Ripple explained for Bitcoiners!

[itsgoldbaby]

I finally decided to go and try it out, is it seriously still in a closed beta testing phase? 

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[misterbigg]

I finally decided to go and try it out, is it seriously still in a closed beta testing phase? 

I wouldn't say that it is closed, because you can still create a wallet and open your existing wallet but I think they might have not made it as easy as possible. I opened a bug report about this a little while ago:

https://github.com/rippleFoundation/ripple-client/issues/489

This is by design. We are just trying to gather emails right now till ripple is more stable

They postponed the announcement of the next round of giveaways, I think to give them some more time to polish up the client. In my opinion the client is a very rough ride and not ready for the masses, in fact I've opened up several GitHub issues about it.

If you look hard enough you will be able to create a wallet, PM me with your address and I will fund your account with XRP so you can use it. But be warned...this is still beta software!

[CurbsideProphet]

misterbigg,

Are you affiliated with OpenCoin or any of their affiliates/subsidiaries?

No. I don't work for OpenCoin, they don't pay me, and I haven't received any compensation for my views (nor would I want to, for then I could not claim objectivity).

I do, however, hold a substantial quantity of both XRPs and Bitcoins. I'm equally bullish on both.

I just wanted to be clear if I was talking with a representative of the Company or just an investor.  Thanks for sharing your views on the topic.

[Rassah]

I'm having trouble understanding how this is decentralized? Could you please elaborate on that?

Yes. It is decentralized because no one can stop you from sending or receiving things in the Ripple network, nor can anyone seize the items in your account. You don't have to trust OpenCoin to send balances from one account to another. There is counterparty risk when depositing funds in a gateway but that is unavoidable.

So, if I have to log into ripple's wallet site.. who actually holds my ripples, and who holds the ledger listing who owns what? In short, what effect would there be on the Ripple network if OpenCoin and the ripple website disappeared?

[misterbigg]

So, if I have to log into ripple's wallet site..

The Ripple wallet client is written in Javascript, and it runs entirely on your own machine. If you want to, you could clone the Github repository (https://github.com/rippleFoundation/ripple-client) onto your local machine and open it from there. Ripple.com is just where you get the client app right now, but Stephan (another OpenCoin genius) is building a really cool distributed system for securely getting a signed instance of the wallet. You can read his research here:

Secure Bookmarklets

His research and development of secure bookmarklets is public and open, and can be directly used by some of the Bitcoin javascript wallets (like Blockchain.info).

who actually holds my ripples, and who holds the ledger listing who owns what? In short, what effect would there be on the Ripple network if OpenCoin and the ripple website disappeared?

Your balances are kept in the ledger, which is a shared database very similar to the Bitcoin block chain. Each validator maintains a copy of the current ledger. Most validators can also provide historical data, like previous ledgers. The ledgers form a hash chain, and all of the information and transactions can be verified with cryptographic signatures.

After the source code is published and all of the bugs, features, and kinks worked out, the closure of OpenCoin will not affect the Ripple network or its account balances. Ripple will be decentralized in the same fashion as Bitcoin.

It is worth repeating, however, that when you extend trust to a gateway there is always a non-zero risk of default.

[virtualfaqs]

Now let's say Bitstamp gets hacked and those 2907 BTC are wiped out. People start withdrawing BTCs from Bitstamp. How does that get resolved? In order or does Bitstamp choose which IOUs to deal with first?

[CurbsideProphet]

Is there a way to "cold store" XRP?  As we all know one of the major issues with Bitcoin, especially early on, was accounts being compromised and BTC's being stolen.  Paper wallets and such was a huge leap forward in terms of security, is there a similar option with Ripple?  At the very least, they should enable two-factor authentication (Google Authenticator or SMS Text are my preference).

[misterbigg]

If you could please edit your post to not quote the entire block especially the image that would make things look neat.

let's say Bitstamp gets hacked and those 2907 BTC are wiped out. People start withdrawing BTCs from Bitstamp. How does that get resolved? In order or does Bitstamp choose which IOUs to deal with first?

Most likely it would be a chaotic free-for-all. If there were any bitcoins, whoever redeemed first would get them. People who then realize that the Bitstamp IOUs are worthless would try to trade them for something else as quickly as they could, likely at a discount (to get out fast). Whoever hears the news last would probably end up holding the bag.

It would be very similar to what happens at MtGox if they get hacked and lose a bunch of Bitcoins, or if the government seizes some of their USD.

[abrkn]

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[abrkn]

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[misterbigg]

they should enable two-factor authentication (Google Authenticator or SMS Text are my preference).

I don't have a lot of knowledge about two-factor authentication but I believe that it requires a central authority. Can someone enlighten me? Is it possible to have two-factor authentication in a client application? It seems that the client would have to store your private key anyway - rendering two factor authentication useless.

"Authentication" is different from decryption in the sense that in an authentication system it is presumed that you are authenticating against a central authority. Where in the decryption scenario, there is no server that is checking your credentials (the decryption operation simply produces garbage). Two factor systems are authentication based not decryption based.

[abrkn]

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[abrkn]

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[abrkn]

　

[jancsika]

Just The Facts

I've made this a moderated to prevent repetition of baseless accusations. To be clear, here are some well established facts about Ripple:

1. Ripple is a payment and accounting system, not just a cryptocurrency.
2. XRP is Ripple's built in currency, and it is used for important things.
3. Only 100 billion XRP can ever exist, and OpenCoin starts out with all of them.
4. Transaction fees, paid in XRPs, can be lowered or changed through consensus.
5. Ripple server is closed source but will be open sourced soon. The client is open source now.
6. OpenCoin says their plan to make money is to "hold XRPs and hope they go up in value."
7. Ripple founders own 20% of all XRP.
8. OpenCoin plans to give away 50% of all XRP to fund new accounts and promote the system.
9. OpenCoin will sell the remaining 30% of all XRP to finance operations and repay investors.
10. As long as OpenCoin holds most of the XRP, they can influence its price.

You do not need to invest large amounts of money in XRP or hold a significant amount of XRP in order to benefit from Ripple!

Well, you're posting this on a forum for a p2p cryptocurrency that was designed to give the _users_ of the system control over their crypto-tokens, so let's be clear-- you _must_ hold XRP in order to gain anything like the control over your own tokens that you have in Bitcoin.

When I say "control", of course I mean a type of control that comes with all the price swings/risks of scams/hacks/bugs, and everything else that may in the end make that control more theoretical than practical.  That control includes:

* irreversibility.  I send you XRP/Bitcoin, you have XRP/Bitcoin.  No double spends, no questions.
* no counterparty risk.  You send XRP/Bitcoin to a nonprofit, that nonprofit _has_ those XRP/Bitcoin.  No third party can "freeze" those funds (though idiots can certainly make overlay coin-taint systems that hurts the fungibility of the currency in general)
* there is an unblockable (or at least _extremely_ difficult to censor) route from me to you that only depends on the system itself holding to the minimum protocol rules required for the system to function.  If there's a bug in the system, or some unexpected fork it can make me decide to delay my payment, but if there is some bank account of an exchange that holds an alarmingly large portion of the currency that gets frozen it does absolutely nothing to delay my transaction (unless of course they hold my coins on my behalf).

Investing in XRP is risky as fuck!

Yep.

[misterbigg]

Well, you're posting this on a forum for a p2p cryptocurrency that was designed to give the _users_ of the system control over their crypto-tokens, so let's be clear-- you _must_ hold XRP in order to gain anything like the control over your own tokens that you have in Bitcoin.

Yep, I agree with that. Only XRP offers similar functionality to what Bitcoin provides. And it differs from Bitcoin both in the method of distribution, and that the code hasn't been made open source yet (although they promise to do so soon).

When I say "control", of course I mean a type of control that comes with all the price swings/risks of scams/hacks/bugs, and everything else that may in the end make that control more theoretical than practical.  That control includes...

This is all correct. But we need to recognize that even though we're on the Bitcoin forum, it is unfortunately a necessity today to extend trust to various entities. I use MtGox as my favorite example. Until we can "close the economic loop" with Bitcoin by dealing only in Bitcoin and not having to go to and from fiat, it will be necessary to interface with non-Bitcoin systems. Ripple does this exceedingly well, and does as well as you can hope to do while still dealing with fiat.

[abrkn]

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[ihsotas]

Great explanation, misterbigg. One of the best high-level explanations I've seen about Ripple, and this is after spending hours at the Ripple booth this past weekend hearing from David Schwartz directly about how things worked.

Your comment about the <currency>.<gateway> bidirectional order books clears up why OpenCoin thinks XRP will be so valuable; because it's the only non-IOU (real XRPs are sent), the only non-gateway-issued currency, it would become the default reserve currency in this ecosystem, just like the US dollar is in the world today.

[yvv]

The XRPs used to pay for transactions are destroyed (this might seem counter intuitive but trust me its the right thing to do).

And why is that? Just curious.

[virtualfaqs]

Now let's say Bitstamp gets hacked and those 2907 BTC are wiped out. People start withdrawing BTCs from Bitstamp. How does that get resolved? In order or does Bitstamp choose which IOUs to deal with first?

They would become worthless. Imagine if Bitstamp was hacked and their wallets emptied. What would the value of your Bitstamp account with a 1000 BTC balance be? Close to zero.

This is under the assumption Bitstamps won't make good on their debt. Bitstamps can borrow BTC to pay back everyone else. I'm not saying they will, but that is an option. Most likely they'll be able to trade their debt for Ripple XRP until they can get back on their feet. Ripple founders and OpenCoin have a lot to lose if Bitstamp defaults.