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Author Topic: Ripple - the real Bitcoin competition?  (Read 28102 times)
zby
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May 11, 2013, 07:58:49 AM
 #1

Altcoins are not real competition for bitcoin.  They don't provide any substantial advantage over bitcoin - it's all the same digital gold - but Ripple with the distributed clearing house idea is something quite a bit more complex and potentially enabling.  

On the other hand OpenCoin declares to discourage XRP speculating and they have all 100 billion XRPs already created - so it might not gain such notoriety as Bitcoin.
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May 11, 2013, 08:01:35 AM
 #2

Relevant to your thread: https://bitcointalk.org/index.php?topic=201794

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May 11, 2013, 08:02:32 AM
 #3

LOL @ OP

Ripple = pile of dodo

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zby
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May 11, 2013, 08:14:33 AM
 #4

I am intrigued by the clearing house idea.  Somehow it is not advertised or explained much on the Ripple.com site - but they claim to be an implementation of the original Ripple idea that was about a distributed clearing house.  I believe that having trust factored into the system as a variable that is directly manipulated by users might lead to a system more robust against bubbles.
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May 11, 2013, 08:15:44 AM
 #5

Ripple is designed to facilitate currency exchange, not product exchange, they aren't meant to be a currency.

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May 11, 2013, 08:35:26 AM
 #6

Ripple is designed to facilitate currency exchange, not product exchange, they aren't meant to be a currency.

It's like a metacurrency really. Just one more layer of abstraction to Grok.

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May 11, 2013, 09:06:08 AM
 #7

OCripple is not Ripple.
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May 11, 2013, 09:10:05 AM
 #8

Ripple does a number of very nice things for Bitcoin. My money says that if Ripple takes off, it gives Bitcoin a significant boost. Why? First, it can in principle make bitcoins easier to buy, and limit the number of points of failure of this infrastructure by acting as a distributed exchange. If the social lending catches on (unlikely in the near term, imho) then you don't even need to depend on gateways in order to buy bitcoins, it would just facilitate trades through peer networks.

More importantly, it hopes to be a currency-indifferent payment system. This means that anybody who accepts any kind of Ripple payment, also accepts Bitcoins. It also means that if you are selling a product, if you accept Bitcoin payments through Ripple, people can pay you in USD and it will be converted on the fly. Basically, it's a distributed, omnidirectional BitPay-like service.

There are more subtle reasons why Ripple would be a boon for Bitcoin: one is that the economics of providing liquidity means that the cost of Ripple payments between gateways in the same currency is related to the underlying costs of moving that currency around. This means that even on Ripple, payments in BTC will tend to be cheaper than payments in USD, so if people use Ripple, they may want to start using bitcoins. (Or they may want to start using XRP for the same reason.)

All of this is assuming that Ripple delivers: that OpenCoin delivers on its promise to open source rippled, and that the consensus mechanism turns out to be a good and scalable and secure way to operate something like Ripple, among others.

The role XRP play in this is uncertain – it does compete more or less directly with Bitcoin, but people may or may not end up using it as a currency if Ripple takes off. It has advantages and disadvantages over Bitcoin as a currency – faster confirmations and cheaper transactions, but (more) limited privacy and a troubling relationship with OpenCoin. Also, everybody who accepts XRP also accepts Bitcoin (as mentioned above), but the reverse is not true.
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May 11, 2013, 09:14:38 AM
 #9

If they don't release the source code of Ripple server, there is no guarantee that the network runs the way they told you, it could just be another centralized e-cash, opencoin can withdraw at anytime and the network will stop to function.

If they do release the source code, then the Ripple framework would be infinitely replicable, anyone can just go and create their own Ripple network and release their own XRP, this could potentially mean that XRP has no value at all because it doesn't require a backup by computational power.

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May 11, 2013, 10:13:09 AM
 #10

If they don't release the source code of Ripple server, there is no guarantee that the network runs the way they told you, it could just be another centralized e-cash, opencoin can withdraw at anytime and the network will stop to function.

If they do release the source code, then the Ripple framework would be infinitely replicable, anyone can just go and create their own Ripple network and release their own XRP, this could potentially mean that XRP has no value at all because it doesn't require a backup by computational power.

If they don't release the source then there is not much to discuss - nobody will use it.
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May 11, 2013, 10:16:54 AM
 #11

LOL @ OP

Ripple = pile of dodo
This.

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zby
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May 11, 2013, 10:42:55 AM
 #12


Hmm - indeed pretty bad - but some claims are not true (OpenCoin is not hiding that the 100 billion coins are premined), some are speculative - like the fact that Ripple will not be OpenSource when it is released. 

I would agree that it it not worth a look if it is not 100% Open Source, and OpenCoin made a big mistake to declare it Open Source when it is only planned to be Open Source - but if you say that it is scam because it is not Open Source and they release it as Open Source then your argument is invalidated and you are left with an angry page with no true arguments.
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May 11, 2013, 10:47:43 AM
 #13

If the social lending catches on (unlikely in the near term, imho) then you don't even need to depend on gateways in order to buy bitcoins, it would just facilitate trades through peer networks.

Social payment might be enough, with relatively small trust limits.

ROI is not a verb, the term you're looking for is 'to break even'.
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May 11, 2013, 12:26:03 PM
 #14

If Ripple takes off it will be a Bitcoin killer, not a metacurrency. There's absolutely no reason to prefer to use BTC instead of XRP aside from speculation. XRP is a better currency than BTC because they can control the price and make it stable, with a gentle upwards slope guaranteeing a nice return in relation to the risk, say 10-20% per year. For people wanting to use it as a currency, that's a major improvent over BTC.

They don't market themselves as Bitcoin killers because they want to leverage the bitcoin community for their own profit, but make no mistake about it, Ripple is not "a distributed bitcoin exchange". Think of XRP as an improved bitcoin where the early adopters are the developers, committed to build and extend the ecosystem instead of simply hoard BTCs and wait for others to do the work. It's improved in many ways: instant clearing, high scalability, no need for a mining race, built in distributed exchange and many other features in addition to fixing the "Bitcoin early adopter incentives" problem.

Most of the crap on that website is just FUD or false, with one large exception: Ripple is centralized in it's bootstrap phase and is vulnerable to regulatory pressure for the first few years.

Edit: On the open source front,  they have little incentive to release it now in alpha phase, when most innovation takes place, pantents are being filled etc. and they are at high risk from disruption by someone who copy pastes an "open ripple". Once they are established, I agree with their website they have a major incentive to release the source, as long as there's no longer any direct threat from copycats.


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dave111223
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May 11, 2013, 12:58:58 PM
 #15

When I researched Bitcoin i was amazed at how perfectly everything ties together; there are no loose ends, and any questions starting with "What if this happened..." are already thought of and answered within the protocol...

However when I look at Ripple there are so many things that could go wrong, that you just have to assume that it will go wrong at some point such as:

1) What if a huge gateway (such as Bitstamp) just decides "nah we're not going to do Ripple anymore"...and all their IOU are now worthless; it would bring the whole thing down, everyone would be trying to unload their worthless balances, it would be total melt down.  And the best part is Bitstamp could probably continue to operate as a regular exchange (what is Ripple going to do about it)

2) What if Opencoin starts leaking their billions of XRP onto the market to try to turn a profit?  As soon as people start to notice everyone will dump and run

3) What if Opencoin get shut down by the government?

4) What if Opencoin gets hacked and hackers use their Opencoin servers to do all kinds of bad stuff

5) What if Ripple itself gets hacked (source is still closed so no one knows how secure it is, there may be major security flaws)

6) What if Opencoin decides to randomly start doing bad shit like making more XRP, confiscating balances, banning accounts...etc..

These are just a few glaring "What if"s, I imagine people with more knowledge on the subject could come up with 20 more than this.

Basically Ripple makes Opencoin the de facto Fed...

It really is insanity that every Bitcointalk account created prior to February is now worth $300-$500...lols already got my $500 (in BTC)...I'm surprised the bitcointalk admins have not been tempted to start using old accounts to post their own Ripple address and cash in on this madness.

I wonder is gateways, such as Bitstamp, really considered what there were getting into; I mean if Ripple took off, in 5 years they could end up with outstanding IOUs of billions of dollars...are you telling me Bitstamp is prepared to hold billions of dollars in cash reserve to cover their IOUs...?  The last thing I'd want to be doing is running a gray market currency exchange (and yes I consider Bitcoin still a gray market; as laws/regs have yet to be applied) and have billions of dollars in the bank...(MASSIVE TARGET ON YOUR BACK!)?  Or they are planning to operate a factional reverse...god help us all...either way I wonder if they really thought through all the ramifications.



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mmeijeri
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May 11, 2013, 01:07:28 PM
 #16

1) What if a huge gateway (such as Bitstamp) just decides "nah we're not going to do Ripple anymore"...and all their IOU are now worthless; it would bring the whole thing down, everyone would be trying to unload their worthless balances, it would be total melt down.  And the best part is Bitstamp could probably continue to operate as a regular exchange (what is Ripple going to do about it)

Their clients would sue them and win.

Quote
2) What if Opencoin starts leaking their billions of XRP onto the market to try to turn a profit?  As soon as people start to notice everyone will dump and run

If you're worried about that, then don't invest in XRP. You only need tiny amounts to be able to use the Ripple functionality for other currencies, including BTC. And of course, OpenCoin has no motive to do this, because they would be shooting themselves in the foot if they did. They want the XRP exchange rate to go up, not down, just not uncontrollably.

Quote
3) What if Opencoin get shut down by the government?

The protocol is distributed, just like Bitcoin, so governments cannot really shut it down any more than they can shutdown Bitcoin or Bittorrent.

Quote
4) What if Opencoin gets hacked and hackers use their Opencoin servers to do all kinds of bad stuff

5) What if Ripple itself gets hacked (source is still closed so no one knows how secure it is, there may be major security flaws)

6) What if Opencoin decides to randomly start doing bad shit like making more XRP, confiscating balances, banning accounts...etc..

Only a problem until OpenCoin releases the source code. It is in their interest to do so, precisely because it will dispel fears like that.

Quote
These are just a few glaring "What if"s, I imagine people with more knowledge on the subject could come up with 20 more than this.

Basically Ripple makes Opencoin the de facto Fed...

Scare mongering.

ROI is not a verb, the term you're looking for is 'to break even'.
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May 11, 2013, 01:27:08 PM
 #17

1) What if a huge gateway (such as Bitstamp) just decides "nah we're not going to do Ripple anymore"...and all their IOU are now worthless; it would bring the whole thing down, everyone would be trying to unload their worthless balances, it would be total melt down.  And the best part is Bitstamp could probably continue to operate as a regular exchange (what is Ripple going to do about it)

Their clients would sue them and win.

I'm going to sue Bitstamp for their Ripple IOU; are you kidding me, have you actually used the system yet?  There is nothing even closely resembling a contract between me and Bitstamp.  When you transfer Bitcoins to Ripple there is nothing but "Enter your Address", there is no text as to what they will give you, what that means, what their obligations are...nothing...somehow I'm going to use that to sue them?
Also what if I didn't get the IOU from Bitstamp directly.  It may have come from Bitstamp 10 years ago and passed through 10,000 people before it got to me and was then worthless.  Somehow I'm going to trace back the debt through 10,000 people and bring Bitstamp to court?

And even if you could sue Bistamp, then what, you get half of Ripple trying to sue a company for money they don't have?

Quote
2) What if Opencoin starts leaking their billions of XRP onto the market to try to turn a profit?  As soon as people start to notice everyone will dump and run

If you're worried about that, then don't invest in XRP. You only need tiny amounts to be able to use the Ripple functionality for other currencies, including BTC. And of course, OpenCoin has not motive to do this, because they would be shooting themselves in the foot if they did. They want the XRP exchange rate to go up, not down, just not uncontrollably.


You act as if XRP and the other currencies within Ripple are totally isolated and each in individual little bubbles...when in fact any panic with XRP would immediately spread across the entire system.  As soon as the confidence is broken.  

And of course Opencoin would not try to shoot themselves in the foot, but all it would take would be to slightly misjudge the number of XRP they were able to safely unload without affecting the market.  Too much and people start to notice and panic, panic, withdrawal, withdrawal, uh oh the gateways were running factional reserve and we have our first virtual "run on a bank"


Quote
3) What if Opencoin get shut down by the government?

The protocol is distributed, just like Ripple, so governments cannot really shut it down any more than they can shutdown Bitcoin or Bittorrent.

How distributed it is; are there any stats available on this (ie how many full server nodes run by how many different organizations?

*This may be a noob question; but the only why I was aware that I could access my Ripple account is at https://ripple.com/client/, so if someone someone hacked that server, or managed mess with the domain...doesn't that mean bye bye Ripple, at least until they can get a new site up and running?

Quote
4) What if Opencoin gets hacked and hackers use their Opencoin servers to do all kinds of bad stuff

5) What if Ripple itself gets hacked (source is still closed so no one knows how secure it is, there may be major security flaws)

6) What if Opencoin decides to randomly start doing bad shit like making more XRP, confiscating balances, banning accounts...etc..

Only a problem until OpenCoin releases the source code. It is in their interest to do so, precisely because it will dispel fears like that.
How is it only a problem until source is released...if when the source is released it contains serious security flaws; and hackers are quickly able to put through double transactions, or steal balances etc...

In which case what will OpenCoin do, start rolling back balances?  And the fact that they have the ability to do this is another cause for concern.

Quote
These are just a few glaring "What if"s, I imagine people with more knowledge on the subject could come up with 20 more than this.

Basically Ripple makes Opencoin the de facto Fed...

Scare mongering.

Not really trying to scare people; I'm just asking questions that I can't seem to find answers that I'm satisfied with.

P.S. I don't think Ripple is a "scam"; i just think there are too many things that could go wrong, and probably will go wrong.



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mmeijeri
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Martijn Meijering


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May 11, 2013, 01:47:14 PM
 #18

I'm going to sue Bitstamp for their Ripple IOU; are you kidding me, have you actually used the system yet?

Yes, but not for large amounts and I'm not going to at least until well after the code has been released.

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 There is nothing even closely resembling a contract between me and Bitstamp.  When you transfer Bitcoins to Ripple there is nothing but "Enter your Address", there is no text as to what they will give you, what that means, what their obligations are...nothing...somehow I'm going to use that to sue them?

If they accept your money and purport to issue and redeem IOUs then you can probably sue them, or at least report them to the police.

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Also what if I didn't get the IOU from Bitstamp directly.  It may have come from Bitstamp 10 years ago and passed through 10,000 people before it got to me and was then worthless.  Somehow I'm going to trace back the debt through 10,000 people and bring Bitstamp to court?

That may be more difficult.

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And even if you could sue Bistamp, then what, you get half of Ripple trying to sue a company for money they don't have?

It means they have an incentive not to cheat and users have a way to weed out bad gateways. This is how banks should operate IMO. Bitstamp are going to have to earn their trust lines.

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You act as if XRP and the other currencies within Ripple are totally isolated and each in individual little bubbles...when in fact any panic with XRP would immediately spread across the entire system.  As soon as the confidence is broken.  

Releasing "excessive" amounts of XRP would not impact the reliability of the Ripple system. If XRP tanks, there is no reason to start distrusting the USD balances. Reliability is a function of the source code (and the availability of independent validators, wider adoption etc), not of OpenCoin's "monetary policy".

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And of course Opencoin would not try to shoot themselves in the foot, but all it would take would be to slightly misjudge the number of XRP they were able to safely unload without affecting the market.  Too much and people start to notice and panic, panic, withdrawal, withdrawal, uh oh the gateways were running factional reserve and we have our first virtual "run on a bank"

Bank runs could happen and that's a good thing, because it keeps banks honest. But it's totally unrelated to the XRP exchange rate. And in fact, XRP is the only currency in the Ripple system that has zero counterparty risk and needs no exchanges gateways, precisely because it is handled entirely inside the Ripple system. Exchange rate risk, obviously, but no counterparty risks. And for IOUs it's precisely the other way round.

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How distributed it is; are there any stats available on this (ie how many full server nodes run by how many different organizations?

The protocol itself is distributed, but since the source hasn't been released there are only a handful of servers. If that doesn't change, no one in their right mind will trust Ripple.

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How is it only a problem until source is release...if when the source is release it's contains serious security flaws; and hackers are quickly able to put through double transactions, or steal balances etc...

Well, even then it's not really a problem because you shouldn't use Ripple to hold large sums of money until well after the source has been released and vetted, many independent validators and exchanges have sprung up etc.

ROI is not a verb, the term you're looking for is 'to break even'.
dave111223
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May 11, 2013, 02:17:30 PM
 #19

Releasing "excessive" amounts of XRP would not impact the reliability of the Ripple system. If XRP tanks, there is no reason to start distrusting the USD balances. Reliability is a function of the source code (and the availability of independent validators, wider adoption etc), not of OpenCoin's "monetary policy".

I will spare over quoting just focus on this; as I think it shows we fundamentally disagree on the premiss that XRP and Opencoin have no affect on Ripple...

I think to say that "what Opencoin does with their XRP will have no impact on the Ripple system" ignores completely human nature and human history.

Even in recent months and years we've seen perfect examples of people seeing panic within other sectors and applying that same panic to their own sector.  When you see Cyprus, and yet this causes people in Spain and Italy to start worrying...although there was absolutely no evidence that similar government action was planned.

The difference is that in Cyprus the government is able to close down the banks and say "You can only withdraw 100EUR per day" and prevent a full scale melt down.  In ripple all there is no overseeing body to stop the panic, and the gateways would fall like dominoes.

For example:
- Opencoin sells some XRP and brings the price of XRP down too fast
- People start to get nervous about Ripple, they start to withdraw a portions of their holdings from Ripple to be safe
- The unusually high withdraw volume hits some of the gateways hard;  the ones that did not have enough reserves to cover the withdrawals
- People from the tapped out gateways are now bringing their IOUs to other gateways, these gateways either fold too, or block these IOUs causing further panic
- Everyone would be trying to cash out before their gateway went down...why risk having any money in Ripple when you could cash out and have the exact same amount if your own wallet
- End result you have a Ripple system filled only with bad debt; sure some people, who held IOUs from good gateways, managed to get out unharmed, but they would "get out" none the less
- I think at this point confidence in the system would be so badly shattered that people would never put money back into it (even the people who got out unharmed)

Now that is a "Ripple" effect Cheesy


And please don't say something stupid like "This is a good thing, it keeps people honest".



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dave111223
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May 11, 2013, 02:21:10 PM
 #20

Quote
 There is nothing even closely resembling a contract between me and Bitstamp.  When you transfer Bitcoins to Ripple there is nothing but "Enter your Address", there is no text as to what they will give you, what that means, what their obligations are...nothing...somehow I'm going to use that to sue them?

If they accept your money and purport to issue and redeem IOUs then you can probably sue them, or at least report them to the police.

Just one more quote...so you are telling me that I could go down to my local police station and report to the police that Bitstamp wouldn't let me redeem my Ripple Dollars Cheesy  Sorry just can't help laughing when I think about the look on the policeman's face.

P.S. I don't see any mention of "IOUs" on the Bitstamp website; I don't really see the mention of anything, there is basically no text at all.



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