PSA: 'Bitcoins' in Ripple are not Bitcoins. They are not real, can be seized.

[🏰 TradeFortress 🏰]

Your balances on Ripple are not real. They don't exist, they never existed in the first place and will never exist. Some people honor their printed Ripple balances, but for how long?

It doesn't have to be malicious by the gateway.

What if the gateway loses all the bitcoins through a natural disaster and a poor back up strategy?

What if the Department of Homeland Security seizes the gateway's stored bitcoins, like what happened earlier?

The answer is.. nothing changes. You never owned anything of existence in the first place.

"We can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own." - Satoshi Nakamoto

Napster was a centralized network controlled by one company. It was closed source. You had to trust files that they were legit.

Ripple is a centralized network controlled by one company. It is closed source. You have to trust gateways that they actually pays out.

Bitcoin is an decentralized network, controlled by every peer (that's you) who run Bitcoin and enforces the network rules. It's open source, and you don't have to trust anyone. A bitcoin, is a bitcoin that can't be seized without physical or malware intrusion - because it's enforced by every peer.

History repeats itself. Don't blindly follow Satoshi, but as someone who has created Bitcoin, you have to give their word a moment of thought.

[1714958952]

1714958952

[1714958952]

1714958952

[QueenElizabeth]

Hang on. How does this work?

If I trust you for 1 trillion BTC you can send them to me even if you don't actually have them in your Ripple account? If that's the case, yes, serious bug; but how come nobody realized?

[Gabi]

What if the Department of Homeland Security seizes the gateway's stored bitcoins, like what happened earlier?

This! Your bitcoin are your only if they are in your wallet!

[🏰 TradeFortress 🏰]

Hang on. How does this work?

If I trust you for 1 trillion BTC you can send them to me even if you don't actually have them in your Ripple account? If that's the case, yes, serious bug; but how come nobody realized?

Because you cannot send anything of value in Ripple. You can only send debt.

Please excuse me for using you as an example, but this is one of the users that OpenCoin Inc has deceived.

[datz]

That is BTC debt.

You could theoretically collect 1 trillion in USD debt and collect that as long as someone lives.

[datz]

Debt is valuable - it all depends on the source.

[🏰 TradeFortress 🏰]

What if the Department of Homeland Security seizes the gateway's stored bitcoins, like what happened earlier?

This! Your bitcoin are your only if they are in your wallet!

If you don't hold the private key, you don't own the bitcoin. The government can seize centralized currencies all they like with a court order, but the government cannot seize your BTCs without showing up to your door at gunpoint and forcing you to delete your wallet.dat.

One is plausible to do en-masse, the other is not.

[🏰 TradeFortress 🏰]

Debt is valuable - it all depends on the source.

Debt is valuable until the DHS starts seizing it.

Do you seriously think that Mt Gox is the last cryptocurrency DHS seize we will see? I'm willing to bet 1:100 on that.

[datz]

Fiat debt is valuable as long as someone thinks it is. Just as BTC is valuable because someone thinks it is. My dirty laundry is valuable if someone thinks it is.

The value of XRP and debt in the Ripple protocol is derived from its effectiveness and advantages as a protocol.

[🏰 TradeFortress 🏰]

Fiat debt is valuable as long as someone thinks it is. Just as BTC is valuable because someone thinks it is. My dirty laundry is valuable if someone thinks it is.

The value of XRP and debt in the Ripple protocol is derived from its effectiveness and advantages as a protocol.

See the part about seizure.

"Bitcoins" in ripple cannot survive in an environment where it is illegal, Bitcoin (although there would be many inconveniences) can.

[datz]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

[datz]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

The government cannot seize debt.

[🏰 TradeFortress 🏰]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

I never claimed my bitcoins in Mt Gox were real bitcoins. They're only real when I see a transaction on the network - the saying, "I don't believe it until I see 6 confirmations"

Explain to me how a government can seize my bitcoins in a Brainwallet without using physical force against me.

The government can seize the backing behind debt (which may turn out to never have existed). Let's get this straight first, do you believe it is much easier for the government to crack down on Ripple balances backed by centralized and legal entities versus real Bitcoin balances on the blockchain?

[datz]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

I never claimed my bitcoins in Mt Gox were real bitcoins. They're only real when I see a transaction on the network - the saying, "I don't believe it until I see 6 confirmations"

Explain to me how a government can seize my bitcoins in a Brainwallet without using physical force against me.

The government can seize the backing behind debt (which may turn out to never have existed). Let's get this straight first, do you believe it is much easier for the government to crack down on Ripple balances backed by centralized and legal entities versus real Bitcoin balances on the blockchain?

Ripple is not centralized - it is actually designed to be a decentralized currency. For the time being I would not load up on BTC debt from untrusted sources which do not follow regulations of the countries they reside in. Nor would I loan my untrustworthy, addict friend $1000.

You are completely correct - the government cannot seize bitcoins in your Brainwallet unless you left any passwords or information unsecured.

The government may seize your hardware, audit and seize any companies holding your bitcoins on a server, and search/seize any written passwords or keys you may have in your possession. The government may seize your freedom. The government may prevent you from ever spending that currency.

[🏰 TradeFortress 🏰]

Ripple was designed to be a decentralized currency, however at the current stage it is centralized. Core network rules were changed at a whim - see the lowered requirements for XRP balances to actually use Ripple.

This would be like Gavin introducing 20 million new coins to Bitcoin, and no, no miner is going to adopt that. Reducing XRP requirements creates new XRPs that may be used in the economy, inflating the currency.

In addition, assuming that we will see a holocaust-like mass imprisonment of Bitcoin users is what I would consider unlikely.

[datz]

Ripple was designed to be a decentralized currency, however at the current stage it is centralized. Core network rules were changed at a whim - see the lowered requirements for XRP balances to actually use Ripple.

This would be like Gavin introducing 20 million new coins to Bitcoin, and no, no miner is going to adopt that. Reducing XRP requirements creates new XRPs that may be used in the economy, inflating the currency.

Let's not bicker. Let's wait it out - 6 more months - and then resume this conversation.

[🏰 TradeFortress 🏰]

Ripple was designed to be a decentralized currency, however at the current stage it is centralized. Core network rules were changed at a whim - see the lowered requirements for XRP balances to actually use Ripple.

This would be like Gavin introducing 20 million new coins to Bitcoin, and no, no miner is going to adopt that. Reducing XRP requirements creates new XRPs that may be used in the economy, inflating the currency.

Let's not bicker. Let's wait it out - 6 more months - and then resume this conversation.

Let's not. When there's a new movie, we don't want 6 months before giving feedback, nor is it a good idea to shelve away discussion because "let's wait it out".

Perhaps you were not aware that Bitcoin was released in an open source state? It's not unfair to expect the same thing from a competitor.

[tclo]

Yeah the whole IOU thing does make me a bit hesitant to embrace ripple more fully.  I'm not sure if this is a drawback,but it's definitely a concern.

[TTBit]

It doesn't have to be malicious by the gateway.

What if the gateway loses all the bitcoins through a natural disaster and a poor back up strategy?

Only trust gateways that are worth trusting. When sending USD, BTC, Credit Card numbers, Social security numbers, etc to a gateway such as MtGox, BTC-E, BitcoinStore.com, Amazon.com, Citibank, you must trust them to be good stewards of your BTC / USD / Credit Card / Data / Products.

Why do you see gateways in ripple differently from a local bank, retaurant, amazon, etc?

[Cryptoman]

Right, you shouldn't keep a lot of Bitcoins as IOUs in Ripple.  However, there's nothing wrong with keeping a minimal amount there, only what's necessary for creating and exchanging IOUs for products or services from merchants.  Let's not ignore Ripple's utility for offloading some of the transaction volume from the block chain.

[dave111223]

Only trust gateways that are worth trusting. When sending USD, BTC, Credit Card numbers, Social security numbers, etc to a gateway such as MtGox, BTC-E, BitcoinStore.com, Amazon.com, Citibank, you must trust them to be good stewards of your BTC / USD / Credit Card / Data / Products.

Why do you see gateways in ripple differently from a local bank, retaurant, amazon, etc?

Local banks are government insured.

[TTBit]

Only trust gateways that are worth trusting. When sending USD, BTC, Credit Card numbers, Social security numbers, etc to a gateway such as MtGox, BTC-E, BitcoinStore.com, Amazon.com, Citibank, you must trust them to be good stewards of your BTC / USD / Credit Card / Data / Products.

Why do you see gateways in ripple differently from a local bank, retaurant, amazon, etc?

Local banks are government insured.

oh

[deadweasel]

Only trust gateways that are worth trusting. When sending USD, BTC, Credit Card numbers, Social security numbers, etc to a gateway such as MtGox, BTC-E, BitcoinStore.com, Amazon.com, Citibank, you must trust them to be good stewards of your BTC / USD / Credit Card / Data / Products.

Why do you see gateways in ripple differently from a local bank, retaurant, amazon, etc?

Local banks are government insured.

oh

also highly regulated.

[justusranvier]

Think of Ripple, not as a currency, but as an accounting system and it will become much easier to understand.

[madmadmax]

2013.
People still taking Ripple seriously.
Lolwut.

[Theraty]

2013.
People still taking Ripple seriously.
Lolwut.

Ripple still a great way of transfering funds quickly.

[fenican]

I'm no big fan of Ripple but a faked screenshot (Takes about 8 seconds to edit the HTML) proves nothing

[Stampbit]

Ripple is what you'll feel when their servers get pwned.

[cdog]

Ripple is what you'll feel when their servers get pwned.

Exactly. I wouldnt leave a dime on this "network." If this latest incident shows us anything, its the extreme utility of Bitcoin's decentralization.

Beyond the fact that OpenCoin is a for profit private company with paid shills on BitcoinTalk, the currency (XRP) being issued and controlled by a few individuals and not mined, and the undeniable fact that interest free debt is worth less in real, quantifiable terms than the amounts it represents.

[🏰 TradeFortress 🏰]

I'm no big fan of Ripple but a faked screenshot (Takes about 8 seconds to edit the HTML) proves nothing

Screenshot is not faked, you can see 1 trillion BTC in the ledger.

[Sukrim]

Well, trust someone else for even just 1000 BTC from Bitstamp, I dare you!
Creating own IOUs is just like creating your own Bitcoin block chain - as long as nobody else uses it, you can just enjoy your numbers.

[misterbigg]

I'm no big fan of Ripple but a faked screenshot (Takes about 8 seconds to edit the HTML) proves nothing

The screenshot isn't fake. Anyone can create their own IOUs and issue them to anyone willing to hold them. In the screenshot, there are two accounts involved. One is the issuer and the other is the recipient. In order to achieve that balance the recipient first has to extend trust in the amount of a trillion BTC IOUs to the issuer. Then he logs into the issuer's account using the client and sends the recipient a trillion BTC IOUs.

The recipient will show a positive one trillion balance, while the issuer shows a negative one trillion BTC balance.

This isn't a particularly useful example because the "issuer" is not acting in good faith. Bitstamp, Weexchange, and soon more gateways exist which ARE acting in good faith (you can send and receive fiat and cryptocurrencies with Bitstamp).

If you want to see all of the gateways and how many IOUs they have each emitted, visit https://ripplecharts.com/

Here you can see Bitstamp has issued $213,772.71 of US dollar IOUs. This means they should have at least this much money on deposit in their business bank account.

[🏰 TradeFortress 🏰]

Now, let's say (heck, don't need to say, it is going to happen) the DHS investigates the 'gateways' for the same crime and they seize USD and BTC holdings.

All the users that kept currencies on the ripple network just lost money. Whereas if you had btc in your wallet...

[N12]

Correct. In the Ripple system, Ripples are the superior asset for their lack of counterparty risk. Furthermore, they are inherently valuable for maintaining account balances and conducting transactions.

Ripple is set up as a parasitic system that takes advantage of Bitcoiner's naivety advertising "decentralized exchanges" to then suck off the blood of its host and kill it with time. Because Bitcoiners don't understand the above, they believe Ripple will complement it, but in reality, it will only do so for a short amount of time until there is no more reason not to switch to Ripple's internal XRP currency.

[Sukrim]

...then you're in exactly the SAME situation as if MtGox (or BTC24, or BTC-e, or...) gets their wallets/accounts seized, hacked or anything else. This has happened multiple times and continues to happen.

Bitcoin is a system where you can store something that has 0 value and that is given any value beyond that by trading and user trust.
Ripple is a system where you can trade tokens of any value BUT you need to trust others with that. That's the same as with sending BTC to any other address that you don't have the private key to, for example an exchange, Satoshi's Dice, BitPay...

[abrkn]

-

[misterbigg]

Now, let's say (heck, don't need to say, it is going to happen) the DHS investigates the 'gateways' for the same crime and they seize USD and BTC holdings.All the users that kept currencies on the ripple network just lost money. Whereas if you had btc in your wallet...

Partially true. Not ALL the users, just the people who hold the gateway IOUs. This is no different than MtGox getting seized.

However with Ripple I expect that we will see larger, well capitalized existing businesses who are already fully licensed as money transmitters in the United States getting on board in a way that they are not getting on board with Bitcoin, for precisely the reason that Ripple is more compatible in interfacing with the traditional financial system.

As of now any business that wants to be serious about Bitcoin has to deal with one or more mickey-mouse exchanges. Even if you're going through Bit-pay, they are still dependent on MtGox. But with Ripple's distributed order books, plus the 'profound liquidity' creating perfect competition for market makers, transactions in Ripple do not have the single point of failure that we are seeing with Bitcoin.

[🏰 TradeFortress 🏰]

If you withdraw BTC from Justcoin to Ripple, we promise to exchange them for BTC in the future. How is this difficult to understand?

That isn't as good as actually having the bitcoins in your wallet. What if you get into a traffic accident? What if your government outlaws trades over X not using legal tender? Are you going to go to prison for that just so you uphold your promise?

There are many factors outside your control that makes it an incredibly stupid idea to store bit coins for a large amount of time in anywhere but your wallet.

[Coinseeker]

If you withdraw BTC from Justcoin to Ripple, we promise to exchange them for BTC in the future. How is this difficult to understand?

That isn't as good as actually having the bitcoins in your wallet. What if you get into a traffic accident? What if your government outlaws trades over X not using legal tender? Are you going to go to prison for that just so you uphold your promise?

There are many factors outside your control that makes it an incredibly stupid idea to store bit coins for a large amount of time in anywhere but your wallet.

What good are BTC's in your wallet, if they have little to no value because business' won't accept them?  No mass adoption, no Bitcoin.  It's real simple.  Ripple is the way to mass adoption that Bitcoin could never do on it's own.  Ripple equals legitimacy for Bitcoin.   Embrace it.

[oillio]

With Ripple (and OpenTransactions) you are required to trust an "issuer" with the underlying asset.  This is required for legacy assets like USD, but there is no technical reason that this is required for BTC.  All of the benefits of Ripple can be had with the current blockchain and a properly designed, limited trust, network of Ripple or OpenTransactions servers.
By "limited trust" I mean that your assets are in your control at all times.

Let me explain in more detail:
Currently, any "value" in your account is an IOU from a trusted issuer.  Say Alice Bank and Trust deals in USD.  You can transfer USD into Alice's account.  In exchange she will give you a USD IOU within the Ripple system.  You must trust that Alice will safely store all of the USD she has been given.  In theory, for every USD IOU that Alice has given out, there is 1 USD in their account.  Anyone should be able to give Alice one of her IOUs and be given USD in return.  If Alice is not careful with the underlying asset, all her IOUs can suddenly become worthless.  If you deal in Alice issued USD IOU's in Ripple, you are trusting Alice will remain solvent and a good actor.

Currently, the same process is used for BTC in Ripple.  Some issuer must give you an IOU that is theoretically backed by BTC.  This is not required.  Lets look at some examples of the advantages Ripple gives you:

Atomic transactions - You can transfer BTC IOU's for USD IOU's with no trust.  This is incredibly useful if you want to build a decentralized exchange (judging by recent events, we definitely want one of those).  You don't need to use BTC IOU's though.  It is possible to transfer USD IOU's for raw BTC.  You must risk your legacy assets with an issuer, you do not need to trust and issuer with your BTC.  Think of the Ripple network as an alt-blockchain.  We have strategies to do inter-chain atomic transfers (https://bitcointalk.org/index.php?topic=91843.0, https://en.bitcoin.it/wiki/Contracts#Example_5:_Trading_across_chains).
There is no technical reason why this cannot be done within Ripple.

Instant transactions - Ripple can do instant transactions only because you trust that a small number of Ripple servers will never attempt a double spend.  This is perfectly fine for old and well respected servers.  Double spends are easy to prove after the fact, and the servers will work together to keep eachother honest.  It would be exceedingly difficult to successfully perform a double spend, and if successful, that server will be banned for life and all the trust it had built will be lost.

However, we don't need to trust the Ripple servers (or issuers) with control of our assets to gain this ability.  We only need to give the servers the authority to certify our transactions.  This can be done with the block chain using multi-sig transactions.  Create an account where, to spend the coins, your personal signature is required as well as the signature of the server.  When you create a transaction, you send it to the server for certification.  The server checks to make sure you have not tried to spend these coins before, and if everything checks out, it signs our transaction and broadcasts it to the bitcoin network.  Any other bitcoin user can see this account is protected by the server and can choose to trust a transaction from this account with no confirmations.  As long as the other user trusts the server to certify against double spends, accepting the transaction is safe.
The server can never steal your coins but, if the server disappears, you will be left unable to spend your coins.  This is a better situation than we have now with trusting a Ripple issuer (if they disappear the IOU's are worthless as well).  There are technical solutions to this problem that would require only minor additions to the bitcoin protocol.

Micro payments - Some types of micro transactions can be handled on the bitcoin network now (https://en.bitcoin.it/wiki/Contracts#Example_7:_Rapidly-adjusted_.28micro.29payments_to_a_pre-determined_party).  These are transactions where you have an ongoing relationship with the other party.  This works if you will be spending between, say 0.05 BTC and 10 BTC, you just don't know exactly how much you will be spending at the beginning of the transaction.  This does not work if you will be sending only 0.0001 BTC to a given user (say buying access to news article).  A Ripple-like server network can help here as well by being an intermediary.

Lets say you are playing an MMORPG with an economy based on bitcoin.  You commonly want to send very small amounts of bitcoin to different users.  Each transaction may be 0.0001 BTC or so, but you tend to transact 0.1 BTC per week in the game.  The workflow in the link won't work well because you want to setup a large number of small transactions with a number of different users.  So, every player in the game sets up an account with the intermediary server.  You reserve 0.5 BTC for possible payments throughout the week.  The 0.5 BTC is not transfered to the server, it is just held in reserve so that you can't spend it elsewhere durring the week.  When you make a transaction with another player, you increase your payment to the server by 0.0001 BTC and the server does the same with the other player.

In this scenario, you are trusting 0.0001 BTC to the server.  They could take your coin and refuse to give it to the other player.  However, this will be easy for you and the other player to spot and you both would stop doing business with the server.  You would only trust the server with the largest micro transaction you conduct.  By definition, I don't expect micro transaction theft would be a very lucrative business for a Ripple server.

In conclusion.  Don't trust your BTC with an issuer.  Build better tools.  Ripple is great for lifting legacy assets into the modern bitcoin-like asset domain.  That isn't needed for BTC, it already has all the features you need.

[luv2drnkbr]

Uhhh, no shit Sherlock..??

[johnyj]

Ripple just sounds too complex to be widely accepted, I believe most of the people's IQ are capable of understanding the main benefit of bitcoin, but not ripple

Debt is slavery, this is another negative advertisement effort from ripple's IOU

[🏰 TradeFortress 🏰]

Uhhh, no shit Sherlock..??

Ask some Ripple users, I bet more than half don't know the difference, and it's OpenCoin Inc's fault for not stating it obvious enough.

[HurtK]

http://i.minus.com/jbdWLPldfrGiSr.PNG

Your balances on Ripple are not real. They don't exist, they never existed in the first place and will never exist. Some people honor their printed Ripple balances, but for how long?
...

mayby you should explain why you are paying thousands of dolars to people on this forum to say ripple is scam before we start taking you are saying seriously

[🏰 TradeFortress 🏰]

Because I think Ripple is a scam?

From analytics and research a lot of people are taking me & ripplescam.org seriously on top of those that hard already figured out ripple is a scam themselves

I can find you more quotes if you'd like:

Ripple is not a scam, but my contentions with Ripple are the following:

1) It is closed source. Yes it might open in the future, but until then, my contention stands. The point of cryptocurrencies is that you don't have to trust any single person or group. Right now, everyone using Ripple has to trust the team at OpenCoin.

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.

4) Issuance of XRP's is left to the whims of men. I do not care that OpenCoin will keep X number of XRP and thus get wealthy if it takes off. That's fine. My problem is that the XRP's which are supposed to be distributed have no planned distribution model. It's basically "we'll give it to our friends" approach. The problem here is that when and where they will be given is unknown, which causes considerable economic supply concerns. We all know how many Bitcoins there are in the wild, we have no idea with Ripple. 100 billion were created, and some number between several million and 99 billion is currently in circulation. To the extent that OpenCoin can issue, at whim, tranches of new XRP's into the market, it is no more attractive to me as a money system than any central bank.

5) The security model of Ripple is untested. This isn't OpenCoin's fault... it just means that Ripple has not been exposed to the wild in the same way that Bitcoin has for four years. Ripple needs to earn credibility with time in the wild. A number of people I've spoken with have grave concerns about the security model of Ripple, but we'll just have to wait and see. There's nothing wrong with experimentation.

In my opinion, Ripple is a pretty clever way to take the allure of the successful cryptocurrency system and leverage it into a proprietary project that will make the creators of the project rich. And that's fine, rich is good. But, I don't see that Ripple has any significant advantage over Bitcoin from a monetary perspective, and that's what will ultimately decide the success of the two projects.

Ripple's competitive advantage rests on the tenuous assertion that it transfers standard currencies, when it reality it doesn't do this. Ripple only really transfers XRP's, and in this way it is no better than Bitcoin, which transfers BTC's... yet Bitcoin is far more proven, widespread, and decentralized.

Ultimately, competition in cryptocurrency land is good. I have great respect for the OpenCoin developers, and Ripple is certainly not a scam, but I remain unconvinced of the system's ultimate merit.

The problem is if you go through a third party, you don't know how much debt they've created.  You can set a limit on how much you trust someone but there's no way to know how big of a leveraged position they're playing in aggregate.  In other words, there's a fundamental lack of transparency.  There's no point in Ripple if this is the case as we're back to the fundamental problem with current governments that we're trying to escape.

That's a problem that has to be addressed outside of Ripple itself. One possible solution is to only extend trust to people who you know, and who you trust to provide you with accurate information about their personal balance sheet.

There's stickies and posts all over this forum stating to, "trust no one."  Also, that's a tremendous amount to ask of someone.  Lets say I trust you up to a $50 IOU.  Are you willing to disclose to me all of your personal financial information for $50?  $100?  Most people will be reluctant to make this sort of information public and even if they do, validating their claims is difficult or expensive (third party audit).

The problem all goes back to peer-to-peer lending, which is what it seems Ripple is despite the duration of the loan.  Peer-to-peer lending is based on unsecured loans and there is ample evidence (including past projects of one of OpenCoin's founders) that this model does not work.  So the question to me then becomes what if we allow for secured IOUs?  So basically you can issue $10,000 in IOUs so long as you have $10,000 in collateral.  That works for me but the problem here is in a decentralized exchange, who holds the collateral? 

Right now what I see in Ripple is a decent business model but with some very large inherent flaws.  Maybe the creators have thought of a way to address these issues, but until I hear about it or understand more, I'm wary. 

Yeah, the main problem I see with Ripple is that it's probably a lot more centralized than it appears, even ignoring the issues with XRP distribution and source availability.

AFAICT, Ripple requires that your UNL:
- Contain entities that won't cooperate to defraud you.
- Contain entities that themselves have good UNLs, and the entities in their UNLs must have good UNLs, etc.
- Form a "good network". A UNL containing just your friends wouldn't form a good network because you wouldn't be linked well-enough to the rest of Ripple. Your section of the network might get into a situation where its idea of history will never converge with the rest of the network's idea of history.

As a result, I believe that Ripple can really only be used reliably and securely if everyone has pretty much the same UNL. It's probably OK to remove or add a handful of nodes to your UNL, but at least a big portion of it probably needs to remain the same between users. So this ends up being a distributed system, but not a decentralized one. Whoever decides who's on the canonical UNL has a lot of power over the network. Also, people generally can't be "full nodes" in Ripple and participate in the consensus process because full nodes need to be online all the time and in someone's UNL.

Despite this, I wouldn't be surprised to see Ripple grow over the next few years. A lot of people think that it's decentralized and safe, and if they use the default centralized Ripple configuration it probably will be safe and stable in the short-term, and it'll be a lot cheaper to transact using Ripple than with Bitcoin. But it won't actually be as decentralized or as robust as Bitcoin, and legal issues may bring the whole thing down eventually.

[lexxus]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

The government cannot seize debt.

+1. It's in the Ledger of Ripple network.

[Sukrim]

Looking at this page and your "facts", this still seems like an elaborate joke to me that I just don't get (yet)...

On the other hand, maybe you are really convinced that if you spot a scam, you need to invest money to make people aware of it?

[🏰 TradeFortress 🏰]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

The government cannot seize debt.

+1. It's in the Ledger of Ripple network.

I've already responded to this. The government can seize the backings behind the debt, which dramatically reduces the value to the point where it isn't worth anything.

Take a look at how BTC debt is going for.

[🏰 TradeFortress 🏰]

Looking at this page and your "facts", this still seems like an elaborate joke to me that I just don't get (yet)...

On the other hand, maybe you are really convinced that if you spot a scam, you need to invest money to make people aware of it?

Not a joke.

OpenCoin Inc has substantial capital in promoting a flawed scheme to get them rich to the detriment of the Bitcoin ecosystem. Make no mistake, OpenCoin Inc's goals are to kill bitcoin.

[lexxus]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

The government cannot seize debt.

+1. It's in the Ledger of Ripple network.

I've already responded to this. The government can seize the backings behind the debt, which dramatically reduces the value to the point where it isn't worth anything.

Take a look at how BTC debt is going for.

Ok. But what's the difference with BTC? I have 10 BTC and took 50 more from you as a debt (without Ripple). Now goverment breaks in my home, siezes my PC and puts me in jail for 10 years for "money laundering" or something. How this doesn't dramatically reduces the value of my debt to you?

[🏰 TradeFortress 🏰]

The government can and has seize and seized your "real" US dollars and "real" BTC from Mt. Gox as well.

The government cannot seize debt.

+1. It's in the Ledger of Ripple network.

I've already responded to this. The government can seize the backings behind the debt, which dramatically reduces the value to the point where it isn't worth anything.

Take a look at how BTC debt is going for.

Ok. But what's the difference with BTC? I have 10 BTC and took 50 more from you as a debt (without Ripple). Now goverment breaks in my home, siezes my PC and puts me in jail for 10 years for "money laundering" or something. How this doesn't dramatically reduces the value of my debt to you?

Ripple forces you to take debt, unless you use XRP which is premined.

The government can seize all BTCs an exchange has with a court order, because all the BTCs are kept in a centralized location. However, it is much more impractical for federal agents to seize decentralized storages.

[lexxus]

Ripple forces you to take debt, unless you use XRP which is premined.

The government can seize all BTCs an exchange has with a court order, because all the BTCs are kept in a centralized location. However, it is much more impractical for federal agents to seize decentralized storages.

But let's assume for a moment that OpenCoin will holds it's promises, delivers opensource server and we will see that it's truly decentralized. Then is there a problem with debt still there or not really?

The thing is that I don't see their incentives of failing to do what they promised. Yes, they hold 50bill. of XRP, but there is no way they can dump it and get rich quick. It's just to much to be absorbed in the open market unless Ripple network will become trustworthy and widely used. And this in turn requires opensource servers and decentralization.

[Micon]

I want this on record that I cannot understand Ripple.  I am not the smartest on these forums, I know that, but when I found bitcoin I keep researching the answers to questions I kept having.  I am still in that research process, 2+ yrs later:  and I'm still finding answers, and I'm never left hanging without an answer - I am always able to find it for myself or ask Freemoney to explain it to me.

With Ripple, I only generate questions, not answers.  How the pre-mine work?  what is an xrp, in reality? who got 50B xrps?  so they hold all the Ripple "debt" ?  so the initial friends of opencoin get most of the initial rights to issue trust (debt) ? - I watched that video about Gateways and pathways and became extremely confused.  I cannot find any answers.  How do I sell 1 btc for USD?  Is this possible with ripple?

It seems way too complex and not needed in any way. 

I have said this about litecoin / devcoin / feathercoin [lol] / the other alt-cryptos - there is 1 world-wide adopted crypto-currency, it's called bitcoin, and many many many businesses will be built on top of this amazing layer - PPl will try and copy this bitcoin model in many ways, trying to create another "base layer" for others to build on, but there is not a second bitcoin IMO.

After reading the whitepaper and their website, it seems to me that Ripple is trying to be bitcoin, or seems jealous of bitcoin - but again I admittedly do not understand it nor will take much more time to do so unless many of the bitcoin'ers that I respect start supporting it or at least explain it to me.

[redwraith]

I want this on record that I cannot understand Ripple.  I am not the smartest on these forums, I know that, but when I found bitcoin I keep researching the answers to questions I kept having.  I am still in that research process, 2+ yrs later:  and I'm still finding answers, and I'm never left hanging without an answer - I am always able to find it for myself or ask Freemoney to explain it to me.

With Ripple, I only generate questions, not answers.  How the pre-mine work?  what is an xrp, in reality? who got 50B xrps?  so they hold all the Ripple "debt" ?  so the initial friends of opencoin get most of the initial rights to issue trust (debt) ? - I watched that video about Gateways and pathways and became extremely confused.  I cannot find any answers.  How do I sell 1 btc for USD?  Is this possible with ripple?

It seems way too complex and not needed in any way. 

I have said this about litecoin / devcoin / feathercoin [lol] / the other alt-cryptos - there is 1 world-wide adopted crypto-currency, it's called bitcoin, and many many many businesses will be built on top of this amazing layer - PPl will try and copy this bitcoin model in many ways, trying to create another "base layer" for others to build on, but there is not a second bitcoin IMO.

After reading the whitepaper and their website, it seems to me that Ripple is trying to be bitcoin, or seems jealous of bitcoin - but again I admittedly do not understand it nor will take much more time to do so unless many of the bitcoin'ers that I respect start supporting it or at least explain it to me.

Ripple is not a "coin" and was never meant to be, and this is where it's detractors are willfully trying to mislead you.  XRP is a  common denominator liquidity provider inside the system that facilitates the transfer of differing currencies, including bitcoin.  It is used so that one can turn a currency into another one and is done automatically and seamlessly to make payments easy.  Any value gained by holding this internal liquidity provider is a side effect, but not the main purpose of ripple. 
   The whole "Oh, its premined!" argument is laughable, because it was never meant to be a mined cryptocurrency in the first place and this concept is something that some members of this forum cannot seem to grasp, therefore they attack, mislead and just basically lie because they're afraid of something unknown. 
Tradefortress has admitted he was a supporter of Ripple at one time, so he obviously saw something of value in it, but it seems mainly because it is not opensourced (the client is, BTW) he has decided to go into seek and destroy mode using basically nothing but speculation as attack vectors.  We'll see who's the fool in time.

[SamS]

I want this on record that I cannot understand Ripple.  I am not the smartest on these forums, I know that, but when I found bitcoin I keep researching the answers to questions I kept having.  I am still in that research process, 2+ yrs later:  and I'm still finding answers, and I'm never left hanging without an answer - I am always able to find it for myself or ask Freemoney to explain it to me.

With Ripple, I only generate questions, not answers.  How the pre-mine work?  what is an xrp, in reality? who got 50B xrps?  so they hold all the Ripple "debt" ?  so the initial friends of opencoin get most of the initial rights to issue trust (debt) ? - I watched that video about Gateways and pathways and became extremely confused.  I cannot find any answers.  How do I sell 1 btc for USD?  Is this possible with ripple?

It seems way too complex and not needed in any way.  

I have said this about litecoin / devcoin / feathercoin [lol] / the other alt-cryptos - there is 1 world-wide adopted crypto-currency, it's called bitcoin, and many many many businesses will be built on top of this amazing layer - PPl will try and copy this bitcoin model in many ways, trying to create another "base layer" for others to build on, but there is not a second bitcoin IMO.

After reading the whitepaper and their website, it seems to me that Ripple is trying to be bitcoin, or seems jealous of bitcoin - but again I admittedly do not understand it nor will take much more time to do so unless many of the bitcoin'ers that I respect start supporting it or at least explain it to me.

Ripple is not a "coin" and was never meant to be, and this is where it's detractors are willfully trying to mislead you. XRP is a  common denominator liquidity provider inside the system that facilitates the transfer of differing currencies, including bitcoin.  It is used so that one can turn a currency into another one and is done automatically and seamlessly to make payments easy.  Any value gained by holding this internal liquidity provider is a side effect, but not the main purpose of ripple.  
   The whole "Oh, its premined!" argument is laughable, because it was never meant to be a mined cryptocurrency in the first place and this concept is something that some members of this forum cannot seem to grasp, therefore they attack, mislead and just basically lie because they're afraid of something unknown.  
Tradefortress has admitted he was a supporter of Ripple at one time, so he obviously saw something of value in it, but it seems mainly because it is not opensourced (the client is, BTW) he has decided to go into seek and destroy mode using basically nothing but speculation as attack vectors.  We'll see who's the fool in time.

From the Ripple Website:

Ripple Credits
ripples (XRP)

Ripple contains a virtual currency, called ripples (XRP). These are used to pay the small fee required by the network for each transaction. They can also be sent between two accounts, converted into other currencies, or spent at venues that accept them.

And the link:
https://ripple.com/how-ripple-works/

[smoothie]

I guess for me the fact that ripple had a booth at Bitcoin 2013 speaks volumes.

Litecoin, Freicoin, name coin, terracoin etc. all did not ever have a booth at a conference.

Ripple is controlled by a single entity, OpenCoin Inc.

That basically sums it up on all of its flaws as a system.

Any system where I have to trust another human being to be the backing "alternative payment system" to traditional banking systems is not a system I want to use.

Trusting a single entity says it can be shut down implicitly by any governing body or regulators if they so choose.

Looks like a broken system to me.

[TTBit]

I want this on record that I cannot understand Ripple.  I am not the smartest on these forums, I know that, but when I found bitcoin I keep researching the answers to questions I kept having.  I am still in that research process, 2+ yrs later:  and I'm still finding answers, and I'm never left hanging without an answer - I am always able to find it for myself or ask Freemoney to explain it to me.

With Ripple, I only generate questions, not answers.  How the pre-mine work?  what is an xrp, in reality? who got 50B xrps?  so they hold all the Ripple "debt" ?  so the initial friends of opencoin get most of the initial rights to issue trust (debt) ? - I watched that video about Gateways and pathways and became extremely confused.  I cannot find any answers.  How do I sell 1 btc for USD?  Is this possible with ripple?

It seems way too complex and not needed in any way. 

I have said this about litecoin / devcoin / feathercoin [lol] / the other alt-cryptos - there is 1 world-wide adopted crypto-currency, it's called bitcoin, and many many many businesses will be built on top of this amazing layer - PPl will try and copy this bitcoin model in many ways, trying to create another "base layer" for others to build on, but there is not a second bitcoin IMO.

After reading the whitepaper and their website, it seems to me that Ripple is trying to be bitcoin, or seems jealous of bitcoin - but again I admittedly do not understand it nor will take much more time to do so unless many of the bitcoin'ers that I respect start supporting it or at least explain it to me.

You're over-thinking

Consider this - the US used to be on a min-ripple system, the gold standard. People routinely traded in their gold for paper IOUs and bank IOUs (and vise-versa). Ripple is a way to do this for all assets. We're getting lost in why people would want to turn in perfectly good assets for IOUs of said asset, but there can be advantages of doing so.

[themusicgod1]

Your balances on Ripple are not real. They don't exist, they never existed in the first place and will never exist. Some people honor their printed Ripple balances, but for how long?

How long will bitcoin be around?  Does it matter?  You could use the same argument against mtgox or any online service which allows you to deposit BTC into it.  "Sure mtgox lets you keep your BTC on their service...but for how long?"

If you have trust issues, that's your problem.  But if you trust someone for 1BTC, and that person trusts someone else for 1BTC, then that 1BTC of value can be transferred between you.   You do not need a "real" bitcoin in order to make a transaction happen, and that's the whole point.  Let the "real" bitcoins stay in a more secure location and let trust be allocated via 'lighter' ways.

What if the gateway loses all the bitcoins through a natural disaster and a poor back up strategy?

...

What if the Department of Homeland Security seizes the gateway's stored bitcoins, like what happened earlier?

The whole point of Ripple is that there will be *many* gateways and that a complete loss of one will only be a trivial problem.  Sure there's only a few right now, but there will be no barriers beyond legal ones(and good luck with that).

The answer is.. nothing changes. You never owned anything of existence in the first place.

Equivocation.  You owned something, and that something can be recreated.  Unlike real bitcoin a balance can be reinstated after a hard disk is lost.  Obviously not all gateways are going to do this but there's nothing preventing a balance of 1BTC from being put right back after a hard drive is taken.  As you've pointed out these are not bitcoins these are *promises* of bitcoins, which is a different thing but, when treated right, can function *just as much of a currency as bitcoins themselves*.

Ripple is a centralized network controlled by one company. It is closed source. You have to trust gateways that they actually pays out.

I would encourage people who believe this go check out the source code to villages.cc and other releases of Ripple.  It has been a continuing path of decentralization, ending at the next version which is not yet released but which TradeFortress seems to have some kind of an issue with.

you don't have to trust anyone

Which is fantastic, if you're living in a cabin in the woods and don't have any friends but can still order stuff at gunpoint off of the internet.

Unfortunately most of us *do* trust people and our trust is limited to fairly local trust networks, and mostly sits unused.

Ripple allows you to use that trust so you, along with your entire community can build wealth that is not available without it.

History repeats itself. Don't blindly follow Satoshi, but as someone who has created Bitcoin, you have to give their word a moment of thought.

Satoshi has NEVER commented on Ripple.  TradeFortress is building an argument based on misunderstandings of what Ripple is.

[CurbsideProphet]

The gray area with Ripple "debt" is what troubles me most.  Debt is granted with the expectation of being repaid.  However, in the Ripple system I'm not even sure there is legal recourse you could take against someone if they were to default on you.  As I mentioned earlier, we're already dealing with unsecured debt, which already leaves the creditor with very little recourse but on top of that, these IOU's or whatever you want to call them, are they even legally binding?  

Even in peer-to-peer lending, you had the ability to sick debt collectors on a defaulter, hurt their FICO score, etc.  This was done through the peer-to-peer medium (i.e. Prosper) and not done by the actual creditors.  Is Ripple going to play collection agency?  I don't think they will nor do I think they can, not in a decentralized exchange.  So again, everything falls back on a system that is predicated purely on trust.  And rather opaque trust at that.  I'd like to see a real world example where a PURE trust-based system has been successful on a grand scale.  It doesn't work.  People follow the rules because if you don't, there are consequences.  If you take away the consequences and expect everyone to play fairly, you're incredibly naive.

[superduh]

tradefortres, to be fair the community should wait for the source code to be released and then fully judge it.
it does sound like it has several pitfalls at the moment.
trading xrps (as in buying them) should probably be avoided unless you want to do high stakes gambling.

[themusicgod1]

Perhaps you were not aware that Bitcoin was released in an open source state? It's not unfair to expect the same thing from a competitor.

Ripple is NOT a bitcoin competitor.  It is a complement.

[themusicgod1]

There are many factors outside your control that makes it an incredibly stupid idea to store bit coins for a large amount of time in anywhere but your wallet.

There is a tradeoff.  Obviously it's not "just as good" -- but the fact that people you trust can spend your bitcoins with justcoin if they need it is valuable in and of itself.  I mean, you would want to give something of value to all those people you sent 1BTC to on the other thread right?  Having their ripple credit allow them to use justcoin would do just that.

[themusicgod1]

Ripple forces you to take debt, unless you use XRP which is premined.

The government can seize all BTCs an exchange has with a court order, because all the BTCs are kept in a centralized location. However, it is much more impractical for federal agents to seize decentralized storages.

Ripple forces you to do nothing.  Ripple allows you to take debt, if it makes sense for you to do so.  It also offers you the option of creating debt for others to take.  It as a system acknowledges that money is debt, regardless of whether the underlying asset is or not (such as bitcoin).  No one is forced to do anything with ripple, except that when you have created debt, your debt automatically is treated as something the system can work with and allocate in an efficient way, depending on the needs of the network.

When there are tens of thousands of Ripple exchanges, it will be very impractical to police any substantial portion of them.

[Coinseeker]

Thanks for making Ripple more popular than ever.  Caught one of your scam artists in the currency exchange too.  Hope you're planning to pay them in exchange for the reputation they just lost.  Really sad you are spending all this time and money just to mislead and scam people.  Why anyone is taking him serious, is beyond me.

You know, there's concerns and complaints that are justified, but this is just psychotic behavior at this point.  When the server source code is released, we'll all have the facts.  Continuing to scam people is just low by any human standards and I can't believe the moderators allow this nonsense to continue.  Or at least move this nonsense to the "Speculation" board, where the rest of the "speculation" is done, because that's all this is.  What because he bought ad space, he's legit?  Or the ad revenue superseded righteousness?  Disgraceful.

Now I'd say you should be ashamed but I know you're not.  You're enjoying ridding the Ripple bandwagon, just to improve your own profile popularity and boost your web traffic.  Cheap tricks that are not even remotely original.  That's all for now...please feel free to delete this post as you have the others.  Wouldn't want too many people calling you out in your own ridiculous thread.

For everyone else, wait and see.  Then hold Ripple's feet to the fire.  Ripple has made their claims and will be held accountable.  Reasonable people get that, ideological nut jobs do not and can not because they are not rational individuals.  They will seek to destroy anything they dislike, instead of just not using something they don't like.  Haters is the easiest word to describe them.  Haters.

[themusicgod1]

The gray area with Ripple "debt" is what troubles me most.  Debt is granted with the expectation of being repaid.  However, in the Ripple system I'm not even sure there is legal recourse you could take against someone if they were to default on you.

Which is why you should only loan what you are willing to lose.  The system will work with that.

 As I mentioned earlier, we're already dealing with unsecured debt, which already leaves the creditor with very little recourse but on top of that, these IOU's or whatever you want to call them, are they even legally binding?  

Depends if you make them so.  That is up to the people making the connection.  Some people will only offer credit if the conditions for the offer are legally binding.  Others, will trust unscrupulous people with 100BTC for no reason at all.  And lots will happen in between.

Even in peer-to-peer lending, you had the ability to sick debt collectors on a defaulter, hurt their FICO score, etc.

What is a FICO score?  It is an abstraction of whether or not a person is expected to pay their debt.   Ripple is an competitor system to FICO and it is reasonable to pay no attention to FICO but keep your Ripple connections in good standing, because quite frankly, FICO is an inhumane institution that does not have the interest of the people it manages at heart.

In the future if these institutions are useful, they will be implemented in a decentralized way.  But for the moment I wouldn't be worried about it, unless you're thinking of putting serious amounts of value into the Ripple network instead of just being a user.  In which case, you should probably be using Villages.cc, not OpenCoin's implementation(as it's not done yet and they could still yet have a jubilee before it's released).

Is Ripple going to play collection agency?

It doesn't have to.  It can keep debt alive effectively forever.

It doesn't work.  People follow the rules because if you don't, there are consequences.

Ripple does work. It might not work very well, but it does work.  I have conducted enough transactions, over a long enough time frame that debt cycles cancel.  With more users, it is more useful, but it already works, today, now.  As far as why people follow the 'rules', most people follow the rules because most people follow the rules.  Rule following has inertia -- you only need to train someone to do something in a certain way and they will resist doing things otherwise.

If you take away the consequences and expect everyone to play fairly, you're incredibly naive.

I expect people to cooperate.  Ripple allows for cooperation on scales that have never been dreamed of before, without violence, or state force.  If people choose not to cooperate that is OK -- scammers will always exist, but their effects can be minimized via spreading risk out.

[misterbigg]

Ripple is an competitor system to FICO

I wouldn't be so sure about that. I think people are overplaying the community / self-issued credit thing. While the person to person "web of credit" sounds appealing there are practical problems with its implementation.

Almost all debt in the Ripple system will come from gateways. Even the word "debt" is misleading because when we think of debt we think of consumer debts like mortgages. But gateway debt and debt in Ripple in general is not like those things.

Debt in Ripple is more like what happens when you deposit money into MtGox. The exchange "owes" you US dollars, which can be redeemed by wire transfer, etc...

[SamS]

Ripple is an competitor system to FICO

I wouldn't be so sure about that. I think people are overplaying the community / self-issued credit thing. While the person to person "web of credit" sounds appealing there are practical problems with its implementation.

Almost all debt in the Ripple system will come from gateways. Even the word "debt" is misleading because when we think of debt we think of consumer debts like mortgages. But gateway debt and debt in Ripple in general is not like those things.

Debt in Ripple is more like what happens when you deposit money into MtGox. The exchange "owes" you US dollars, which can be redeemed by wire transfer, etc...

I think that's likely to be true. But then I wonder why bother at all then? The current system(s) already transfers funds for a fee. If the upside of Ripple is just modestly cheaper transaction fees -- a questionable assumption from what I have read -- I don't see the big deal.

[CurbsideProphet]

Depends if you make them so.  That is up to the people making the connection.  Some people will only offer credit if the conditions for the offer are legally binding.  Others, will trust unscrupulous people with 100BTC for no reason at all.  And lots will happen in between.

How would you go about accomplishing this via the Ripple system?  How do I set the condition that any credit offered is legally binding?

It doesn't have to.  It can keep debt alive effectively forever.

Yes, you can keep it "alive" forever but will it be collectible?  That's all I care about.

Ripple does work. It might not work very well, but it does work.

I agree.  However, I'd like to see it work well.  I'm willing to wait and see but I'm still voicing my concerns.

I expect people to cooperate.  Ripple allows for cooperation on scales that have never been dreamed of before, without violence, or state force.  If people choose not to cooperate that is OK -- scammers will always exist, but their effects can be minimized via spreading risk out.

I thought like this at one time too.  The reality of Prosper brought me out of this fantasy.  You cannot spread out risk when risk cannot be effectively measured.  This all goes back to transparency, something Ripple lacks.  Yes, on a very small scale Ripple might work if you only trust your buddy or someone you know very well, I'm talking about Ripple on a much larger scale.  This is where I see the business model start to fall apart.

[themusicgod1]

Depends if you make them so.  That is up to the people making the connection.  Some people will only offer credit if the conditions for the offer are legally binding.  Others, will trust unscrupulous people with 100BTC for no reason at all.  And lots will happen in between.

How would you go about accomplishing this via the Ripple system?  How do I set the condition that any credit offered is legally binding?

This is outside of the scope of Ripple as Ripple itself but it is perfectly reasonable, when offering credit to someone, to demand something in return for it, like collateral or signing a document or something.

but will it be collectible?  That's all I care about.

I won't even justify this with an answer unless you clarify that you care about other people as human beings, and their interests and rights and human dignity.

I thought like this at one time too.  The reality of Prosper brought me out of this fantasy.  You cannot spread out risk when risk cannot be effectively measured.

The difference between Prosper and Ripple is that Prosper is about profit.  It isn't about getting to learn about how people around you use their money, and helping them, as a group, use it more effectively.  Transparency is good, and it should be something that comes along with any credit, really, as much as possible.

I'm talking about Ripple on a much larger scale

But the thing is -- all you need is the trust between individuals.  In practice, that is all all of our societies run on, as is, really.  Trust aggregates and scales in practice.

[themusicgod1]

Ripple is an competitor system to FICO

I wouldn't be so sure about that. I think people are overplaying the community / self-issued credit thing. While the person to person "web of credit" sounds appealing there are practical problems with its implementation.

Almost all debt in the Ripple system will come from gateways. Even the word "debt" is misleading because when we think of debt we think of consumer debts like mortgages. But gateway debt and debt in Ripple in general is not like those things.

Debt in Ripple is more like what happens when you deposit money into MtGox. The exchange "owes" you US dollars, which can be redeemed by wire transfer, etc...

We are not overplaying it because *that is the whole point of Ripple*.  The amount of trust between people dwarfs and will continue to dwarf by orders of magnitude any trust to gateways -- though it remains to be seen how much of that trust will actually make its way onto the ledger.  I think I have ~200$ in gateways, and about ~16,000$ in people.  That's about a 80:1 ratio and I would expect others to have similar ratios, once they get that this is a possible and useful thing.

[misterbigg]

I want this on record that I cannot understand Ripple. With Ripple, I only generate questions, not answers.

Micon it's nice to see your questions and legitimate complaints expressed in a civil fashion. I totally agree with you that Ripple is hard to understand at first. Perhaps the easiest way to understand Ripple is to recognize the similar ways that you already accept IOUs and currencies. I'll use MtGox as an example:

Imagine you wire some money over to MtGox because you want to buy Bitcoins. A few days after you wire the money, the balance appears in your MtGox account and is visible when you log into their site. Now you look at the order book and decide to place a few orders. Eventually they execute and you are left with both a USD balance and now a BTC balance. Both of these balances are visible on the MtGox website. At this point you decide that you would like to have your dollars and Bitcoins so you go to their Withdrawal page and first ask them to wire you the remaining USD balance to your bank account, and then have them send your Bitcoin balance to your wallet address. An hour or two later the bitcoins appear in your wallet, and hopefully a few days later your bank account shows the dollars.

Ripple functions almost identically to this example! Using Ripple to perform these actions would look like this:

You choose a Ripple gateway that you trust (right now Bitstamp is the largest gateway but that will change as more appear). You open an account at the gateway then you wire some dollars over to the gateway. A few days later the balance appears in your gateway account when you log into their site (bitstamp.net for example). Now you "withdraw" the dollar balance into Ripple. Logging into your Ripple wallet client (http://ripple.com/client) you will see that you hold a USD balance from your gateway. You look into the BTC/USD order books inside the Ripple client and place a few orders. Shortly after, they execute and you are left with a BTC and USD balance showing. Now you decide that you want to cash out so you "Deposit" the BTC and USD from Ripple back into your gateway account. You log into your gateway account through their website and you can see your BTC and USD balance. You go to the Withdrawal page at the gateway and first ask them to wire you the remaining USD balance, and then have them send your Bitcoin balance to your wallet address. An hour or two later the bitcoins appear in your wallet, and hopefully a few days later your bank account shows the dollars.

What's the difference between this and MtGox? Imagine if you had a $100 balance at MtGox and you could transfer that balance not just to any other MtGox user but to any user in general. That's the power of Ripple! If you are holding IOUs from a gateway, Ripple's decentralized system allows you to send those IOUs to anyone who will accept them in a cryptographically secure manner. You can use those IOUs to trade in the built-in distributed order books to receive BTC IOUs, exchange them for other currencies like Euro IOUs, or anything.

As long as you trust the gateway to redeem those IOUs back into whatever they are supposed to represent (like dollars or Bitcoins), then the balances in the Ripple system are as good as the money they represent.

Can you lose money? Yes. You don't hold actual Bitcoins in your Ripple wallet, you hold a gateway's promise to pay bitcoins later. If the gateway defaults you can lose up to the entire amount of their debt that you hold. This is no different than having a BTC and/or USD balance at MtGox, and they freeze your account or otherwise refuse to redeem your balance.

A lot of bitcoiners might complain that having to trust a gateway is the very problem that Bitcoin is intended to solve, and to a certain extent they are right. However, this overlooks the fact that it is impossible to completely avoid interacting with the fiat money system. Rather than thumbing its nose at the banking system and asking for a fight, Ripple plays nicely with it to the extent that it can. It provides tremendous functionality. You do have to find a reputable gateway for IOUs to have value.

How the pre-mine work?  what is an xrp, in reality? who got 50B xrps?  so they hold all the Ripple "debt" ?

"XRP" (often confusing called "Ripples") is a crypto-currency that is built into the Ripple system. Like bitcoins  there can only ever be 100 billion of them, and they are divisible to many decimal places. Unlike bitcoins, they are not mined. Instead, the "genesis ledger" (this is similar to Bitcoin's genesis block) was created with 100 billion XRPs sitting inside an account whose private key is owned by the founders of the Ripple system.

Ripple uses XRPs to pay for transaction fees. The XRPs used to pay for transactions are destroyed (this might seem counter intuitive but trust me its the right thing to do). XRPs are also held as reserves in your account to allow you to do certain things. For example, in order to even create a Ripple account you need 50 XRPs to sit in there. XRPs used as reserves cannot be sent to any other account, but they can be used for transaction fees. Essentially once the XRPs are used as reserves they are "stuck" or "sequestered", unless the network decides reserve requirements should be lowered because they are too expensive.

OpenCoin states that 20 billion XRP is held by the founders of the software, with the other 80 billion going to OpenCoin. Out of this 80 billion, a full 50 billion will be given away to promote the usage of the system (in other words, to make new account creation essentially free for a time). The remaining 30 billion will be held and sold from time to time by OpenCoin in order to fund its operations. Holding and selling XRP is the only way OpenCoin can make money.

Because XRPs are sequestered as reserves, OpenCoin can give away a lot of them without causing the price to drop, since reserves cannot be sent to other people or used to buy IOUs.

so the initial friends of opencoin get most of the initial rights to issue trust (debt) ?

XRPs are different from IOUs. XRPs are not debt. Anyone with a Ripple account can issue IOUs. The trick is getting people to accept your IOUs. Realistically speaking, only IOUs from a gateway will have any significant value or liquidity. Gateways are corporations with legal standing, and should be licensed and fully regulated in their jurisdiction. This is why you can hopefully trust their IOUs. Gateways also need to hold customers' funds on deposit.

It seems Bitstamp and WeExchange were very interested in operating as gateways early on, while other exchanges were not. I see no evidence that OpenCoin is restricting companies who want to get on board. Quite the opposite, it would seem to be in their best interest to have as many gateways as possible. The more gateways, the better, because there are that many more ways to get money into and out of the system. Compare this with Bitcoin, where MtGox is the bottleneck and lifeblood of almost all the Bitcoin businesses. If MtGox was to close down it would disrupt Bitcoin significantly for a while. With Ripple, having many gateways allows many points of entry; Once you have deposited funds in a gateway they can be used anywhere, not just in MtGox' order book.

How do I sell 1 btc for USD?  Is this possible with ripple?

Yes it is possible:

1) Open an account at a gateway (Bitstamp.net for example)
2) Deposit your BTC at the gateway
3) Withdraw the BTC as a BTC IOU in Ripple
4) In the Ripple client send a payment to yourself in USD
    The client will show you the price, you can accept it or cancel
5) Deposit the USD back into the gateway
6) Withdraw the USD from the gateway to your bank account

It seems way too complex and not needed in any way.

Complex yes. And very much needed!

there is not a second bitcoin IMO...it seems to me that Ripple is trying to be bitcoin

Ripple is definitely not trying to be Bitcoin. Instead, it is trying to take concepts that we are already familiar with like exchanges holding our fiat money and cryptocurrency for us, and make it more explicit and functional using a decentralized cryptographically secure accounting system.

[misterbigg]

We are not overplaying it because *that is the whole point of Ripple*.  The amount of trust between people dwarfs and will continue to dwarf by orders of magnitude any trust to gateways -- though it remains to be seen how much of that trust will actually make its way onto the ledger.

That might have been the whole point of the original Ripple by Fugger, but that never really scaled up or addressed existing problems like having a distributed exchange. The new Ripple certainly incorporates the "web of credit" in the spirit of the original but as you said, it remains to be seen whether this will work or not.

On the other hand, we know that the gateway model will work. If person to person trust actually becomes viable it would be amazing because then we can handle fiat almost as well as the way that Bitcoins are handled (decentralized). But its not so clear to me that it will work.

[traderv]

Misterbigg, thank you for this very clear explanation. I now comprehend the process quite well. Kudos to you.

[justusranvier]

I'm going to have to disagree with misterbigg about the future of Ripple and the advisability in speculating in XRP although having just met him at the conference I will say I enjoyed talking to him.

Ripple is neither a currency nor is it a payment system; it's an accounting system. You can use it as one of the components needed to build a multi-currency payment system but by itself Ripple is not a complete solution. Gateways as Opencoin has described them don't interest me much due to legal liabilities issues.  I can see how a P2P network of people with relative high levels of financial education could use Ripple to pool their fiat liquidity and really make the transition between Bitcoin and legacy currencies easier, but in a future scenario where Bitcoin is a mainstream currency I don't know if Ripple will be needed.

[Rampion]

These OpenCoin guys are geniuses. They create a system that reproduces the old banking system in a distributed way - you do not hold any real asset, only debt, with all the negative incentives that this produces (and which Bitcoin was designed to address).

Then, they launch their own cryptocurrency, which is the only real asset you can hold inside the Ripple system - so the logical step for users is to value Ripples more, as it is "real" money and not "paper money" or debt.

Anyhow, I see many flaws in Ripple. Its complicated, and gateways will for sure abuse the trust they were given. People will think this is Facebook, they will start to trust each other, and as soon as they realize they can create money out of thin air... Well, you can imagine what will happen. And we all know that debt based systems collapse.

Again: Ripple is everything Bitcoin is against. Bitcoin was designed to make you free and independent. With Ripple your money is still in the hands of your "trusted gateways" and their fractional reserverve.

[themusicgod1]

Again: Ripple is everything Bitcoin is against. Bitcoin was designed to make you free and independent. With Ripple your money is still in the hands of your "trusted gateways" and their fractional reserverve.

Gateways are only necessary because Ripple is going to have to coexist with fiat currencies for a long time.  It's a hard sell to suggest that we can just up and do away with fiat currency entirely before too long -- in the meanwhile, the more of your value you can get out of the Gateways and into helping people, the better.

[greBit]

Kudos to Misterbigg, a very nice explanation of Ripple.

As I understand it, using XRP is the only way to settle debts without trusting an IOU issuer. I cannot send Bitcoins directly to someone, I have to entrust a third party to trade my Bitcoin for a transferable IOU.

Is it technically feasible to have XRP and Bitcoin as assets in the system?

So a bitcoin could be universally trusted as an asset in the same way as XRP?

Or are there technical reasons why this would not work?

[discobean]

I'm also trying to get my head around it.  If somebody could please explain what would happen in this scenario:
1. 1000 people deposit $1AUD into Exchange A, they then move it to Ripple, and 'buy' BTC or whatever currency
2. Exchange A, now has $1000AUD in their account to maintain their IOUs for their Ripple account
3. Exchange B opens its doors, and they too have AUD, with cheap withdraw fees to AUD banks
4. Everybody sells their BTC and withdraws their money from Ripple to Exchange B
5. Everybody requests Exchange B to withdraw their funds to their bank.

So my questions are:
1. Where does Exchange B get their money to pay all the withdraws, if they have $0AUD balance?
2. Is this scenario even possible?

[mmeijeri]

1. Where does Exchange B get their money to pay all the withdraws, if they have $0AUD balance?

Exchanges don't have to redeem other exchanges' IOUs, though they might choose to redeem limited amounts of the more trustworthy ones at a discount.

[hathmill]

would pirate have loved ripple 

[Rampion]

would pirate have loved ripple  

Of course, I can foresee some epic scams based on Ripple. Just check this thread: https://bitcointalk.org/index.php?topic=145896.0

People is just granting trust to anonymous people on the interwebz like there's no tomorrow. Yes, this is just for "test" purposes. But if the system does not change radically, the incentive to build a huge network of trust is too big for scammers. They will think about this as a money Facebook, with the particularity that being trusted allows you to create money out of thin air (which is actually the business model of the "old" banking system). Thus, we will see huge scams, spirals of debt collapsing, and the only thing reliable in the Ripple system will be XRP's - anyhow, we all knew that fiat money is shit, and that's why we love Bitcoin - isn't it?

I'm testing Ripple hard, and finally I understand it. What I really can't get is how it's possible that all XRP's have been premined and controlled by Opencoin. That's a joke. Do we know how many XRP's have been "given away" until now? How many Ripples will OpenCoin hold to? 50 billion? 30 billion? That's some crazy shit if you ask me. They just removed one of the best things in Bitcoin - mining - and they introduced the very first characteristic of a scam coin - premining.

[cypherdoc]

i had a direct conversation with Chris Larson after the Alt chain session.

during the session he claimed that Ripple has no counterparty risk.  the obvious thing that popped into my mind immediately was this ability for OpenCoin to print more XRP's.

so i approached him at the end and mentioned that claim and then gave him the example of how many of us feel the USD has counterparty risk in the form of inflation via the Fed.  he nodded in agreement and then i asked him why wouldn't XRP fall into that same category.

he immediately retorted that OpenCoin will not ever print anymore XRP once the code is released and that it would be hard coded that way.

i then pointed out that if that was true then the value of the remaining XRP's in circulation would certainly go up in value over time with OpenCoin having the most to gain since they held the largest share.  he nodded in agreement and said that was their business model.

knowing those facts, i should've pushed him to wall by asking the following questions but i didn't want to embarrass him too much as he seemed already very uncomfortable:

1.  if XRP's are being destroyed with every tx and there is only ever going to be the fixed supply, then what happens to Ripple when all the XRP have been destroyed?
2.  as the value of XRP gets pushed higher and higher via destruction, won't tx fees eventually become so huge as to be uneconomical for funding tx's?
3.  won't OpenCoin eventually perform a dump of their XRP holdings to cash out? (he acknowledged that)

Larson can't have it both ways.  if he allows XRP's to eventually all be destroyed, the system will fail.  if he changes the rules and allows more XRP's to be printed then effectively he is no better than the Fed.

they are caught in a contradiction.

[ahbritto]

he immediately retorted that OpenCoin will not ever print anymore XRP once the code is released and that it would be hard coded that way.

i then pointed out that if that was true then the value of the remaining XRP's in circulation would certainly go up in value over time with OpenCoin having the most to gain since they held the largest share.  he nodded in agreement and said that was their business model.

To be clear, OpenCoin does not promote XRP as investment. OpenCoin hopes XRP goes up in value to fund the business.

1.  if XRP's are being destroyed with every tx and there is only ever going to be the fixed supply, then what happens to Ripple when all the XRP have been destroyed?

People lose XRP by the thousands (lost password or other error). The loss due to transaction fees is insignificant. The world need not worry about running out of XRP, because, XRP is divisible to 6 digits which can be increased to more digits.

2.  as the value of XRP gets pushed higher and higher via destruction, won't tx fees eventually become so huge as to be uneconomical for funding tx's?

Transaction fees are currently 10 drops (1,000,000 drops = 1 XRP). The transaction fee can be adjusted so 1 drop = lots of transactions if needed.

3.  won't OpenCoin eventually perform a dump of their XRP holdings to cash out? (he acknowledged that)

There must of have been some misunderstanding.  It makes no sense.  The company is "dumping" (selling) XRP to fund the company. As far as I know, there are no plans for OpenCoin to dump in bulk (as you imply).

[CurbsideProphet]

This is outside of the scope of Ripple as Ripple itself but it is perfectly reasonable, when offering credit to someone, to demand something in return for it, like collateral or signing a document or something.

Of course it's reasonable, but it's not practical in the Ripple system.  In fact it's not possible.  It's a pure trust-based system.  You would need to go outside of the Ripple system to make this transfer of debt legally binding.   

I won't even justify this with an answer unless you clarify that you care about other people as human beings, and their interests and rights and human dignity.

That was an odd tangent.  You said debt can last forever, and I said, I don't care if debt can last forever, I care if debt is collectible.  What's the use of debt with no maturity date?  Because I don't want to extend evergreen loans to people, I somehow no longer care about human rights?  Give me a break.

The difference between Prosper and Ripple is that Prosper is about profit.  It isn't about getting to learn about how people around you use their money, and helping them, as a group, use it more effectively.  Transparency is good, and it should be something that comes along with any credit, really, as much as possible.

Uh, no.  OpenCoin will make money by selling XRP.  They're hoping that Ripple will become widely adopted thus increasing the value of XRP, which they hold the lion's share, which they will then sell on the open market.  Stop making it look like this is a charity or non-profit organization.  They're in it to make money.  There's nothing wrong with that, but cut the Kumbaya bullshit.

[bbit]

He has a point.

[misterbigg]

OpenCoin will make money by selling XRP.  They're hoping that Ripple will become widely adopted thus increasing the value of XRP, which they hold the lion's share, which they will then sell on the open market.  Stop making it look like this is a charity or non-profit organization.  They're in it to make money.  There's nothing wrong with that, but cut the Kumbaya bullshit.

Fully agree lol

[CurbsideProphet]

But the thing is -- all you need is the trust between individuals.  In practice, that is all all of our societies run on, as is, really.  Trust aggregates and scales in practice.

No, a society without rules and consequences result in anarchy.  There is no society that runs solely on trust.

We all know Chris Larsen was co-founder of Prosper and is now a co-founder of OpenCoin.  We've been through the whole trust experiment before, it does not work. 

First, I think we need to agree that trust is broken when a debtor does not repay a creditor.  In this case, trust is broken when one does not fulfill their obligation to the other.  If that is the case, your utopian society should have a minimal amount of people defaulting on their loans.

Here's reality, a list of Prosper loans while Mr. Larsen headed the company that are late and/or defaulted:

http://www.wiseclerk.com/reporting-a-late_loans-l-late_loans-m-all.html

[nameface]

First, I think we need to agree that trust is broken when a debtor does not repay a creditor.  In this case, trust is broken when one does not fulfill their obligation to the other.  If that is the case, your utopian society should have a minimal amount of people defaulting on their loans.

People will default. But what does that really matter when we all have the freedom to choose to whom we extend trust?

[Rampion]

First, I think we need to agree that trust is broken when a debtor does not repay a creditor.  In this case, trust is broken when one does not fulfill their obligation to the other.  If that is the case, your utopian society should have a minimal amount of people defaulting on their loans.

People will default. But what does that really matter when we all have the freedom to choose to whom we extend trust?

You may well end up trusting a gateway which is exposed to bad debt, and you will see is the same problem you can have in meatspace, as many of the US and EUR banks are a) surviving covering holes with more debt or b) defaulting

And when the debt chain collapse the guys who played magic tricks with others people money are rich for life, while the average joe pay the bills

BTW, americans should know something about rescuing banks with their money

And that's one of the many reasons why BTC was created

[CurbsideProphet]

First, I think we need to agree that trust is broken when a debtor does not repay a creditor.  In this case, trust is broken when one does not fulfill their obligation to the other.  If that is the case, your utopian society should have a minimal amount of people defaulting on their loans.

People will default. But what does that really matter when we all have the freedom to choose to whom we extend trust?

You can only choose who you directly extend trust to.  You have no choice in who or what your trusted Ripple group does.  Do you know why the derivatives market almost collapsed the financial markets?  It wasn't because of a breach of trust between A and B.  It was because A and B entered into an agreement but parties C, D, E, and F also made side bets on that agreement.  It becomes an incredibly complicated web to untangle and people can be easily deceived as TradeFortress pointed out rather easily with his BTC IOU giveaway.

I'm not saying Ripple is a scam or doomed to fail, all I'm saying is I still see some very fundamental issues with their business model, especially knowing the history of their founders.  Ripple is still in beta so I'm willing to see what they have in store but I feel its better to bring these issues to light now so either they can be addressed or people can be aware.  

[nameface]

Good points in above two posts ^

But in Ripple there is so much more transparency then in the current banking system. Isn't it a whole new ballgame when we can see what's going on?

[Frozenlock]

Good points in above two posts ^

But in Ripple there is so much more transparency then in the current banking system. Isn't it a whole new ballgame when we can see what's going on?

I send you 100 ripple-BTC. Can you tell if I really have the 100 BTC?

[cypherdoc]

I'm not saying Ripple is a scam or doomed to fail, all I'm saying is I still see some very fundamental issues with their business model, especially knowing the history of their founders.  

please explain further.

i understand Chris Larson founded Prosper.  how well did that go?

[CurbsideProphet]

I'm not saying Ripple is a scam or doomed to fail, all I'm saying is I still see some very fundamental issues with their business model, especially knowing the history of their founders.  

please explain further.

i understand Chris Larson founded Prosper.  how well did that go?

Correct.  Chris Larsen was co-founder of Prosper and I was able to meet him in the very early stages of Prosper's launch (commonly known as Prosper 1.0).  Since then, Prosper has undergone a major transformation so I cannot speak about its current incarnation but from what I can gather, the new Prosper is even less transparent than the original.  With the original Prosper you were able to get much more information out of borrowers.

Despite all this information, it was more or less a massive failure for lenders due to the sheer number of defaults by borrowers.  Even with a diversified portfolio, a small number of defaults will kill your ROI.  I've posted this elsewhere but this is a list of default loans (no longer updated but it proves my point):

http://www.wiseclerk.com/reporting-a-late_loans-l-late_loans-m-all.html

As you can see, everyone from an "A" rated borrower to a "HR (high risk)" borrower would default.  This was partly due to the fact that loans were unsecured.  The best recourse a creditor had was to allow Prosper to send a collection agency against the borrower with next to no success.  And of course if they filed bankruptcy, that was the end of it.  But these were legally binding loans with terms and conditions including maturity date.

Enter Ripple.  To me, Ripple is founded on the same failed business model, peer-to-peer lending/trust.  Except now, there is even less transparency and legal recourse.  IOUs are essentially unenforceable and as we have seen with TradeFortress, without terms of repayment.  Ripple does not shy away from the fact that people will default but like Prosper, touts diversification as a way to mitigate risk. However, Prosper has already shown that it is difficult to mitigate risk with diversification because in these types of extension of credit, risk cannot be properly assessed.  Yes, if you trust one or two reputable gateways it's essentially the same counterparty risk as trusting Gox, Coinbase, etc.  However, their business model appears to be on a much grander scale than each person trusting only one of two gateways.  As Ripple scales, I see an increase in risk that is not mitigated by potential reward.

As I mentioned, this is my personal apprehension and my personal concerns due to my past experiences with Chris Larsen.  At this point in time, I do not see sufficient evidence that he has learned from his mistakes with Prosper.  Given that Ripple is still in beta, I believe he deserves the benefit of the doubt, however, at the same time, he has not earned my trust yet.

[mmeijeri]

I still don't understand why that matters if all you want to do is to buy or sell BTC, rather than trying to lend money.

[Rampion]

I still don't understand why that matters if all you want to do is to buy or sell BTC, rather than trying to lend money.

You will need to trust gateways because you are not buying or selling BTC, you are buying or selling BTC IOUs

If your gateway is exposed to bad debt, it can default. Everybody can default in Ripple, because everything you are exchanging is debt (except XRPs) - pretty much like in the "normal" banking system

[mmeijeri]

Of course, but that involves small amounts for short periods.

[Rampion]

Of course, but that involves small amounts for short periods.

It can involve small amounts for short periods or big amounts for long periods. It really depends on how you use it.

I guess we all agree that trusting a third party with too much money for too long is a big problem which is very difficult to address when dealing with fiat money. And that's why we have Bitcoin

I don't see how XRP is a solution to the trust problem, as it is a premined cryptocurrency controlled exclusively by a private corporation.

[Sukrim]

Good points in above two posts ^

But in Ripple there is so much more transparency then in the current banking system. Isn't it a whole new ballgame when we can see what's going on?

I send you 100 ripple-BTC. Can you tell if I really have the 100 BTC?

If they are issued by you I don't accept them, if they are issued by Bitstamp I do. You will either have to find someone who trades your own BTC (or any other of the currencies in your account) to BitstampBTC directly or via a path or you won't be able to send me any. If there is a path I don't care if you have 100 BTC, 1 BTC or 1 million BTC - I only care that Bitstamp will pay me upon request as these will be the only BTC I can receive.

To receive 100 BTC issued by you, I have to trust you for that amount and I won't do that.

Feel free to send me 1 10 BTC on Ripple right now, my address is in the giveaway thread.

[🏰 TradeFortress 🏰]

Good points in above two posts ^

But in Ripple there is so much more transparency then in the current banking system. Isn't it a whole new ballgame when we can see what's going on?

I send you 100 ripple-BTC. Can you tell if I really have the 100 BTC?

If they are issued by you I don't accept them, if they are issued by Bitstamp I do. You will either have to find someone who trades your own BTC (or any other of the currencies in your account) to BitstampBTC directly or via a path or you won't be able to send me any. If there is a path I don't care if you have 100 BTC, 1 BTC or 1 million BTC - I only care that Bitstamp will pay me upon request as these will be the only BTC I can receive.

To receive 100 BTC issued by you, I have to trust you for that amount and I won't do that.

Feel free to send me 1 10 BTC on Ripple right now, my address is in the giveaway thread.

LOL I can't wait in a couple of months till Bitstamp shuts down ala Bitcoin24, Bitcoinica, BitcoinMarket, Bitmarket.eu, Aqoin, ExchangeBitCoins.com, Bitcoin7, TradeHill, btcex.com, Crypto X Change ..

I have to say you are a retard if you keep your bitcoins in a third party service instead of a private key.

[Sukrim]

I have to say you are a retard if you keep your bitcoins in a third party service instead of a private key.

From your signature:
http://coinlenders.com/
https://bitfunder.com/
http://coinchat.org/
https://bitmillions.com/

All these services only issue IOUs, never pay directly to your private key (thankfully, otherwise there would be a lot of bitdust and spam in the block chain).

I can and did choose how much I am willing to risk with Bitstamp as you can do implicitly by allowing to let your balances on these services grow to a certain amount before you withdraw. You just have a bit more manual work and less control over the amount of debt you are allowing these services to have towards you (e.g. with Ripple you could limit your exposure towards Bitfunder to 5 BTC max., everything above that gets converted to some other IOUs, with Bitfunder currently you have to take as much debt as they give you).

[🏰 TradeFortress 🏰]

I have to say you are a retard if you keep your bitcoins in a third party service instead of a private key.

From your signature:
http://coinlenders.com/
https://bitfunder.com/
http://coinchat.org/
https://bitmillions.com/

All these services only issue IOUs, never pay directly to your private key (thankfully, otherwise there would be a lot of bitdust and spam in the block chain).

I can and did choose how much I am willing to risk with Bitstamp as you can do implicitly by allowing to let your balances on these services grow to a certain amount before you withdraw. You just have a bit more manual work and less control over the amount of debt you are allowing these services to have towards you (e.g. with Ripple you could limit your exposure towards Bitfunder to 5 BTC max., everything above that gets converted to some other IOUs, with Bitfunder currently you have to take as much debt as they give you).

BitMillions pays out directly to your address.

 

There's an obvious difference from changing for chips in a casino to use on the service, and keeping your balance in casino chips across the world.

What the fuck do you mean "Bitfunder currently you have to take as much debt as they give you"? They can give me 10000 BTC if they want, if they do then there's zero chance for it to be honored. My Bitfunder IOU does not randomly get exchanged for payb.tc IOUs unlike in Ripple (if I trust them both).

Whereas with Bitstamp, if they gave everyone BTC up to their trust limit, then same thing, there is zero chance for it to be honored. So in either case you just lost all your coins beyond the amount that people is willing to pay for Pirate/Bitcoin24/Bitcoinica/whatever debt (aka nothing).

[Sukrim]

BitMillions pays out directly to your address.

 

So who holds their jackpot then and what does the "waiting" state imply? As long as they don't send back Bitcoins directly using a function of the network itself, they issue IOUs. Maybe for a short amount of time (in BitMillions it seems you can play for multiple rounds), maybe with a limited risk (you only risk the coins you send), maybe not even with a displayed balance but only an implicit version of it. Still, BitMillion can run right now just by refusing to pay out anything they promised to pay. I'd call that an IOU.

There's an obvious difference from changing for chips in a casino to use on the service, and keeping your balance in casino chips across the world.

True, that's why I keep a good part of my BTC in a safe place. The analogy is actually quite good, as you would likely also only want to have chips from 1 or maybe 2 casinos nearby and not some random chips from somewhere in Siberia, even if that was an honest casino over there.

What the fuck do you mean "Bitfunder currently you have to take as much debt as they give you"? They can give me 10000 BTC if they want, if they do then there's zero chance for it to be honored. My Bitfunder IOU does not randomly get exchanged for payb.tc IOUs unlike in Ripple (if I trust them both).

Whereas with Bitstamp, if they gave everyone BTC up to their trust limit, then same thing, there is zero chance for it to be honored. So in either case you just lost all your coins beyond the amount that people is willing to pay for Pirate/Bitcoin24/Bitcoinica/whatever debt (aka nothing).

I the fuck mean that the issue you are referring to (automatic exchange between 2 IOUs of the same currency where one is potentially toxic) is in my opinion a bug (in the sense of that it can't be easily adjusted in the client).
If Bitstamp did that (issue and send huge amounts of IOUs), they would be effectively bankrupt/hacked, I don't see the difference to any other service (including the ones in your signature - this exact scenario actually happend at MtGox btw.) offering fantasy amounts of balance that are not withdrawable. I would try to recover whatever is possible and then move on with my life, cutting the trust line to the bad service.

As long as I don't trust somebody not trustworthy, I have low risks. Feel free to send me any amount of your trillion BTC to my ripple address (it is in the giveaway thread), all I will receive are Bitstamp BTC that I can withdraw or XRP that I can trade.

You only repeat the risk that a gateway is hacked or goes out of order for some reason. I don't see the risk for that happening much higher than any other service in the Bitcoin universe being hacked or closing down in an unorderly fashion. This is not inherent to Ripple at all but simply the risk you cannot avoid, even dealing purely in Bitcoin (just like your BitMillion game that can still steal from you, as there is no enforcable contract in the block chain that will get you your earnings).

[mmeijeri]

It can involve small amounts for short periods or big amounts for long periods. It really depends on how you use it.

Yes, but for the purpose we are talking about it means small amounts and short periods, and then your objections don't apply. I'd advise anyone against transferring large amounts of money through gateways or keeping any non-trivial amount inside the Ripple system for the foreseeable future.

I don't see how XRP is a solution to the trust problem, as it is a premined cryptocurrency controlled exclusively by a private corporation.

Premined is a nonsensical term when applied to XRP, which doesn't have a concept of mining. Investing in XRP right now is very risky, just as BTC was in the beginning. In the longer term that may change, as to a degree it did with BTC.

[misterbigg]

XRP...is a premined cryptocurrency controlled exclusively by a private corporation.

Premined is a nonsensical term when applied to XRP, which doesn't have a concept of mining.

Actually "premined" although something of a misnomer is a very accurate term considering the history of alt-coins. Perhaps a more correct term would be "self-issued." But everyone understands the term pre-mined so its going to be here to stay.

Now XRP is not "controlled exclusively". Once it leaves the hands of OpenCoin they can no longer control it (once the code is open sourced). It is true that for as long as they have most of the XRP in accounts under their control, they can keep the price down by selling.

If the Ripple system consisted only of XRP then I would consider it a useless alt-coin. But Ripple does other things so it may turn out that having all the XRPs self-issued works in the end.

[mmeijeri]

Actually "premined" although something of a misnomer is a very accurate term considering the history of alt-coins.

It's very appropriate for alt-coins, but not for XRP. And even for alt-coins premining doesn't make it a scam, as long as you don't try to mislead people into believing no premining took place.

Perhaps a more correct term would be "self-issued." But everyone understands the term pre-mined so its going to be here to stay.

Sure, but it's still misleading.

If the Ripple system consisted only of XRP then I would consider it a useless alt-coin. But Ripple does other things so it may turn out that having all the XRPs self-issued works in the end.

Not quite useless, because of the faster confirmation and the lower resource requirements. Whether that would be enough to establish a decent market share without the rippling system is an open question. In fact, it's still an open question whether it will even with the rippling system. I'm not investing XRP yet, but I'm using Ripple to buy BTC.

[abrkn]

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[Matthew N. Wright]

XRP are stamps. They're only used for mailing transactions from one location to the other. Guess what their original name was before OpenCoin decided on "XRP"?

Stamps.

[misterbigg]

XRP are stamps.

Even stamps have value. But anyway, XRP is a currency not "just a stamp." I'm not sure why OpenCoin marketed it as just a stamp but it functions as money the same way that Bitcoin does, except that the method of initial distribution is different.

[mmeijeri]

XRP are stamps. They're only used for mailing transactions from one location to the other.

Yeah, but the only thing the anti-Ripple brigade are worried about is that XRP will become more than just stamps, soar in value, displace Bitcoin and make all their BTC worthless. They don't fear XRP will become worthless, they're just trying to scare people into believing that, while they believe or at least fear the exact opposite.

[mmeijeri]

I'm not sure why OpenCoin marketed it as just a stamp but it functions as money the same way that Bitcoin does, except that the method of initial distribution is different.

I'm not sure either, but it's bad marketing if you are addressing Bitcoin enthusiasts, and maybe not such a hot choice if you are trying to coexist with the USG for long enough to get Ripple established.

[misterbigg]

it's bad marketing if you are addressing Bitcoin enthusiasts

Definitely a mistake. I don't think there was any real "grand plan" as much as a handful of programming nerds hacking away for two years. Maybe this is why the wiki is a bit messy.

[Matthew N. Wright]

Definitely a mistake. I don't think there was any real "grand plan" as much as a handful of programming nerds hacking away for two years. Maybe this is why the wiki is a bit messy.

You've just described bitcoin.

[mmeijeri]

Definitely a mistake.

I meant calling it a currency would have been a mistake as it could drive people away. I don't think the anti-Ripple brigade was fooled though, despite their claims.

[misterbigg]

You've just described bitcoin.

Yeah but Bitcoin is orders of magnitude simpler. So documenting it well was easier.

[misterbigg]

Definitely a mistake.

I meant calling it a currency would have been a mistake as it could drive people away. I don't think the anti-Ripple brigade was fooled though, despite their claims.

Well, just my opinion but honesty and clarity is the best policy. If its a currency, then call it that.