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

[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.

[1714951020]

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[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.