources validating transactions than three million inefficient, untrusted, spamming processors. There is simply nothing centralized about the Ripple protocol. If you play by the rules of the protocol you can have equal say in the consensus process.
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May 13, 2013, 07:43:24 PM
 #386

Until all of your creditors accept Bitcoin you will be forced to extend trust. Ripple just makes this explicit, and gives you control over to whom and by how much trust you extend.

It also allows you to exchange currencies with strangers and settle with people you know and trust outside the banking system, up to self-chosen risk limits.

That still requires the eventual "cash out."

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May 13, 2013, 07:44:47 PM
 #387

I need to trust no one to use a SR type business.

By "SR" do you mean "Silk Road?" You do realize that you have to trust Silk Road with your Bitcoins...both as a buyer and as a seller. Silk Road is a perfect example of centralization! LOL


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May 13, 2013, 07:47:40 PM
 #388

I need to trust no one to use a SR type business.

By "SR" do you mean "Silk Road?" You do realize that you have to trust Silk Road with your Bitcoins...both as a buyer and as a seller. Silk Road is a perfect example of centralization! LOL


Oh, I see your confusion. I'm not the opponent of centralization. The other guy is. I want total anonymity.

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May 13, 2013, 09:19:38 PM
 #389

Oh, I see your confusion. I'm not the opponent of centralization. The other guy is. I want total anonymity.
I think you can transact in Ripple with this level of anonymity if you want to. You can cash in using Bitcoins and an anonymous gateway. You can submit transactions over tor. The advantage Ripple would give you is the ability to hold the currency of your choice, not just Bitcoins, and to change currencies whenever you wanted to. You could make anonymous payments to others in the currency of their choice.

Perhaps in the future, you'll be able to "buy" and "sell" gateway balances in person at meetups. You hand some guy $50.25 and he delivers a $50 USD payment to you on the Ripple network, a balance at the gateway of your choice. (Nothing stops people from doing this now, I just don't think anyone actually is.)

The downside, of course, would be greater counter-party risk. If you had no interest in doing those things though, I don't see much point in using Ripple. Ripple is going after a different set of use cases. It is not intended to be a "better Bitcoin". If your question is some version of, "I have this problem that Bitcoin solves perfectly, now show me how Ripple solves it as good or better", the answer is going to be that you should use Bitcoin for that.

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May 13, 2013, 09:32:41 PM
 #390

I need to trust no one to use a SR type business.

By "SR" do you mean "Silk Road?" You do realize that you have to trust Silk Road with your Bitcoins...both as a buyer and as a seller. Silk Road is a perfect example of centralization! LOL


c'mon.  you know what he's talking about.  

we're not talking about centralized businesses surrounding the Bitcoin or Ripple network which clearly can be shut down (altho its questionable if SR falls into this category).

we're talking about the Ripple network itself, ie, gateways and validators which are centralized, and can be shutdown.
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May 13, 2013, 09:59:00 PM
 #391

we're talking about the Ripple network itself, ie, gateways and validators which are centralized, and can be shutdown.

Someone correct me if I'm wrong, but I see no reason a gateway couldn't operate over Tor.  It could issue and monitor Bitcoin addresses and make appropriate IOU changes on the Ripple side (or go in the opposite direction).  The only problem, again, is going into and out of cold, hard fiat cash.  However, if you can trade that anonymous gateway's IOU for one in another currency that a merchant will accept as payment for a product or service you want to buy, then maybe you don't need the fiat cash after all.  Just keep the minimum amount of IOUs necessary to handle your cash flow on the Ripple side and keep the rest in your Bitcoin wallet.  Offload most of the transaction volume to the Ripple system and leave Bitcoin to do what it does best, store value.

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May 13, 2013, 10:26:29 PM
 #392

Someone correct me if I'm wrong, but I see no reason a gateway couldn't operate over Tor.  It could issue and monitor Bitcoin addresses and make appropriate IOU changes on the Ripple side (or go in the opposite direction).  The only problem, again, is going into and out of cold, hard fiat cash.  However, if you can trade that anonymous gateway's IOU for one in another currency that a merchant will accept as payment for a product or service you want to buy, then maybe you don't need the fiat cash after all.  Just keep the minimum amount of IOUs necessary to handle your cash flow on the Ripple side and keep the rest in your Bitcoin wallet.  Offload most of the transaction volume to the Ripple system and leave Bitcoin to do what it does best, store value.
Only that I don't know how smart it is to trust an unknown intermediary with your money. You could mitigate the risk by transferring small amounts at a time and never holding balances with the anonymous gateway longer than necessary. But that seems kind of tedious and annoying. Maybe someone will come up with a clever way to do it that avoids this risk.

One way is for the gateway to charge fees that are high relative to the amount of value the gateway holds at one time. If the gateway makes more in fees every month than it holds at any one time, there's little point in the gateway operator stealing anyone's money. It would cost him in lost profits more than he would gain in stolen funds. Of course, he still might if he decides to stop operation, but that would certainly reduce the risk.

Of course, someone else would probably just large lower fees and probably wind up holding more money.

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May 13, 2013, 10:31:39 PM
 #393

Oh, I see your confusion. I'm not the opponent of centralization. The other guy is. I want total anonymity.
I think you can transact in Ripple with this level of anonymity if you want to. You can cash in using Bitcoins and an anonymous gateway. You can submit transactions over tor. The advantage Ripple would give you is the ability to hold the currency of your choice, not just Bitcoins, and to change currencies whenever you wanted to. You could make anonymous payments to others in the currency of their choice.

Perhaps in the future, you'll be able to "buy" and "sell" gateway balances in person at meetups. You hand some guy $50.25 and he delivers a $50 USD payment to you on the Ripple network, a balance at the gateway of your choice. (Nothing stops people from doing this now, I just don't think anyone actually is.)

The downside, of course, would be greater counter-party risk. If you had no interest in doing those things though, I don't see much point in using Ripple. Ripple is going after a different set of use cases. It is not intended to be a "better Bitcoin". If your question is some version of, "I have this problem that Bitcoin solves perfectly, now show me how Ripple solves it as good or better", the answer is going to be that you should use Bitcoin for that.

Let's see what happens when it's more mature and has an infrastructure and economy surrounding it.

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May 13, 2013, 10:36:42 PM
 #394

I believe that the premise behind a gateway is that it has to be a highly visible, reputable organization that is accountable to the a corresponding legal system. For example, a bank. OpenCoin is very clear to point out that gateways have to comply with all regulations such as Know Your Customer and the like.

A gateway operating anonymously would be quite risky.



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May 13, 2013, 10:47:08 PM
 #395

I believe that the premise behind a gateway is that it has to be a highly visible, reputable organization that is accountable to the a corresponding legal system. For example, a bank. OpenCoin is very clear to point out that gateways have to comply with all regulations such as Know Your Customer and the like.

A gateway operating anonymously would be quite risky.



who would be validators?
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May 13, 2013, 11:51:44 PM
 #396

I believe that the premise behind a gateway is that it has to be a highly visible, reputable organization that is accountable to the a corresponding legal system. For example, a bank. OpenCoin is very clear to point out that gateways have to comply with all regulations such as Know Your Customer and the like.

A gateway operating anonymously would be quite risky.
who would be validators?
Validators validate the entire ledger. It's not per gateway or anything like that. Gateways are only special in the sense that they offer issue and redeem agreements to the general public. They may tend to run validators, but they don't have to, and using them as a validator and using them as a gateway have nothing to do with each other.

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May 14, 2013, 01:47:37 AM
 #397

I think if you still need to select several third-parties to decide which one of the two transactions invloved in a double-spend is valid, it's essentially a "commander and lieutenant" solution to Byzantine Generals problem. Roll Eyes

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
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May 14, 2013, 01:50:20 AM
 #398

I believe that the premise behind a gateway is that it has to be a highly visible, reputable organization that is accountable to the a corresponding legal system. For example, a bank. OpenCoin is very clear to point out that gateways have to comply with all regulations such as Know Your Customer and the like.

A gateway operating anonymously would be quite risky.
who would be validators?
Validators validate the entire ledger. It's not per gateway or anything like that. Gateways are only special in the sense that they offer issue and redeem agreements to the general public. They may tend to run validators, but they don't have to, and using them as a validator and using them as a gateway have nothing to do with each other.

so is it right to conceptualize the entire Ripple system as a replication of the existing banking system with it being likely that banks will act as gateways (and possibly as validators) doing the issuing and redeeming of XRP's (IOU's) except somehow with a p2p aspect layered in btwn individual ppl and open ledgers?
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May 14, 2013, 02:04:01 AM
 #399

so is it right to conceptualize the entire Ripple system as a replication of the existing banking system with it being likely that banks will act as gateways (and possibly as validators) doing the issuing and redeeming of XRP's (IOU's) except somehow with a p2p aspect layered in btwn individual ppl and open ledgers?

XRPs are a native currency, gateways don't issue and redeem XRPs.

On the other hand, gateways issue and redeem their own IOUs (usually denominated in a fiat currency such as USD or EUR).

At a minimum Ripple should incorporate the existing banking system, and also do much much more. I would love it if I could open a checking account that lets me hold not only US dollars but also Bitcoins, XRPs, even Euros, and when I write a check or use my debit card it sells just enough of my non US-dollar assets to cover the cost. This is the holy grail, for me at least, because then I don't care if Amazon accepts Bitcoins or uses Ripple, I can just pay them using my debit card like normal except that the money will come from a just-in-time sale of Bitcoins on the distributed Ripple exchange.

The promise of Ripple is that with a Ripple gateway bank account, you can spend your bitcoins anywhere that takes credit cards, checks, ACH payments, or wire transfers.


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May 14, 2013, 02:18:48 AM
 #400

so is it right to conceptualize the entire Ripple system as a replication of the existing banking system with it being likely that banks will act as gateways (and possibly as validators) doing the issuing and redeeming of XRP's (IOU's) except somehow with a p2p aspect layered in btwn individual ppl and open ledgers?

Not only would banks act as gateways from which they benefit from the global standardized P2P system/protocol that is Ripple, but every individual has the ability to do the exact same thing.  Whether they choose to interact with the banks on some level or operate independently.

Makes the banks play fair and gives the little guy equal opportunity:)
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