Why Ripple™ is against everything Bitcoin

[mmeijeri]

OpenCoin has done nothing to earn the coins they're holding back except write code for a concept that may or may not work.

Yeah nothing except write code, develop the concept, invest in a support / marketing infrastructure etc etc. Trivial really.

What have the Romans ever done for us

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[paraipan]

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weren't you very much against Ripple at the beginning.  IIRC, you wrote pages and pages of arguments against it.

what was the key factor in you switching?

+1

[misterbigg]

OpenCoin has done nothing to earn the coins they're holding back except write code for a concept that may or may not work.

The notion of "earn" is entirely subjective. Plenty of people hold the opinion that the early miners are unjustly enriched.

i still think OpenCoin represents a centralized point of pressure that could be exploited.

I agree. As long as Ripple is closed source and there are not many validators, it is vulnerable.

[mmeijeri]

The problem with Open Transactions is that it doesn't satisfy immediate consumer demands. It's a great system (although a little bit complicated) but it seems to be a solution waiting for a problem.

Doesn't it have a large overlap with Ripple? It would allow the distributed exchange between fiat and crypto currencies. And it adds untraceable digital cash.

[anti-scam]

Let me clear up some misconceptions. Every object in the ledger database adds to a "reserve" requirement. This is necessary, or else the ledger could be attacked with spam (for example, by writing a script that creates an infinite number of accounts). The reserve requirement for an account is currently 50 XRP (it used to be 200 but OpenCoin lowered it because XRPs went up so much in value). This means that you cannot perform transactions or receive payments until you have received at least 50 XRP in your account.

The reserves in an account can only be spent on transaction fees (currently, the transaction fee is ten millionths of an XRP but it can be changed if all the servers agree). This means that if your account has only 40 XRP you cannot get the 40 XRP "out" of the account. It can only be used to pay for fees. Each object that you create increases the reserve requirement by 25 XRP (it used to be 100). Objects include trust lines and book offers.

Because XRPs are "sequestered" in an account's reserves, it is possible for OpenCoin to give away 50 billion XRPs to new account holders, but without making the value of XRPs fall by too much. The recipients of these XRP giveaways cannot sell the XRP reserves. I believe that the current giveaway is down to 3,000 XRP (down from 50,000). This means that at most 2,950 can be spent. I expect that the size of the giveaway will steadily decrease over time. Developers might get larger dollops though, who knows.

It seems OpenCoin wants to make it free or cheap for people in the early stage to open Ripple accounts, to spur adoption. To this end the appear to be giving away XRP both to let people open accounts and also so that a market forms.

So what you're saying is that they want to pump up the value of their holdings as much as possible for the eventual dump?

A lot of the ideas behind Ripple are simply brilliant.

Nobody denies that Ripple is brilliant. It was brilliant when Ryan Fugger invented it and before OpenCoin hijacked it (and the name of http://opencoin.org/).

[mmeijeri]

The notion of "earn" is entirely subjective. Plenty of people hold the opinion that the early miners are unjustly enriched.

It also remains to be seen if adoption can grow to something like that of the euro while so many people hope to hoard their BTC. Every person wil start to cash out at some price level, and conversely, if they don't adoption will stagnate.

[cypherdoc]

Not quite mutually exclusive, I'm afraid. It all depends on the endgame. If you believe the Ripple developers, then yes, they would be mutually exclusive. But as long as you can trade XRP for BTC, then it's also possible (with varying degrees of likelihood) to make money by defrauding the public with XRP.

Somewhat valid point, but the mitigating factor is the amount of resources that have gone into Ripple. They've developed the consensus protocol, the server and client software, and have I think 20 or more full time employees. They've also secured venture capital funding. It's hard to imagine that their intention at the outset was to defraud the public. A lot of the ideas behind Ripple are simply brilliant. If it's a scam then its practically indistinguishable from the real thing!

the way to solve this issue is for OpenCoin to not hold any XRP back, release the code as open source, then buy in to XRP's just like everyone else so everyone starts off at the same place.  this is the only way they will succeed IMO.

[anti-scam]

OpenCoin has done nothing to earn the coins they're holding back except write code for a concept that may or may not work.

The notion of "earn" is entirely subjective. Plenty of people hold the opinion that the early miners are unjustly enriched.

Early miners participated in a process that was open to anybody, and were not compensated anywhere near 100%. Even Satoshi is not worthy of 100% of all Bitcoins.

...

weren't you very much against Ripple at the beginning.  IIRC, you wrote pages and pages of arguments against it.

what was the key factor in you switching?

+1

Somebody slipped him a few XRP for his trouble?

[misterbigg]

weren't you very much against Ripple at the beginning.  IIRC, you wrote pages and pages of arguments against it.

Yep, I was definitely against it. The pre-mine / self-issued currency really stuck in my throat.

what was the key factor in you switching?

Two factors I think. First I realized that my objections were largely based on emotion and then once I set the indignation aside and took a closer look, I saw that Ripple is on a solid technical foundation.

What really sold me on accepting the enrichment of OpenCoin is when I looked at all of the drawbacks that Bitcoin has because there is no for-profit company developing the code. I want OpenCoin to be profitable and keep paying all those C++ programmers, JavaScript programmers, testers, and CEO. I definitely want OpenCoin to grow to many times its size. If they have a large cash flow they can buy up more small companies and send them out on-site to help banks and businesses integrate Ripple. They could put more resources into polishing up a "Ripple SDK" and "Guide for Ripple Integrators". Maybe they could offer free training classes to help companies learn Ripple. Almost none of this is possible with the Bitcoin financing model.

The Bitcoin software has no direct financial link to the appreciation of the Bitcoin price and for that reason we see odd conflicts of interest. Like...there is no "1.0" version of Bitcoin. Still after 4 years there is no official pruning (did that get solved yet?) The interface is clunky and features that people want, the developers refuse to add. There's no official specification. My opinion this is because the developers are not accountable to a corporate entity. They work on what they want, sent their own goals. There's no shipping deadlines, no milestones, etc... in short there's no financial pressure.

Don't mistake this as a criticism of the skills or commitment of the Bitcoin developers - they are doing a great job given the circumstances. But OpenCoin has a better financial structure. There are financial incentives to get Ripple right, and get it done fast.

The problem with Open Transactions is that it doesn't satisfy immediate consumer demands. It's a great system (although a little bit complicated) but it seems to be a solution waiting for a problem.

Doesn't it have a large overlap with Ripple? It would allow the distributed exchange between fiat and crypto currencies. And it adds untraceable digital cash.

And yet, people are putting money in / using Ripple, but not Open Transactions. OT got something wrong. Perhaps the XRP currency was the 'secret sauce' that was needed to make Ripple attractive to early adopters, just like mining was for Bitcoin.

So what you're saying is that they want to pump up the value of their holdings as much as possible for the eventual dump?

This is a perfect example of what I was speaking about earlier regarding primates. "anti-scam" like everyone, knows full well that you can use Ripple to send, receive, and redeem IOUs without having to invest in the XRP currency and yet he ignores that and continues to spout baseless claims.

[mmeijeri]

the way to solve this issue is for OpenCoin to not hold any XRP back, release the code as open source, then buy in to XRP's just like everyone else so everyone starts off at the same place.  this is the only way they will succeed IMO.

And how exactly would that work? How would they "buy" XRP? Where would the money go? And don't forget they did all the work and made all XRP that exists. They should be free to do with it as they please. You aren't entitled to any of it.

[mmeijeri]

And yet, people are putting money in / using Ripple, but not Open Transactions. OT got something wrong. Perhaps the XRP currency was the 'secret sauce' that was needed to make Ripple attractive to early adopters, just like mining was for Bitcoin.

That may well be true. But purely from a functional point of view, wouldn't Open Transactions make for a great complement to Bitcoin, just like Ripple, just not in exactly the same way? I'd love to see a combination of all three, and then integration with Tor, I2), Bitmessage etc.

[cypherdoc]

Two factors I think. First I realized that my objections were largely based on emotion and then once I set the indignation aside and took a closer look, I saw that Ripple is on a solid technical foundation.

What really sold me on accepting the enrichment of OpenCoin is when I looked at all of the drawbacks that Bitcoin has because there is no for-profit company developing the code. I want OpenCoin to be profitable and keep paying all those C++ programmers, JavaScript programmers, testers, and CEO. I definitely want OpenCoin to grow to many times its size. If they have a large cash flow they can buy up more small companies and send them out on-site to help banks and businesses integrate Ripple. They could put more resources into polishing up a "Ripple SDK" and "Guide for Ripple Integrators". Maybe they could offer free training classes to help companies learn Ripple. Almost none of this is possible with the Bitcoin financing model.

The Bitcoin software has no direct financial link to the appreciation of the Bitcoin price and for that reason we see odd conflicts of interest. Like...there is no "1.0" version of Bitcoin. Still after 4 years there is no official pruning (did that get solved yet?) The interface is clunky and features that people want, the developers refuse to add. There's no official specification. My opinion this is because the developers are not accountable to a corporate entity. They work on what they want, sent their own goals. There's no shipping deadlines, no milestones, etc... in short there's no financial pressure.

Don't mistake this as a criticism of the skills or commitment of the Bitcoin developers - they are doing a great job given the circumstances. But OpenCoin has a better financial structure. There are financial incentives to get Ripple right, and get it done fast.

seriously?

everything you've just argued as a negative to Bitcoin, i see as features, not bugs.

i see no problem with how Bitcoin is evolving.  look at the evidence; the price, the venture capital funding thats coming in, adoption worldwide, etc, etc.  nothing like it has come close to what we're witnessing.

we don't want the software to have a direct financial link to the appreciation of the Bitcoin price.  it's meant to be disaggregated.

[SamS]

why don't you specifically address the concerns everyone is voicing here?  like with some facts? i'll be happy to be educated but no one seems to be providing any specific details, implementations, or code to convince us otherwise.

Here's the problem: TradeFortress and his ilk are completely irrational when presented with facts regarding Ripple. There are plenty of posts by David Schwartz, chief cryptographer at OpenCoin, all over the forum (he goes by "JoelKatz") answering all these questions but they get ignored.

The main flaw in the "logic" of thinking Ripple is a scam is on the one hand claiming that they are going to get rich off XRP but then saying that Ripple is useless and only exists to defraud the public. It should be obvious that these are mutually exclusive possibilities. It is clearly in OpenCoin's best interests to follow through on their promises, and to make sure that the software lives up to all of its claims - to do otherwise, would undermine any potential value of XRP (the built-in currency).

People like TradeFortress would have us believe that OpenCoin wants to "control the centralized Ripple software" so they can make a lot of money. This makes no sense; How will they convince the public to buy XRP if the software is centralized and under their control? I'd be willing to bet that OpenCoin wants to release their source as soon as possible. Having control over Ripple is actually a liability. As long as the source is closed and OpenCoin controls the network, XRPs can never appreciate fully and Ripple is vulnerable to attacks from governments.

The real reason that people dislike Ripple is because there is something...lets call it a certain "stink" that comes from the idea that they gave themselves all of the currency, and get to decide how it is handed out. It is an affront to our sense of fairness. Bitcoin people in particular, dislike a premine. Given the experience of alt coins and their pre-mines, it is definitely reasonable to approach Ripple with a huge amount of skepticism.

What separates intelligent people from primates like TradeFortress is that the intelligent person listens to all the voices and draws their own conclusion from the information available (incomplete as that may be) instead of allowing their decisions to be ruled purely by emotion.

In my opinion, the OpenCoin developers deserve to get rich beyond belief if they deliver on the promises of their system. Ripple could be superior to Bitcoin in so many ways. Near instant confirmations, no problems with micro-transactions, no wasted resources going to mining, and no way to rewrite history via 51% style attacks. Plus it integrates better with the traditional financial system and oh hey, it has a built in distributed exchange. The benefits to society of such a system are so enormous - why shouldn't they get paid?

In fact, I much prefer that the Ripple software is developed by a for-profit company. Since they have a way to make money, they can pay programmers. They can hire PR firms, and lobbyists to make sure that wallet-holders best interests are represented. They can advertise, get investment capital, and make deals with banks. Compare this with Bitcoin, where the Bitcoin Foundation has to go begging for "tips" to pay the one developer.

With Bitcoin, if the core developers don't like a feature or they don't want to work on something that is important but boring they will tell you "it's open source, no one is stopping you from doing it yourself."

But with Ripple, in order for OpenCoin to make money they have to satisfy customers. That means they are more motivated to fix bugs. They will have actual milestones for the software. Release schedules. Paid Q/A testing. The OpenCoin business model is superior to the Bitcoin business model. Compare GIMP versus Photoshop. One is open source and developed by volunteers. The other one is the industry standard.

I'm still extremely bullish on Bitcoin. There is plenty of room in the cryptocurrency space for Bitcoin, Ripple, and many more future yet-to-be implemented systems. Ripple will complement Bitcoin and they will both enhance each other. Those who embrace Ripple will prosper, while those who foolishly ridicule it out of jealousy will end up missing the boat.

Disclaimer: I hold significant quantities of both Bitcoins, and XRPs. I'm holding for the longest time.

I'm new to this area so my thinking is highly undeveloped -- maybe 10% of the way there. However, it's lots of fun to think about. I appreciate your 3 step process to acceptance that you posted on another thread.  So, I'd be interested in hearing your take on a couple of things in moving my own thinking along.

1. I don't think the real issue is whether the software "...lives up to all of its claims" Any monopoly/cartel can legally squeeze it's users day in and day out. That doesn't make it a desirable outcome -- and certainly not a point I would want something that would affect me directly to be premised on. To me, that's what the Ripple naysayers are concerned about at a global level.

2. Forget OpenCoin and Ripple for the moment, is a trust based system the right way to go in redefining the global transaction system?  One only has to look at the history of banking and banking crises to see that trust based systems are unstable historically. Our most recent experience with this --which has led to the need for entire nations to fund bailouts to prevent the banking system from collapsing -- is only one in a long series of "banking" crises. Arguably, the real problem has been regulatory capture and not "free markets (trust)." Ignoring technology for the moment, is this the right solution to solve a chronic history of abuse? Can you point me to any articles that summarize the "literature" around trust based systems -- and yes I can use Google if needed but prefer not to reinvent the wheel wherever possible.

3. I have my own point of view about what the appropriate fee for innovation, much less providing a service, should be and it's not billions of dollars -- I think the capitalist system is broke in this respect. That however, is an aside from the merits of Ripple per se. Having said that, I don't believe the merits of an approach can be determined by the amount of funding it attracts or the fact that it is VC funded -- rather the opposite in fact. Having worked that field for years, I can promise you that they put on their pants the same way everyone else does in the morning and make the same number of mistakes -- just on a different scale.

4.  While I recognize that emotions run high when people are invested in an issue, don't you think that eliminating the ad hominem attacks and focusing on the issues would be more productive in fleshing out the merits of this proposal -- I recognize that this is the internet and that is a wishful fantasy but what the heck I can put my own fantasy out there as well.

And finally, I do appreciate the time you put in to post here, I've learned a lot quite rapidly as a result.

[cypherdoc]

the way to solve this issue is for OpenCoin to not hold any XRP back, release the code as open source, then buy in to XRP's just like everyone else so everyone starts off at the same place.  this is the only way they will succeed IMO.

And how exactly would that work? How would they "buy" XRP? Where would the money go? And don't forget they did all the work and made all XRP that exists. They should be free to do with it as they please. You aren't entitled to any of it.

they are meant to be exchanged are they not?  that is why we have a price for them, isn't it?  buy them from other sellers; that simple.

did satoshi get paid for his work?  no, he mined the coins he has, which is just another form of payment for the work his computers performed. 

you could've done the same thing at the same time.

[mmeijeri]

Forget OpenCoin and Ripple for the moment, is a trust based system the right way to go in redefining the global transaction system?

Trust is only necessary for dealing with other currencies than XRP (or with stocks, commodities etc), which has no counterparty risk inside the Ripple system. I think the great thing about Ripple is that it is a potentially decentralised bridge between fiat and crypto, which is exactly what we need to make the transition from fiat to crypto and to facilitate competition between crypto currencies.

[mmeijeri]

they are meant to be exchanged are they not?  that is why we have a price for them, isn't it?  buy them from other sellers; that simple.

They have to come from somewhere. Let's start with 100M XRP in account #0. Exactly how are the XRP to be divided among the inhabitants of planet Earth?

[ab8989]

The main flaw in the "logic" of thinking Ripple is a scam is on the one hand claiming that they are going to get rich off XRP but then saying that Ripple is useless and only exists to defraud the public. It should be obvious that these are mutually exclusive possibilities.

First of all, these are obviously not mutually exclusive. I think they are TRYING to get extremely rich, but they are FAILING to achieve that and ripple will not be succesful.

I also think that you are purposefully creating a strawman by introducing words like 'scam' and 'defraud' into the conversation. I have not heard many people opposing ripple using any words like that and the proponents of ripple on the other hand are trying to polarize the discussion and drive it to the gutter by trying to get the discussion to go overboard and then accuse the discussion not making make any sense.

The problem with ripple is just that it does not look like a good idea.

Ripple could be superior to Bitcoin in so many ways.Near instant confirmations, no problems with micro-transactions, no wasted resources going to mining, and no way to rewrite history via 51% style attacks.

Fiat money has some qualities over bitcoin where fiat money is superior and these are all such qualities. However bitcoin people have decided that bitcoin has qualities over fiat money where bitcoin is superior and those weigh much more in comparison. Ripple on the other hand craps all over the bitcoin philosophy in so many issues. Preaching ripple and qualities of ripple sounds in most cases like telling bitcoin people that they have got it all wrong and the bitcoin philosophy sucks and ripple philosophy that is 180 degrees opposite to bitcoin philosophy is superior and bitcoin people have got it all wrong. I don't understand what the ripple people think they are going to achieve by first shouting out such a message and then when they see that many bitcoin people are not instantly making the 180 degree turn in their thinking, they turn into accusing bitcoin people to be stupid and start calling them names.

[cypherdoc]

they are meant to be exchanged are they not?  that is why we have a price for them, isn't it?  buy them from other sellers; that simple.

They have to come from somewhere. Let's start with 100M XRP in account #0. Exactly how are the XRP to be divided among the inhabitants of planet Earth?

precisely my point.  Ripple hasn't developed a fair system to distribute them.  

many XRP's were just handed out here on the forum one day for those willing to post an address.  OpenCoin has just arbitrarily decided to hold back 50% for themselves.  

it's not a fair distribution system and thus creates suspicion/resentment.

contrast this with the proof of work system for Bitcoin.  POW is one real reason Bitcoin resonates with it's adopters even today.

[anti-scam]

So what you're saying is that they want to pump up the value of their holdings as much as possible for the eventual dump?

This is a perfect example of what I was speaking about earlier regarding primates. "anti-scam" like everyone, knows full well that you can use Ripple to send, receive, and redeem IOUs without having to invest in the XRP currency and yet he ignores that and continues to spout baseless claims.

Technically you do have to invest in the XRP currency (to pay transaction fees and the reserve requirement) to send, receive, and redeem IOUs. The only one spouting baseless claims here is you.

A dump of XRP is inevitable. Ripple, as a system built on centralization and control instead of freedom, is doomed to fail. OpenCoin has investors to pay back. They will have no choice but to dump as many XRP as possible to try to pay them off. Anything before then is just hype. I don't know if a pump and dump was their original intention, but it will be the end of Ripple.

precisely my point.  Ripple hasn't developed a fair system to distribute them.  

many XRP's were just handed out here on the forum one day for those willing to post an address.  OpenCoin has just arbitrarily decided to hold back 50% for themselves.  

it's not a fair distribution system and thus creates suspicion/resentment.

contrast this with the proof of work system for Bitcoin.  POW is one real reason Bitcoin resonates with it's adopters even today.

Quoted for truth

People are not stupid, and do have a sense of fairness. You cannot fool them into thinking that OpenCoin's centralized distribution of XRP is okay. If it's already causing this much controversy with users here, it will never be acceptable to your average person. Go long on XRP at your own risk.

[mmeijeri]

precisely my point.  Ripple hasn't developed a fair system to distribute them.  

They made all those XRP themselves. I say it's fair they get to do with them as they please. Of course, only time will tell how much people will be willing to pay for them. Which is fair enough too.

many XRP's were just handed out here on the forum one day for those willing to post an address.  OpenCoin has just arbitrarily decided to hold back 50% for themselves.  

it's not a fair distribution system and thus creates suspicion/resentment.

Who gets to decide what's fair? Was it fair that mining was really, really easy in the beginning?

contrast this with the proof of work system for Bitcoin.  POW is one real reason Bitcoin resonates with it's adopters even today.

I've also heard people complain that Bitcoin enthusiasts are hoarding their coins. The common thread I see is that people are bitching that unlike earlier adopters, they personally won't get a chance to get filthy rich by doing nothing or very little.