- an automatic distributed currency exchange is complete vaporware. It will require a lot more than technology to work, e.g. like liquidity.
Nobody is debating the necessity of liquidity in Ripple in order to perform currency exchange.
- debt valuation depends on the debtor, just compare mtgox and bitstamp USD credits now and you understand how this must be handled inside a Ripple scheme. If you were to exchange currency you trade credits with one debtor with credits for another debtor. Here is the econ theoretic argument - any tuple of debtors in such a transaction creates its on market, so the credits are not fungible. Liquidity will be very thin.
Again, I agree with you that liquidity is a huge issue. But if there is liquidity, I'm sure the balances for the most trusted gateways will be worth about the same. Ripple is trying to federate the existing banking system. Nobody today ever says: " It sucks that my Bank of America USD is worth less than my Citibank USD".
Ripple is clearly a Bitcoin competitor. Saying it isn't does not change the fact that XRP is another currency, so by any definition it is a competitor. Saying it is not, is sneaky marketing crap.
I totally disagree with your quip about the sneakiness. XRP is not Bitcoin, they are different. They will compete in some ways, and help each other in other ways.
Ripple is going to make profit by liquidating the XRP they "printed". In effect, if they are pre-printed or not does not matter as they are not in circulation, at this time. Very few XRP are released so Opencoin is in effect a central bank, regulating XRP. This is the whole point of XRP, printing money for Opencoin.
The point of XRP is to secure Ripple. OpenCoin created this technology, and they are now selling and giving it away. This does not make them a central bank. Anybody can use Ripple freely if it makes their life more convenient, and $1 worth of XRP will possibly pay a lifetime of transaction fees. I use Bitcoin all the time, and sometimes I trade Bitcoin balances, or move them around in Ripple because it is convenient.
Ripple addresses are extremely easy to use to uncover users identity as you will not have many more than one.
If you wanted maximum anonimity why would you use only one address? It functions very similarly to Bitcoin in this regard.
In fact, all your credit lines are associated to a single address so it is impossibly impractical to use many addresses to get more privacy.
It's true that it's more convenient to stick to a smaller number of addresses. But you can set trust lines for any number of accounts very easily, and you only need 1 trust line to trade Bitcoin or fiat in Ripple.
Also, David Schwartz is an old NSA guy. I would never trust anyone who worked there except for Mr. Snowden. Opencoin is funded by VCs and they would likely see their scheme get good traction help by NSA or DHS while bitcoins get outlawed. Opencoins Ripple would actually be The Perfect Surveillance Tool via the public ledger.
The fact that Katz worked with the NSA at some point in his career reinforces my confidence in him. He must really know what he's doing. Anyways, there are bunch of developers working on Ripple everyday. Anyone who doesn't trust them can just wait until it's open sourced.
To conclude, XRP is superfluous for a ripple like scheme, you could as well use some recognized USD credits, or why not Bitcoin credits, as fees. Also, a public ledger is not ok when you have few-to-one address -> user. The database has to be distributed amoung the creditors and debtors. It should not be global. I really think the bitcoin community could design a better ripple scheme like this, using the some consensus validation which I think is a good design.
The Bitcoin community did design Ripple, more or less. Maybe in the future a better similar system will exist? I don't doubt it, tech is always moving forward.
