Why Ripple has failed.

[Labcoin_PR]

So then why is there is a need to have a centralized company that backs it? I'm curious to know when your "secret" gets generated if the issuing party keeps a copy somewhere. Hmm.

You can look at the code. The secret is random. It's stored, encrypted, in your wallet. Your encrypted wallet can be stored locally in your browser or remotely in a blob vault.

As for why there is a need to have a centralized company that backs it, it's because adoption is absolutely not a sure thing. We've worked as hard was we can to design the system, develop the code, build relationships with other companies, and so on. There will come a time when Ripple no longer needs us. As people find the Ripple network useful, we hope they'll contribute the features they most need or want. We're having a developer conference in Las Vegas in about two weeks.
https://bitcointalk.org/index.php?topic=293086.0

Thank you for clarifying the secret portion of my post. I appreciate that.

Why create so many XRPs and hold the majority of them..if indeed your bolded statement is true?

Why do you folks needs to many XRPs?

for ripplelabs to give to its potential partners/gateways... i think.

http://www.newyorkfed.org/images/v2/features/seal.jpg

http://pics.photographer.ru/nonstop/pics/pictures/489/489840.jpg

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[Labcoin_PR]

http://demonocracy.info/infographics/usa/federal_reserve-qe3/images/demonocracy-federal_reserve_money_printing-qe_3-2012.jpg

https://opencoin.com/wp-content/themes/open-coin-theme/assets/img/logo.png

http://lis879.files.wordpress.com/2013/04/mine.jpg

[smoothie]

Why do you folks needs to many XRPs?

To fund development, to drive adoption of Ripple as a payment network, to do some good in the world, and, of course, we are a for profit company.

Okay. thanks for clarifying.

So I presume you folks have your own VC investors you need to pay off?

[DumbFruit]

Ripple may wind up being predominantly used between payment systems rather than between users directly.

Could you expand on this? I'm not sure I follow what you mean.

You think that Ripple may only have Gateways?

As people find the Ripple network useful, we hope they'll contribute the features they most need or want.

I think most people expect OpenCoin to handle the development, as our understanding is that development was supposed to be funded by XRP.
If that is not the case, then it's more probable that voluntary efforts will be put behind something without the premine. I hope you don't take that as a personal insult, that's just where the incentives lie.

[bitcoinBull]

One problem I see with Ripple, is that common people will not understand Ripple, therefore are unlikely to see any reason to use it.

Because of this, therefore Ripple will spend an awful lot of energies trying to explain to people, and people will still go away shaking their heads not knowing what you are talking about.

I thought the same thing about bitcoin, even as recently as one year ago. Six months ago I ignored ripple on similar reasoning: "well bitcoin is already so abstract and difficult to explain. The chances are very slim that a meta-bitcoin like ripple will gain any traction." It was only two months ago that I learned bitstamp is a ripple gateway. It is gaining traction, much to my surprise.

[JoelKatz]

Ripple may wind up being predominantly used between payment systems rather than between users directly.

Could you expand on this? I'm not sure I follow what you mean.

You think that Ripple may only have Gateways?

Payment systems may or may not be gateways, but essentially, yes. Imagine if PayPal and Western Union are both Ripple gateways. Now, a PayPal customer can make a payment to a Western Union customer through a mechanism like this:

1) The PayPal customer logs into their PayPal account and selects to make a payment.

2) The PayPal customer specifies the Western Union customer using something functionally equivalent to an email address.

3) PayPal talks to Western Union and gets the Ripple account and destination tag to use for the payment.

4) PayPal uses Ripple pathfinding to find out what the payment will cost and informs their customer.

5) The customer approves the transfer.

6) PayPal makes a Ripple payment to Western Union. PayPal decrements the balance on their customer.

7) Western Union sees the payment and credits their customer.

This allows payment systems to federate through Ripple. The payment system operators don't have to handle any cross-currency or cross-issuer issuers so long as there is sufficient liquidity through market makers in the Ripple network. The users don't have to know that the two payment systems used Ripple to make the payment.

This payment can be reversible or irreversible, depending on the agreement between the payment networks (which can be automatically negotiated at step 3). Payment systems can be payment systems themselves and/or they can accept balances from one or more gateways of their choice.

Now, you might wonder why PayPal and Western Union wouldn't just agree to do this without Ripple. And, for this example, they probably would. But if you imagine a number of payment systems using different currencies, you can see why this works better. Email used to work with ad hoc arrangements -- if you had AOL, you could use their Compuserve email gateway to email a Compuserve user. But nobody does it that way anymore, and for good reasons.

If this model takes off, Ripple's direct user base could consist mainly of gateways, payment systems, market makers, large merchants, and power users.

[DumbFruit]

That could work.

Thanks for the response.

[tokeweed]

yup. just brilliant.

[BobMarley]

The only reason prices are going up is because ripples get destroyed in every transaction

[ahbritto]

The only reason prices are going up is because ripples get destroyed in every transaction

People lose XRP far faster than transactions fees are destroyed. People lose XRP by forgetting or losing access to their password and secret.

[digitalindustry]

Ripple may wind up being predominantly used between payment systems rather than between users directly.

Could you expand on this? I'm not sure I follow what you mean.

You think that Ripple may only have Gateways?

Payment systems may or may not be gateways, but essentially, yes. Imagine if PayPal and Western Union are both Ripple gateways. Now, a PayPal customer can make a payment to a Western Union customer through a mechanism like this:

1) The PayPal customer logs into their PayPal account and selects to make a payment.

2) The PayPal customer specifies the Western Union customer using something functionally equivalent to an email address.

3) PayPal talks to Western Union and gets the Ripple account and destination tag to use for the payment.

4) PayPal uses Ripple pathfinding to find out what the payment will cost and informs their customer.

5) The customer approves the transfer.

6) PayPal makes a Ripple payment to Western Union. PayPal decrements the balance on their customer.

7) Western Union sees the payment and credits their customer.

This allows payment systems to federate through Ripple. The payment system operators don't have to handle any cross-currency or cross-issuer issuers so long as there is sufficient liquidity through market makers in the Ripple network. The users don't have to know that the two payment systems used Ripple to make the payment.

This payment can be reversible or irreversible, depending on the agreement between the payment networks (which can be automatically negotiated at step 3). Payment systems can be payment systems themselves and/or they can accept balances from one or more gateways of their choice.

Now, you might wonder why PayPal and Western Union wouldn't just agree to do this without Ripple. And, for this example, they probably would. But if you imagine a number of payment systems using different currencies, you can see why this works better. Email used to work with ad hoc arrangements -- if you had AOL, you could use their Compuserve email gateway to email a Compuserve user. But nobody does it that way anymore, and for good reasons.

If this model takes off, Ripple's direct user base could consist mainly of gateways, payment systems, market makers, large merchants, and power users.

not if each counter party holds a relevant amount of risk to a third party(s) equity/capital.

and if they do - then each would need to underwrite that risk.

then comes into play all the other aspect of the equation that I mentioned previously .

but, as stated , I could be wrong.

[QuantPlus]

One problem I see with Ripple, is that common people will not understand Ripple, therefore are unlikely to see any reason to use it.

Because of this, therefore Ripple will spend an awful lot of energies trying to explain to people, and people will still go away shaking their heads not knowing what you are talking about.

This is a central problem.

There is a complexity Sweet Spot for software/internet products... not too simple, not too complicated.

Bitcoin, EBay, Twitter, YouTube, Bittorrent, Apple hit the nail on the head...
Ripple has completely, massively, ARROGANTLY overshot on the complexity side.

Ripple/JoelKatz: "We are gonna take granny and educate her".

[Keldel]

There is a complexity Sweet Spot for software/internet products... not too simple, not too complicated.

Bitcoin, EBay, Twitter, YouTube, Bittorrent, Apple hit the nail on the head...
Ripple has completely, massively, ARROGANTLY overshot on the complexity side.

Ripple/JoelKatz: "We are gonna take granny and educate her".

You need to be careful dealing with bitcoin, because you can lose your money.

In Ripple you can end up in debt!!!

[hennessyhemp]

We're testing the system while they create it, so yeah, there will not only be unnecessarily complicated hoops to jump through, but also bugs along the way.  Perhaps credit cards will one day be called Ripple Cards, who knows how the adoption stage will kick in, but what is currently available, is one of the most aesthetically pleasing, mathematically secure payment networks ever created.  

They just added the email bridge recently that allows you to send a payment to an email address rather than a Ripple Wallet address.  Changes like this will be added periodically which will raise adoption rates by orders of magnitude.  Once enough improvements are made, it will simply integrate into everyday life running on whatever financial instrument we use most, and even if people aren't fully aware they are using it, Ripple will probably be the underlying system it is running on.

[Gimmelfarb]

We're testing the system while they create it, so yeah, there will not only be unnecessarily complicated hoops to jump through, but also bugs along the way.  Perhaps credit cards will one day be called Ripple Cards, who knows how the adoption stage will kick in, but what is currently available, is one of the most aesthetically pleasing, mathematically secure payment networks ever created.  

They just added the email bridge recently that allows you to send a payment to an email address rather than a Ripple Wallet address.  Changes like this will be added periodically which will raise adoption rates by orders of magnitude.  Once enough improvements are made, it will simply integrate into everyday life running on whatever financial instrument we use most, and even if people aren't fully aware they are using it, Ripple will probably be the underlying system it is running on.

i would say that "Changes like this will be added periodically which will raise the potential for adoption rates by orders of magnitude."

[hennessyhemp]

Fair enough.  It won't raise adoption in and of itself, but simplification is the key to mass adoption of the network.

[Coinseeker]

One problem I see with Ripple, is that common people will not understand Ripple, therefore are unlikely to see any reason to use it.

Because of this, therefore Ripple will spend an awful lot of energies trying to explain to people, and people will still go away shaking their heads not knowing what you are talking about.

"Common people" don't need to understand Ripple.  "Common people" don't understand HTTP OR SMTP but they do understand how their browser and email client works.  Same is true for Ripple.  It's the gateways people will need to understand.  Those providing feature sets that rival current systems like Paypal and online banking, will likely be successful.  Most "common" users will never own a Ripple wallet or even know they are using Ripple.  "Granny" only cares that she can send and receive money from A to B simply, quickly, safely and cost effectively.  As long as the network, works...the rest is on the gateways.

[herzmeister]

right, I believe that's what Ripple's gonna do.

American Granny has a PayPal account, logs in as usual and sends money to an email address grandson@in-australia.org

She doesn't know or need to know that grandson doesn't even have a PayPal account. Grandson has a MtGox account however. Ripple does all the magic inbetween.

[DumbFruit]

Perhaps credit cards will one day be called Ripple Cards

Eh?
Look, setting aside that Ripple has enormous difficulties to overcome before it can work as now intended, even if they manage it there will be virtually no difference observed by average folk other than they will be able to use their particular currency in more places.

I feel like Ripple users read this thread and don't understand a couple key points;

1.) JoelKatz all but admitted that the original Ripple idea (Community Credit/Liquidity Providers/Web of Trust) has been almost entirely discarded. That tiny portion which remains only exists to facilitate some obscure niche by a specialized user base.

2.) Because skepticism is necessarily pervasive in the Ripple network -the users need to be active market participants rather than passive "Liquidity Providers"- the average user is likely not to find anything particularly intriguing about putting their money into it. Hence why JoelKatz suggests that Ripple could very well end up as a Gateway/Market Maker only network.

Taking a glance at their website today you can see that their bellicose far-reaching claims have been tempered severely, but it seems a lot of the veteran Ripple fans didn't get the memo.

[Sukrim]

Well, to be fair Bitcoin also is not really used as a currency at all - rather as a digital asset ("electronic gold"). Still both in Bitcoin and Ripple the possibility exists to use them in the originally planned/intended way. There is a cluster of accounts that are heavily interlinked for example and that most likely belong to the RippleClassic userbase. Just because new users choose not to use this model, does not mean it is not supported any more. It is a less likely use case though I admit and I personally also think Ripple will grow more by being something like the e-mail of payment systems (which also means that there will be huge mail providers like gmail or hotmail) rather than hawala 2.0.

With 2) I agree to some degree - it is a chicken-egg problem (if there is low liquidity, the system is not very interesting - see the trolling of QuantPlus leading to even lower liquidity etc.). What makes it different though is that the cost for entering the system as a liquidity provider is basically zero. Starting from BTC you can trade to nearly any IOU on the market and start to make that market. You do not have to have an order of at least 10000USD to hedge towards the Euro, you can just provide a single dollar and try to beat larger players by a tiny margin over time. I would also love to see easier options to market make (if you do trust more than 1 gateway especially in one currency, after all this means you are basically making money), but on the other hand this also enables more savy people in the meantime to get some nice profits.