4 BTC debt of TradeFortress (Ripple IOUs)

[Peter Lambert]

I'm either missing something or you're all brute stupid.

Why are you bidding on something that even TradeFortress (The one who is supposed to honor the IOU) implied that he wasn't going to be doing so?

I don't know much about Ripple, so feel free to tear this post to bits.

Here, let me explain it clearly:

If I buy a TradeFortressBTC, then it sits in my account. But there are a bunch of other people who trust TradeFortress, so if any of them hold BitStampBTC, I can send 1 BTC to BitStamp and the other guy gets his BitStampBTC switched out for TradeFortressBTC, and Bitstamp credits my account 1 BTC. So there is a chance I will be able to get 1 BTC from this TradeFortressBTC, but there is also a chance that everybody removes their trust from TradeFortress and so it becomes worthless.

[OnkelPaul]

So there is a chance I will be able to get 1 BTC from this TradeFortressBTC, but there is also a chance that everybody removes their trust from TradeFortress and so it becomes worthless.

Exactly. The ones removing their trust last are the Bagholders.

Onkel Paul

[arsenische]

Auction is over.

Congratulations to dancupid!

Please sent 0.06 btc to 1GRNJqxh4SGu3ubNGagsFfEUub8uc8HC7m and give me your Ripple address so that I could send 4 TradeFortress BTCs to you.

Thanks for participating!

[🏰 TradeFortress 🏰]

You will also have to trust arsenische for 4 BTC (or trust me directly for 4 BTC) for you to be able to receive it, FYI.

[arsenische]

Yes, as stated in the original post, trust to TradeFortress is required.

[freedomno1]

Why are you bidding on something that even TradeFortress (The one who is supposed to honor the IOU) implied that he wasn't going to be doing so?

Some might believe there is a chance that TradeFortress will pay to improve his reputation, others might do it for fun or as (stated above) to own a little piece of history

So you bet 4 @ 0.015 , right?

correct (that's about $6 right? - I'm worried I'm losing track of the decimal places)

Yes, that's right. Thanks for bidding! So current winners are:

user	quantity @ BTC	remainder
dancupid	4 @ 0.015	0 remaining

Well I'll beat the dead horse I know that it won't rebate but will participate for history
4 @0.016

[dancupid]

Auction is over.

Congratulations to dancupid!

Please sent 0.06 btc to 1GRNJqxh4SGu3ubNGagsFfEUub8uc8HC7m and give me your Ripple address so that I could send 4 TradeFortress BTCs to you.

Thanks for participating!

Bitcoins sent:

https://blockchain.info/address/1GRNJqxh4SGu3ubNGagsFfEUub8uc8HC7m

My ripple address is rGJTUufiL6cD5j3HeHA7r74VMeyCofpUQq

Thanks.

[freedomno1]

Haha that was a fast expirement mean lol nice rofl 

[arsenische]

https://blockchain.info/address/1GRNJqxh4SGu3ubNGagsFfEUub8uc8HC7m

My ripple address is rGJTUufiL6cD5j3HeHA7r74VMeyCofpUQq

IOUs sent, Transaction # BCD03C649D5E5AD1A2992E18A44FD162788E627537A104F50DD0A3E7331B5A7E

Thanks!

Well I'll beat the dead horse I know that it won't rebate but will participate for history
4 @0.016

I am sorry, you missed your chance, Auction had been over before you made a bet.

[freedomno1]

https://blockchain.info/address/1GRNJqxh4SGu3ubNGagsFfEUub8uc8HC7m

My ripple address is rGJTUufiL6cD5j3HeHA7r74VMeyCofpUQq

IOUs sent, Transaction # BCD03C649D5E5AD1A2992E18A44FD162788E627537A104F50DD0A3E7331B5A7E

Thanks!

Well I'll beat the dead horse I know that it won't rebate but will participate for history
4 @0.016

I am sorry, you missed your chance, Auction had been over before you made a bet.

No worries was just playing around with the idea

[mmeijeri]

In the ripple system, this means that up to an amount of 100 BTC you accept "his" worthless BTC IOUs as substitutes for BTC IOUs from actual trustworthy gateways.

Correct, but there's a much bigger danger, as you describe below:

If you don't trust a gateway to pay out the BTC they owe you, you definitely should not do business with them, whether in ripple not in the "real world". So now you should immediately reduce the trust level for TradeFortress in ripple to zero and hope that there hasn't been too much BTC rippled through your account - that amount would definitely be gone.

This automatic rippling is the real danger. Any time TF makes a BTC payment in Ripple, the Ripple system can take any BTC IOUs issues by presumably honest and reliable gateways like Bitstamp, pay them to the recipient and give you worthless TF issued BTC IOUs in return. By granting him trust you are promising to make payments on his behalf and to trust he will pay you back. You will then be on the hook for some of his debt. In return he has to pay you back, so theoretically it evens out, but that is cold comfort if he defaults on his obligations.

Trust means real world trust, not cyberspace pretend trust.

Bear in mind that Bitstamp also needs to earn its trust. I wouldn't be comfortable with trusting them with anything else than small amounts for short periods of time. For me that's something like $100 for a couple of hours max.

[mmeijeri]

In the ripple system, this means that up to an amount of 100 BTC you accept "his" worthless BTC IOUs as substitutes for BTC IOUs from actual trustworthy gateways.

Correct, but there's a much bigger danger, as you describe below:

If you don't trust a gateway to pay out the BTC they owe you, you definitely should not do business with them, whether in ripple not in the "real world". So now you should immediately reduce the trust level for TradeFortress in ripple to zero and hope that there hasn't been too much BTC rippled through your account - that amount would definitely be gone.

This automatic rippling is the real danger. Any time TF makes a BTC payment in Ripple, the Ripple system can take any BTC IOUs issues by presumably honest and reliable gateways like Bitstamp, pay them to the recipient and give you worthless TF issued BTC IOUs in return. By granting him trust you are promising to make payments on his behalf and to trust he will pay you back. You will then be on the hook for some of his debt. In return he has to pay you back, so theoretically it evens out, but that is cold comfort if he defaults on his obligations.

Trust means real world trust, not cyberspace pretend trust. Everyone needs to revoke any trust lines they have with TF immediately or be at risk of losing lots of BTC and owing them to others.

Bear in mind that Bitstamp also needs to earn its trust. I wouldn't be comfortable with trusting them with anything else than small amounts for short periods of time. For me that's something like $100 for a couple of hours max.

[mmeijeri]

In the ripple system, this means that up to an amount of 100 BTC you accept "his" worthless BTC IOUs as substitutes for BTC IOUs from actual trustworthy gateways.

Correct, but there's a much bigger danger, as you describe below:

If you don't trust a gateway to pay out the BTC they owe you, you definitely should not do business with them, whether in ripple not in the "real world". So now you should immediately reduce the trust level for TradeFortress in ripple to zero and hope that there hasn't been too much BTC rippled through your account - that amount would definitely be gone.

This automatic rippling is the real danger. Any time TF makes a BTC payment in Ripple, the Ripple system can take any BTC IOUs issues by presumably honest and reliable gateways like Bitstamp, pay them to the recipient and give you worthless TF issued BTC IOUs in return. By granting him trust you are promising to make payments on his behalf and to trust he will pay you back. You will then be on the hook for some of his debt. In return he has to pay you back, so theoretically it evens out, but that is cold comfort if he defaults on his obligations.

Trust means real world trust, not cyberspace pretend trust. Everyone needs to revoke any trust lines they have with TF immediately or be at risk of losing lots of BTC and owing them to others.

Bear in mind that Bitstamp also needs to earn its trust. I wouldn't be comfortable with trusting them with anything else than small amounts for short periods of time. For me that's something like $100 for a couple of hours max.
[/quote]
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[mmeijeri]

In the ripple system, this means that up to an amount of 100 BTC you accept "his" worthless BTC IOUs as substitutes for BTC IOUs from actual trustworthy gateways.

Correct, but there's a much bigger danger, as you describe below:

If you don't trust a gateway to pay out the BTC they owe you, you definitely should not do business with them, whether in ripple not in the "real world". So now you should immediately reduce the trust level for TradeFortress in ripple to zero and hope that there hasn't been too much BTC rippled through your account - that amount would definitely be gone.

This automatic rippling is the real danger. Any time TF makes a BTC payment in Ripple, the Ripple system can take any BTC IOUs issues by presumably honest and reliable gateways like Bitstamp, pay them to the recipient and give you worthless TF issued BTC IOUs in return. By granting him trust you are promising to make payments on his behalf and to trust he will pay you back. You will then be on the hook for some of his debt. In return he has to pay you back, so theoretically it evens out, but that is cold comfort if he defaults on his obligations.

Trust means real world trust, not cyberspace pretend trust. Everyone needs to revoke any trust lines they have with TF immediately or be at risk of losing lots of BTC and owing them to others.

Bear in mind that Bitstamp also needs to earn its trust. I wouldn't be comfortable with trusting them with anything else than small amounts for short periods of time. For me that's something like $100 for a couple of hours max.

[mmeijeri]

Sorry about the double posts people, I was trying to edit and must have pressed the wrong button. I can't edit or delete the messages now.

[arsenische]

Sorry about the double posts people, I was trying to edit and must have pressed the wrong button. I can't edit or delete the messages now.

Yes, looks like in Auctions section all posts are read only.

[mmeijeri]

Makes sense, if you think about it. Anyway, bottom line: revoke those trust lines NOW.

[🏰 TradeFortress 🏰]

In the ripple system, this means that up to an amount of 100 BTC you accept "his" worthless BTC IOUs as substitutes for BTC IOUs from actual trustworthy gateways.

Correct, but there's a much bigger danger, as you describe below:

If you don't trust a gateway to pay out the BTC they owe you, you definitely should not do business with them, whether in ripple not in the "real world". So now you should immediately reduce the trust level for TradeFortress in ripple to zero and hope that there hasn't been too much BTC rippled through your account - that amount would definitely be gone.

This automatic rippling is the real danger. Any time TF makes a BTC payment in Ripple, the Ripple system can take any BTC IOUs issues by presumably honest and reliable gateways like Bitstamp, pay them to the recipient and give you worthless TF issued BTC IOUs in return. By granting him trust you are promising to make payments on his behalf and to trust he will pay you back. You will then be on the hook for some of his debt. In return he has to pay you back, so theoretically it evens out, but that is cold comfort if he defaults on his obligations.

Trust means real world trust, not cyberspace pretend trust.

Bear in mind that Bitstamp also needs to earn its trust. I wouldn't be comfortable with trusting them with anything else than small amounts for short periods of time. For me that's something like $100 for a couple of hours max.

Correction: It is not just that when I make a BTC payment in Ripple (I will not do that, I'm not here to scam people), but when anyone with my IOUs makes a payment. In every single case where other people have exchanged their bitstamp/etc IOUs for my IOUs because of the Ripple system, someone else had.

Also:

For one thing, before we can distinguish between the two sample responses you give we need a defined point in time at which the IOU issuer is obliged to give a response at all (a settlement date).

IOUs (taken as meaning any acknowledgement of debt) don't necessarily EVER have to be redeemed.  For example perpetual bonds are never intended to be redeemed - yet are debt.

Thanks for your valuable arguments. You might be right and I think I understand now why theymos said IOU is not a binding contract. But now I feel totally confused. What is debt then, if it is doesn't ever have to be repaid?

Debt is something that you owe - a claim someone else has against you.  Not all debts are created with the intention of being repaid (e.g. loans that are made for tax reasons without either party to the loan having an intention of there ever being a repayment).  Perpetual bonds are another example of debt that will never be repaid (talking RL ones not the pretend mining ones on here).  The bond issuer borrows money that will never be repaid - paying interest (a dividend) on it regularly.  The only way to get your cash back is to sell it to someone else.

That's why debt/IOUs with no agreed terms is worthless.

Maybe an example will help - for the examples below the assumption to be made is that I WILL honour any commitments I made (in practice all debt should be discounted in value based on your confidence that I'd repay):

If I said I'd owe you 20 BTCs to be settled in a week in return for 10 BTCs from you now then (IF you had total trust in me) you could reasonably value those 20 ripple BTCs at similar value to 20 actual BTCs.

If I said I'd owe you 20 BTCs to be settled in 5 years in return for 10 BTCs from you now then (IF you had total trust in me) you would STILL have to value them at a lot less than 20 actual BTCs (as they'd generate no revenue in the meantime and were illiquid).

In ripple BTCs of each of the above scenarios are treated as being interchangeable (whether its 2 sets from same issuer or from 2 different issuers) - despite the fact they have very different actual value.

Now consider a third scenario (equivalent to perpetual bonds):

I say that if you give me 10 BTC now I'll owe you 10 BTC on ripple.  I will never repay those BTC but on the first of each month I'll send 0.01 BTC for each BTC owed to whoever currently holds them.  Again - to ripple those are just BTC - and swappable with anyone else's BTC (provided someone trusts both me and the other issuer).  These BTC may have more or less value than the other ones - depending on how people value 1% interest/month against liquidity.  But I'll never repay them - and am NOT a scammer for issuing them.

Now the final case.  I say if you give me 10 BTC now I'll owe you 20 BTC on ripple but will only ever repay them if I win the lottery.  What are those BTC worth?  Nearly nothing (even ignoring the fact that I don't play the lottery).

Do you see how the value of a debt/IOU is defined by the TERMS that apply to it - not by its face value?  But ripple treats them all based on face value.

TF's ones were pretty much explicitly worthless.  In the absence of terms the only way to reasonably assess value of something is to look at what consideration was given in return for them - and assume a similar value.  Nothing was given - so their value is gong to be around zero.

[🏰 TradeFortress 🏰]

Let's say Bitstamp IOUs can be redeemed pretty much instantly nearly all the time. However, your friend's IOUs can only be redeemed when he is online, and he just went on a holiday for 3 weeks. Ripple may automatically exchange your Bitstamp IOUs for your friend's IOUs. Good luck getting your BTCs out from your friend right now.

http://ripplescam.org/

[MoneypakTrader.com]

please check out how TF scammed me and vote on him being a scammer: https://bitcointalk.org/index.php?topic=151880.0;all