Why Ripple™ is against everything Bitcoin

[mmeijeri]

It's very different in that it is designed to be both distributed and open-source. And if the gateways are reliable, redeeming IOUs might be a relatively rare event. An IOU might be traded for goods and services thirty times before someone redeemed it.

[1715220959]

1715220959

[herzmeister]

Re: Why Ripple™ is against everything Bitcoin

The first and foremost reason is: It will finally enable fractional reserve banking with Bitcoin.

Hitherto, I thought it's not so easily possible, I mean who'd accept MtGox codes? There's no infrastructure for it.

But now, Ripple can provide such an infrastructure. Gateways now can theoretically issue more Bitcoin IOUs than they actually own, and people will trade them happily because the UI is nice and it's so much easier and faster. (history repeating, paper promises were much more comfortable to carry around than heavy gold coins)

[mmeijeri]

It's easy enough to do real-time monitoring of BTC holdings.

[SamS]

It's very different in that it is designed to be both distributed and open-source. And if the gateways are reliable, redeeming IOUs might be a relatively rare event. An IOU might be traded for goods and services thirty times before someone redeemed it.

Sorry for being so dense here, but based on what you say above, would I be wrong in concluding that with respect to my initial comments (reproduced below):

Point 1 below is true?
Point 2 is also true?
Point 3 is not true to the extent that a distributed system online is somehow different than a distributed system of banks and that the open-source code is somehow different than the shared intra-bank protocols currently in use.

-------------------------
1. Would I be wrong is saying that in the absence of Crypto-Currencies, Ripple would merely add a transaction fee to the exchange process (the cost of the XRP to go from Dollars to Yen through two Gateways)?
2. That Gateways will competitively quote whatever exchange rate they want for the currencies (crypto or not) and that this is independent of the Ripple transfer system per se.
3. That this is not all that different from the current system run by banks except that Ripple is trying to intermediate between "Gateways" instead of banks?
-------------------------

If my understanding is correct, Ripple's business model is an attempt to take away the transaction fee business by competing on price. The rest is really out of their hands, yes? If the Gateways aren't reliable (trustworthy) then the whole thing falls apart. The question then becomes why would the existing processors welcome this? I think the idea that Ripple could drive this process by themselves is highly unlikely -- and undoubtedly not their strategy.

[Coinseeker]

Just some really fascinating stuff in this thread.  

One thing that seems to be a recurring them, is this issue of trust.  I'm still not getting the complaint, as if somehow Bitcoin dosen't require trust.  It absolutly is based on trust.  For instance:

To buy Bitcoins, I went through BitInstant which means:

1.  I had to trust the store operating the money gram.  (Some trust as I shop there from time to time)
2.  I had to trust money gram.  (Fair amount of trust as I've used there services and never been ripped off)
3.  I had to trust ZipZap...Who the hell is zip zap?    (Zero trust at time of purchase.  I took the word of forum members, which requires more trust.)
4.  I had to trust BitInstant.  (Zero trust at time of purchase.  Again, the word of forum members and yet more trust.)

If I factor in wanting to trade them in the markets, I have to also trust MtGox, BitStamp or whoever.  (Zero trust at time of deposit and still feel they could run away with my money anytime they want.  So trust is very minimal.)

So, I had to trust 4 different entities just to buy Bitcoins.  So, "decentralization" hasn't removed my need to put trust in people, so I fail to see how this is a legitimate argument.  Maybe someone would like to clear this up.  From what I'm gathering, I have to trust Ripple and the gateway, that's it.  Once open source, thus decentralized, I only need to trust the gateway. While that still requires trust, 1 is certainly less than 4 given anyone one of them can jack me at anytime.  

It's also possible I'm misunderstanding Ripple to a degree or two, so please correct me where I'm in error because I'm really trying to find the validity in this argument.  

[justusranvier]

2) It is centralized.  Yes it may become decentralized in the future, but until then, my contention stands. It is not trust of the OpenCoin team which worries me here, it is the fact that they are the single point of failure. They could be shut down tomorrow a la egold. If Bitcoin had been as centralized as OpenCoin when it was getting started, the Government would've arrested and shut down the project long ago.

3) Ripple does not allow users to send "every kind of currency." Ripple is marketed as better than Bitcoin because it can "send any kind of currency." This is not true. It sends IOU's around, which are created out of thin air. The asset - the currency unit itself - is not transferred via Ripple. Sure you can sell a Bitcoin on Ripple for a USD, but then do you have the USD? No, it rests with a gateway somewhere. To actually get it, you're back in the normal banking system just as if you had traded BTC for USD on an exchange. Ripple can only transfer one asset - XRP's - everything else is a debt that must be fulfilled and transferred by someone else. There are numerous liability/risk issues with a payment system that relies on trust, in this case you need to trust "gateways" with the currency units that Ripple claims you own.

OpenCoin is promoting the use of gateways, but it Ripple doesn't need to be used that way - if you combine the Ripple ledger with an otc exchange and a social network of individuals with sufficient financial competence, it would possible to form a peer to peer free banking system.

[evoorhees]

Just some really fascinating stuff in this thread.  

One thing that seems to be a recurring them, is this issue of trust.  I'm still not getting the complaint, as if somehow Bitcoin dosen't require trust.  It absolutly is based on trust.  For instance:

To buy Bitcoins, I went through BitInstant which means:

1.  I had to trust the store operating the money gram.  (Some trust as I shop there from time to time)
2.  I had to trust money gram.  (Fair amount of trust as I've used there services and never been ripped off)
3.  I had to trust ZipZap...Who the hell is zip zap?    (Zero trust at time of purchase.  I took the word of forum members, which requires more trust.)
4.  I had to trust BitInstant.  (Zero trust at time of purchase.  Again, the word of forum members and yet more trust.)

If I factor in wanting to trade them in the markets, I have to also trust MtGox, BitStamp or whoever.  (Zero trust at time of deposit and still feel they could run away with my money anytime they want.  So trust is very minimal.)

So, I had to trust 4 different entities just to buy Bitcoins.  So, "decentralization" hasn't removed my need to put trust in people, so I fail to see how this is a legitimate argument.  Maybe someone would like to clear this up.  From what I'm gathering, I have to trust Ripple and the gateway, that's it.  Once open source, thus decentralized, I only need to trust the gateway. While that still requires trust, 1 is certainly less than 4 given anyone one of them can jack me at anytime.  

It's also possible I'm misunderstanding Ripple to a degree or two, so please correct me where I'm in error because I'm really trying to find the validity in this argument.  

The difference is this:

With Bitcoin, when you hold Bitcoins or transfer Bitcoins, then there is no trust required. You actually hold and control the asset.

With Ripple, when you "hold" or "transfer" other currencies, then you have to trust gateways (and OpenCoin as well for the foreseeable future).

In other words, Ripple is billed as a way to "transfer all currencies" as easily as one transfers Bitcoins. But this is a misnomer, because you're only actually transferring debts/IOU's of those currencies, and must thus rely on and trust various parties, which is hardly different than our current bank/paypal/visa system.

Further, even though you think you only need to trust the gateway in Ripple, you forgot that you still need to get money into the gateway. Ripple can't move assets, remember, so people still need to "load" and "unload" the system with various currencies at the gateways, requiring all the trusted parties that your BitInstant example required.

But it's important to distinguish between trust needed to hold and transfer assets and trust needed for exchange between assets. In the BitInstant example, you're not using Bitcoin so much as acquiring Bitcoin via various parties who already have it. Once you have the Bitcoin, it's your asset and no more trust is required. With Ripple, even if you can "acquire euros" at a gateway, someone needed to trust the same types of parties to get the euros into the gateway's bank account (Ripple didn't do it), and further still, the euro IOU that you acquire will STILL require trusting the gateway in perpetuity.

Usage of the monies in Ripple, then, requires trust, where in Bitcoin it does not. You can say the ability to move IOU's around via Ripple is valuable (likely it is), but it is not the same as moving assets. It is the claim that Ripple moves assets which I have a problem with. Ripple can only move the asset called XRP's, and in this way it provides no innovation over Bitcoin which has been moving BTC's for four years successfully.

[SamS]

The difference is this:

With Bitcoin, when you hold Bitcoins or transfer Bitcoins, then there is no trust required. You actually hold and control the asset.

With Ripple, when you "hold" or "transfer" other currencies, then you have to trust gateways (and OpenCoin as well for the foreseeable future).

In other words, Ripple is billed as a way to "transfer all currencies" as easily as one transfers Bitcoins. But this is a misnomer, because you're only actually transferring debts/IOU's of those currencies, and must thus rely on and trust various parties, which is hardly different than our current bank/paypal/visa system.

Further, even though you think you only need to trust the gateway in Ripple, you forgot that you still need to get money into the gateway. Ripple can't move assets, remember, so people still need to "load" and "unload" the system with various currencies at the gateways, requiring all the trusted parties that your BitInstant example required.

But it's important to distinguish between trust needed to hold and transfer assets and trust needed for exchange between assets. In the BitInstant example, you're not using Bitcoin so much as acquiring Bitcoin via various parties who already have it. Once you have the Bitcoin, it's your asset and no more trust is required. With Ripple, even if you can "acquire euros" at a gateway, someone needed to trust the same types of parties to get the euros into the gateway's bank account (Ripple didn't do it), and further still, the euro IOU that you acquire will STILL require trusting the gateway in perpetuity. Usage of the monies in Ripple, then, requires trust, where in Bitcoin it does not. You can say the ability to move IOU's around via Ripple is valuable (likely it is), but it is not the same as moving assets. It is the claim that Ripple moves assets which I have a problem with. Ripple can only move the asset called XRP's, and in this way it provides no innovation over Bitcoin which has been moving BTC's for four years successfully.

Thank you for this and your previous post. Those are very clear explanations.

[datafish]

I think Erik's point about ripple moving IOUs rather than assets around is an important one.  It remains to be seen how well the trust risk will be managed by various parties as ripple adoption increases.  For this reason, one shouldn't keep a lot of his/her assets in the ripple system (just like you shouldn't keep a lot of your bitcoins in an online wallet or at an exchange).  However, it might be a great platform for micro-payments.  Erik, any chance you could be talked into moving SatoshiDice over to ripple (FuggerDice, anyone)?

[Coinseeker]

Just some really fascinating stuff in this thread.  

One thing that seems to be a recurring them, is this issue of trust.  I'm still not getting the complaint, as if somehow Bitcoin dosen't require trust.  It absolutly is based on trust.  For instance:

To buy Bitcoins, I went through BitInstant which means:

1.  I had to trust the store operating the money gram.  (Some trust as I shop there from time to time)
2.  I had to trust money gram.  (Fair amount of trust as I've used there services and never been ripped off)
3.  I had to trust ZipZap...Who the hell is zip zap?    (Zero trust at time of purchase.  I took the word of forum members, which requires more trust.)
4.  I had to trust BitInstant.  (Zero trust at time of purchase.  Again, the word of forum members and yet more trust.)

If I factor in wanting to trade them in the markets, I have to also trust MtGox, BitStamp or whoever.  (Zero trust at time of deposit and still feel they could run away with my money anytime they want.  So trust is very minimal.)

So, I had to trust 4 different entities just to buy Bitcoins.  So, "decentralization" hasn't removed my need to put trust in people, so I fail to see how this is a legitimate argument.  Maybe someone would like to clear this up.  From what I'm gathering, I have to trust Ripple and the gateway, that's it.  Once open source, thus decentralized, I only need to trust the gateway. While that still requires trust, 1 is certainly less than 4 given anyone one of them can jack me at anytime.  

It's also possible I'm misunderstanding Ripple to a degree or two, so please correct me where I'm in error because I'm really trying to find the validity in this argument.  

The difference is this:

With Bitcoin, when you hold Bitcoins or transfer Bitcoins, then there is no trust required. You actually hold and control the asset.

With Ripple, when you "hold" or "transfer" other currencies, then you have to trust gateways (and OpenCoin as well for the foreseeable future).

In other words, Ripple is billed as a way to "transfer all currencies" as easily as one transfers Bitcoins. But this is a misnomer, because you're only actually transferring debts/IOU's of those currencies, and must thus rely on and trust various parties, which is hardly different than our current bank/paypal/visa system.

Further, even though you think you only need to trust the gateway in Ripple, you forgot that you still need to get money into the gateway. Ripple can't move assets, remember, so people still need to "load" and "unload" the system with various currencies at the gateways, requiring all the trusted parties that your BitInstant example required.

But it's important to distinguish between trust needed to hold and transfer assets and trust needed for exchange between assets. In the BitInstant example, you're not using Bitcoin so much as acquiring Bitcoin via various parties who already have it. Once you have the Bitcoin, it's your asset and no more trust is required. With Ripple, even if you can "acquire euros" at a gateway, someone needed to trust the same types of parties to get the euros into the gateway's bank account (Ripple didn't do it), and further still, the euro IOU that you acquire will STILL require trusting the gateway in perpetuity.

Usage of the monies in Ripple, then, requires trust, where in Bitcoin it does not. You can say the ability to move IOU's around via Ripple is valuable (likely it is), but it is not the same as moving assets. It is the claim that Ripple moves assets which I have a problem with. Ripple can only move the asset called XRP's, and in this way it provides no innovation over Bitcoin which has been moving BTC's for four years successfully.

Excellent post and I appreciate you taking the time.  Your point about getting money into Ripple was great, whereas it's no different than Bitcoin.  Got it.  What I'm not getting is the asset/IOU thing.  Now I understand the fundamental difference obviously but maybe it's the electronic form of these that's confusing me.  How is it I don't have to trust a gateway with a Bitcoin?  If I want to pull it out as USD, it still has to go through them.  That is until nearly everything and everyone takes Bitcoin.  Especially my landlord, utilities, grocery store, etc.  All my basic needs.  Until that point, how are Bitcoins and XRP's really that much different?  Can I not hold XRP's much the same way?  Maybe even get a rise in value over time from their original "IOU" value?  Does that not make them an asset? Which I think was what you were saying in your last paragraph?

I read your post several times to try to figure this out but something is still not clicking for me.  

Nevermind, I just read a post on the Ripple forums that cleared this up.  The difference is that an XRP you can hold yes, but a gateway still has to hold the actual BTC.  Where with BTC's I can hold them on my own.  So I have to trust a gateway with XRP and with BTC, I just trust myself to not lose my wallet.

[mobile4ever]

This is a perfect example of a non-answer. I have no idea how many people that is.

Don't be ridiculous, it's a crystal clear answer. Something like 30 people I'd guess, a hundred at most, and probably a lot less.

That is the closest anyone has ever answered. Thanks.

Even if it were the number 1000, its not enough people. For example, Wikidpedia is under the control of about 30 people. Yet they are affecting the thinking of most of those on the internet. Bitcoin is not operating like this.

Of course it's not enough if it stays like that. What makes it promising is that it seems unlikely that it will stay that way because it would be against OpenCoin's best interests. And even if OpenCoin doesn't deliver, others could, based on the same principles. Or using Open Transactions. The two aren't even mutually exclusive.

Bitcoin operates under different "thinking". Its decentralized, as in no central point of usage.

Don't patronise me, I know how Bitcoin works.

That was a non-patronizing remark. Excuse me if you thought it was "aimed" at you. It was not that way.


Imagine a system that is actually so decentralized that it actually gets rid of itself. That is, it does its job so well, of bringing together a seller and buyer of bitcoin, that it becomes redundant, even useless. Imagine this system being made of free software, using a web programming language that is second only to the first (primary) web programming language. Imagine people having their own local bitcoin markets and forgetting that this forum exists.

[SamS]

Excellent post and I appreciate you taking the time.  Your point about getting money into Ripple was great, whereas it's no different than Bitcoin.  Got it.  What I'm not getting is the asset/IOU thing.  Now I understand the fundamental difference obviously but maybe it's the electronic form of these that's confusing me.  How is it I don't have to trust a gateway with a Bitcoin?  If I want to pull it out as USD, it still has to go through them.  That is until nearly everything and everyone takes Bitcoin.  Especially my landlord, utilities, grocery store, etc.  All my basic needs.  Until that point, how are Bitcoins and XRP's really that much different?  Can I not hold XRP's much the same way?  Maybe even get a rise in value over time from their original "IOU" value?  Does that not make them an asset? Which I think was what you were saying in your last paragraph?

I read your post several times to try to figure this out but something is still not clicking for me.  

Nevermind, I just read a post on the Ripple forums that cleared this up.  The difference is that an XRP you can hold yes, but a gateway still has to hold the actual BTC.  Where with BTC's I can hold them on my own.  So I have to trust a gateway with XRP and with BTC, I just trust myself to not lose my wallet.

This is what I understand as well. You still have the problem of getting to Fiat in either case. However, if I understand BTC correctly, you possess your coins directly and can transact with any Fiat dealer even if your preferred dealer -- ha ha -- goes down. With XRP's, you're locked into your "trusted" Gateways and if they go down you're finished as an IOU is not the actual crypto-currency itself. To my mind, this is just a way of replicating a "bank" without the government backing or insurance. That doesn't seem like a step forward to me.

While I'm really really cynical about the financial crisis and how it was resolved, the US government did step up and guarantee the system -- unlike Cyprus which was just about a complete wipe out. The fact that it comes out of "our" pockets over time rankles but the alternative was far worse. And of course, rather than repeat that debacle, a currency which is independent of any government, is cryptographically secure, and retains it's relative value would be a big step forward. My limited understanding is that BTC could theoretically fill this role. XRP's could not as they are really a transmission mechanism and not a store of value.

Looking for helpful corrections where I have it wrong.    

[datz]

I think the problem here is lack of vision. Many people only know what is here now and cannot see potential or future progression of technology. What Ripple is now is a closed beta distributed platform. What is it has the potential to become is a decentralized, superior protocol which solves many of the problems Bitcoin faces. Do not abort someone else's baby girl, the daughter of Satoshi, before she has the time to mature into a productive human being.  

[Coinseeker]

Excellent post and I appreciate you taking the time.  Your point about getting money into Ripple was great, whereas it's no different than Bitcoin.  Got it.  What I'm not getting is the asset/IOU thing.  Now I understand the fundamental difference obviously but maybe it's the electronic form of these that's confusing me.  How is it I don't have to trust a gateway with a Bitcoin?  If I want to pull it out as USD, it still has to go through them.  That is until nearly everything and everyone takes Bitcoin.  Especially my landlord, utilities, grocery store, etc.  All my basic needs.  Until that point, how are Bitcoins and XRP's really that much different?  Can I not hold XRP's much the same way?  Maybe even get a rise in value over time from their original "IOU" value?  Does that not make them an asset? Which I think was what you were saying in your last paragraph?

I read your post several times to try to figure this out but something is still not clicking for me.  

Nevermind, I just read a post on the Ripple forums that cleared this up.  The difference is that an XRP you can hold yes, but a gateway still has to hold the actual BTC.  Where with BTC's I can hold them on my own.  So I have to trust a gateway with XRP and with BTC, I just trust myself to not lose my wallet.

This is what I understand as well. You still have the problem of getting to Fiat in either case. However, if I understand BTC correctly, you possess your coins directly and can transact with any Fiat dealer even if your preferred dealer -- ha ha -- goes down. With XRP's, you're locked into your "trusted" Gateways and if they go down you're finished as an IOU is not the actual crypto-currency itself. To my mind, this is just a way of replicating a "bank" without the government backing or insurance. That doesn't seem like a step forward to me.

While I'm really really cynical about the financial crisis and how it was resolved, the US government did step up and guarantee the system -- unlike Cyprus which was just about a complete wipe out. The fact that it comes out of "our" pockets over time rankles but the alternative was far worse. And of course, rather than repeat that debacle, a currency which is independent of any government, is cryptographically secure, and retains it's relative value would be a big step forward. My limited understanding is that BTC could theoretically fill this role. XRP's could not as they are really a transmission mechanism and not a store of value.

Looking for helpful corrections where I have it wrong.    

BTC's will not be "independent from government."  This is a pipe dream...at least from any broad adoption standpoint.  Regulation is inevitable.   That said, your concerns about XRP are valid from my limited understanding.

[misterbigg]

Ripple is not a scam...
1) It is closed source.
2) It is centralized.
3) Ripple does not allow users to send "every kind of currency."
4) Issuance of XRP's is left to the whims of men.
5) The security model of Ripple is untested.

Hi Erik. Glad to see someone post some actual reasonable things. All of these are true of course. Primates take note: this is what a civilized discussion looks like.

3) Ripple does not allow users to send "every kind of currency."

Somewhat false. If you trust a gateway then payments are just as good as sending every kind of currency. You have to accept that each user trusts at least one gateway. Without this, the premise of Ripple falls apart and what we are left with is only the XRP.

Everyone keeps comparing Ripple to Bitcoin but the two are different. Ripple IOUs don't claim to be replacements for Bitcoins. Even the Bitcon IOUs issued by Bitstamp are not claimed to be Bitcoin replacements. For some reason, perhaps the "premine" makes people feel that Ripple's existence is adversarial to Bitcoin. It is not, and the two are complementary.

Bitcoin: No counterparty risk.
Ripple: Requires gateway trust, integrates well with existing financial system.

What do you think is more likely, that Amazon is going to accept Bitcoin payments? Or that a bank is going to operate as a Ripple gateway, thus allowing someone's deposited Bitcoins to be spent anywhere that you can spend money using a normal checking account.

Instead of running around trying to cajole every business on the planet to accept Bitcoins, isn't it more practical to enable companies that already process payments to operate using Ripple? Once a company allows Ripple payments to pass through its existing network, you can now spend Bitcoins, Litecoins, XRP, foreign currencies, etc... anywhere you want without having to beg merchants to accept the cryptocurrency.

[SamS]

I think the problem here is lack of vision. Many people only know what is here now and cannot see potential or future progression of technology. What Ripple is now is a closed beta distributed platform. What is it has the potential to become is a decentralized, superior protocol which solves many of the problems Bitcoin faces. Do not abort a baby before it has the time to grow into a productive human being. 

Well, if you can provide some vision as to what the intent of Ripple is here and how it addresses the shortfalls of the current system, I for one, would be appreciative.

Candidly, I just don't see the problem that Ripple is meant to solve yet. What I have read so far suggests that BTC doesn't seem to be able to scale properly for "Mom and Pop" read day to day demand levels. That doesn't seem to be controversial and I'm sure people are working on it. This may, in fact, be the issue that Ripple is intended to solve. If so, then it's not a "perfect" solution in that it appears that you need to accept a substantial amount of counter-party (read Gateway) risk in exchange for rapid processing. The argument in favor of this that I am hearing is that it's no worse than the current system and may actually reduce transaction fees as well. OK. That would be something to discuss if true.  What else am I missing from the big picture -- a lot I'm sure.

[datz]

I think the problem here is lack of vision. Many people only know what is here now and cannot see potential or future progression of technology. What Ripple is now is a closed beta distributed platform. What is it has the potential to become is a decentralized, superior protocol which solves many of the problems Bitcoin faces. Do not abort a baby before it has the time to grow into a productive human being.  

Well, if you can provide some vision as to what the intent of Ripple is here and how it addresses the shortfalls of the current system, I for one, would be appreciative.

Candidly, I just don't see the problem that Ripple is meant to solve yet. What I have read so far suggests that BTC doesn't seem to be able to scale properly for "Mom and Pop" read day to day demand levels. That doesn't seem to be controversial and I'm sure people are working on it. This may, in fact, be the issue that Ripple is intended to solve. If so, then it's not a "perfect" solution in that it appears that you need to accept a substantial amount of counter-party (read Gateway) risk in exchange for rapid processing. The argument in favor of this that I am hearing is that it's no worse than the current system and may actually reduce transaction fees as well. OK. That would be something to discuss if true.  What else am I missing from the big picture -- a lot I'm sure.

Problems Ripple solves:

1) exchange bottlenecks
2) communication and transfers between Bitcoin companies
3) no electronic, standardized way to track and exchange debt
4) no electronic standardized way to track commitments and bills for future pay
5) high load on completely decentralized Bitcoin network reduces speed and scalabilty (need parallel Universe)
6) interfacing with Bitcoin companies and individuals programmatically requires too many APIs and reliance on specific companies
7) no standardized way to handle complex financial instruments and social constructs (i.e. no way to do insurance without custom builds)
51% attack imminent on Bitcoin protocol - avoidance requires waste of resources and increased hashing rate/dedication of processing power

to name a few.

[oakpacific]

The only coins that Satoshi arguably premined are those from the genesis block, but they are forever unspendable. Afterwards he released the code, and spread the news to as many places as possible, with hundreds of people got in contact with Bitcoin, Hal Finney for one mined several thousand. The only reason that it's Satoshi who mined 1M bitcoins, not someone else is we are all suckers who couldn't see the value of this thing, had anyone of the early adopter kept their miners running all day for half a year they would have been ridiculously rich now. Even if Satoshi had spent millions of dollars to get a Bitcoin ad running on Time Square 24 hours a day I doubt there would have been more than a few miners during the whole period. And Satoshi actually needed to keep his miner running because he must be ready for any new joiner of the network, there must be two nodes or it's not a network.

Compare that to Opencoin, did they ever give any chance for anyone to get hold of that 20% of XRPs? The fact that some Ripplers mentioned these two in the same breath shows just how twisted their minds are.

RE: Oakpacific

This is some great analysis that makes these forums worth reading. I will be sure to follow more your posts in the future and I hope to hear more of this analysis. It's some of the best available on these forums. Imo, it's interesting how everyone has access to the same information (in this case about Ripple), but only a few are able to extract the real truth. Thanks for posting this.

I believe it is possible to see a little about Opencoin through their current approach, even if the majority of their business remains a closed-source mystery, as outlined in this analysis by Oakpacific.

One thing though, let's not get ahead of ourselves analysing Opencoin before they even release the source code. There is no way it is sensible to buy XRP until you have seen the source code of the system. As somebody mentioned , anything can be changed between now and when they release the code.

However, I'd speculate (*speculate* in bold underline) alongside Oakpacific that the fact that they have taken this approach, developing the code closed source initially, and keeping a large number of coins for themselves, does not bode well for a cryptocurrency company, which after all will have to rely on a free and open community to run and support its software in order to succeed. However, jury's out.

Thanks for the compliment.

I think there maybe sensible reason why Opencoin/Ripple developers are so hesitant when it comes to release the source code, as what I said in another post, they may be worried that it's easy for others to "clone" their network and outdo them(after all only trust is required), so they decide to withhold from releasing the source code until their network "matures".

I personally am not too worried about the fact that Opencoin gets to decide the allocation of XRPs, but by creating XRP, Ripple set a very bad precedent: that a random organization can somehow print its own money and rake in a few million bucks for something costs next to nothing to create. You can bet that all Ripple-clones/forks will follow suit. Whether the Ripple network model will prove to be useful remains to be seen, but buying and hoarding XRPs is most likely a very bad idea.

[datz]

The only coins that Satoshi arguably premined are those from the genesis block, but they are forever unspendable. Afterwards he released the code, and spread the news to as many places as possible, with hundreds of people got in contact with Bitcoin, Hal Finney for one mined several thousand. The only reason that it's Satoshi who mined 1M bitcoins, not someone else is we are all suckers who couldn't see the value of this thing, had anyone of the early adopter kept their miners running all day for half a year they would have been ridiculously rich now. Even if Satoshi had spent millions of dollars to get a Bitcoin ad running on Time Square 24 hours a day I doubt there would have been more than a few miners during the whole period. And Satoshi actually needed to keep his miner running because he must be ready for any new joiner of the network, there must be two nodes or it's not a network.

Compare that to Opencoin, did they ever give any chance for anyone to get hold of that 20% of XRPs? The fact that some Ripplers mentioned these two in the same breath shows just how twisted their minds are.

RE: Oakpacific

This is some great analysis that makes these forums worth reading. I will be sure to follow more your posts in the future and I hope to hear more of this analysis. It's some of the best available on these forums. Imo, it's interesting how everyone has access to the same information (in this case about Ripple), but only a few are able to extract the real truth. Thanks for posting this.

I believe it is possible to see a little about Opencoin through their current approach, even if the majority of their business remains a closed-source mystery, as outlined in this analysis by Oakpacific.

One thing though, let's not get ahead of ourselves analysing Opencoin before they even release the source code. There is no way it is sensible to buy XRP until you have seen the source code of the system. As somebody mentioned , anything can be changed between now and when they release the code.

However, I'd speculate (*speculate* in bold underline) alongside Oakpacific that the fact that they have taken this approach, developing the code closed source initially, and keeping a large number of coins for themselves, does not bode well for a cryptocurrency company, which after all will have to rely on a free and open community to run and support its software in order to succeed. However, jury's out.

Thanks for the compliment.

I think there maybe sensible reason why Opencoin/Ripple developers are so hesitant when it comes to release the source code, as what I said in another post, they may be worried that it's easy for others to "clone" their network and outdo them(after all only trust is required), so they decide to withhold from releasing the source code until their network "matures".

I personally am not too worried about the fact that Opencoin gets to decide the allocation of XRPs, but by creating XRP, Ripple set a very bad precedent: that a random organization can somehow print its own money and rake in a few million bucks for something costs next to nothing to create. You can bet that all Ripple-clones/forks will follow suit. Whether the Ripple network model will prove to be useful remains to be seen, but buying and hoarding XRPs is most likely a very bad idea.

Exactly, it's all about maturity.

[n8rwJeTt8TrrLKPa55eU]

I am neutral about Ripple and taking a wait-and-see attitude, there are good arguments both pro and con whether the system will actually work as marketed.  As part of my research, I have a question which hopefully someone here can answer:

OpenCoin, Developer of Ripple Protocol, Closes Funding From Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners and Angel Investors

What is the sustaining business model for OpenCoin on which this investment was predicated?  Or did these firms simply receive a large chunk of XRP with the assumption that the value will appreciate?  Basically I'm trying to understand how investing in OpenCoin was pitched, and what the VC exit strategy is going to be.  These guys would not have handed over money without the expectation of a 10x or 100x rate of return.

Given that OpenCoin doesn't take a cut on transactions, and that once the source code is released and cloneable the technology stops being a scarce resource, is OpenCoin planning to offer additional/ongoing/proprietary paid-for services and products, or is the entire monetization strategy based on widespread network adoption and a rising XRP value?