Ripple: The Best Way To Legitimize Bitcoin

[nahtnam]

Whats funny is that Ripple inst (fully) open source. They are like twitter, claiming to be open source because a tiny part of their script is online.

Your right, Ripple is affraid their brand is not recognized enough to allow publish full open source, and they are right

Sure are. I was just going to suggest that since Ripple is open source, we should create a Ripple with BTC (or NMC) as the native currency (instead of XRP), and thus resolve the issue that the initial creators controlled 100% of the XRP.

Still, if the underlying idea isn't patented, isn't this something we could do?

That would be an online wallet. As I said before, Ripple isnt fully open source.

I'm not sure what you mean by the online wallet thing. If I understand Ripple correctly, it'd be more like a decentralized network of online wallets/exchanges which all federated with one another to allow very quick transaction confirmations.

As far as Ripple not being fully open source, yeah, I even quoted you saying that!

I am talking about Ripple.com not XPM

Okay.

What's XPM? Primecoin?

I dont know. I meant Ripple protocol.

[mmeijeri]

I deposit 10 BTC with a gateway. Now I can spend that 10 BTC using Ripple. That's how it works, right?

Isn't that considered an online wallet? You store your BTC with them, and trust them to keep it safe for you.

OK, I see what you mean. In the case BTC IOUs, yes they do hold your BTC for you, which means they do host a BTC wallet, or maybe outsource that to others. I thought you meant a Ripple wallet. You can store your Ripple wallet (which may or may not contain BTC-denominated IOUs) locally, you don't have to use a hosted service. Except for XRP, it means you're trusting the gateway to hold the fiat currencies and cryptocurrencies other than XRP for you. In the case of fiat currencies that could involve keeping physical money in physical vaults, but it more likely means keeping it in a bank account. For cryptocurrencies it means hosting wallets, though not necessarily a separate wallet for each customer.

[Sukrim]

No, I mean the wallet in the sense of what for example your bitcoin wallet is: A client that is able to sign transactions using one or several private keys that have access to funds.

I think you talked mainly about b) (the money that gets locked away in the vaults of a gateway) while mmeijeri talked about a) (the wallet software where you see all the balances you have with one or several gateways + your XRP balance).

[Sukrim]

In any case, my focus is on how we can remove ripples from the equation. If a@coinbase wants to send 1 satoshi to y@mtgox, then we shouldn't need to mess with ripples.

If for whatever reason they don't want to use the Bitcoin block chain for that transaction, they need to use 1/100 000th of 1 XRP to pay for the transaction fees on Ripple. Otherwise people would simply spam the ledger for fun.

These fees cannot be taken out of IOUs, because these are by definition not even existing as assets on the network, they exist only at the gateways. The only native asset to Ripple are XRP.

It might be possible to build a connection to BTC (it would need to be direct by the way, so you'd need to run a trustworthy Bitcoin client and a rippled) and to have some kind of proof that you paid some amount of BTC instead of destroying XRP to ensure non-spammyness.

Ripple's real use case is by the way not 2 people anyways using BTC - the really nice thing is that you can use whatever currency you want (e.g. BTC) while your counter party can receive whatever they want (e.g. USD). Ripple is much closer to BitPay than to Bitcoin.

Edit:

If the US government seized all the XRP from Ripple Labs and mounted a DOS attack on the Ripple network, how long could they keep it up?

Depends on the form of DoS, if they spam meaningless transactions they could keep it up a quite long time I guess, though it wouldn't be too hard to just ignore that or simply dealing with it. They can spam the AccountState (similar to Bitcoin's UTXO set) but thanks to funding limits (which would be simply manually increased by independent rippled validator operators) this has a finite size. If they DoS attacked all known rippled servers out there, they might drive them to connect through VPNs and TOR, just like with bitcoin.

If the US government seized all BTC from Mr. Silkroad and mounted a DOS attack on the Bitcoin network, how long could they keep it up?

[Sukrim]

So, instead of XRP we have XBB so as to not use a confusing name. One XBB is created by verifiably destroying 1 satoshi. This way the creation of XBB is decentralized.

The proof for that destruction still somehow needs to reach Ripple but that's one possible way to do it, yes. It is actually quite hard to really "destroy" BTC in a sane way - spending as fee doesn't count, otherwise miners could spend their own coin as fees all day long. If you just send dust to the bitcoineater address, you'll spam the UTXO set with unprunable stuff.
Maybe by tracking coins you could do something like colored coins for every single satoshi, so over time people can spend them as fee and still redeem only the 2 100 000 000 000 000 units that exist in BTC land.

Ripple's real use case is by the way not 2 people anyways using BTC - the really nice thing is that you can use whatever currency you want (e.g. BTC) while your counter party can receive whatever they want (e.g. USD). Ripple is much closer to BitPay than to Bitcoin.

But BitPay is even closer to BitPay.... And I suspect more businesses accept BitPay than Ripple.

The exciting part for me is the nearly-instant, nearly-free transactions.

Any business that accepts BTC actually accepts Ripple already, since there is a bridge towards it, so using Ripple you can pay far more merchants than you might think. The nice thing is that you can do a "reverse BitPay" for example at the moment, by holding fiat and paying someone in BTC (maybe if you don't like the volatility or are bearish, yet still your favourite web shop only accepts BTC). Also you can hold e.g. LTC and stil pay anywhere BTC is accepted at current rates, even though something like "LitePay" doesn't (yet?) exist.

Edit:

If the US government seized all the XRP from Ripple Labs and mounted a DOS attack on the Ripple network, how long could they keep it up?

Depends on the form of DoS, if they spam meaningless transactions they could keep it up a quite long time I guess, though it wouldn't be too hard to just ignore that or simply dealing with it.

Ah, so it'd be possible to separate the fake transactions from the real ones?

Depends of course on the exact attack - some transactions would easily be seen as fake, others might be more difficult.

10 minutes? After they spent their high priority coins, they'd be left with low priority coins. Transaction fees aren't the only thing which guard against transaction spam in Bitcoin.

Even Satoshi probably couldn't fill up all the blocks for more than a day without using up all his high-priority coins. After that s/he could DOS low-priority transactions for quite a while, but high-priority ones would at least get through.

Nope, you are assuming that the rules in Bitcoin-QT are actually enforced by some protocol - this is NOT the case. They are merely guidelines (that a lot of miners currently follow though).
Similar rules probably also could be laid out for Ripple if really needed, so far destroying XRP was enough though to keep spammers away.

If anyone REALLY wanted to harm Bitcoin and got their hands on a million or 100k of them, they should better simply buy mining equipment for that money, it is MUCH cheaper to attack using minig power than using transactions.

[JohnsonRobinson]

How is the quantity of Ripples in circulation determined?

[mmeijeri]

I don't know if it's a very good system or not. It seems to have some good ideas in it. But I'd consider the fact that the creators gave 80% of the XRP to some for-profit company (and presumably kept the other 20% to themselves?) to be a fatal flaw even if the rest of the system is sound.

You don't have to use XRP if you only want to use Ripple as a distributed BTC-fiat exchange, except for a very small minimum reserve requirement and tiny fees. And that's what got me interested in Ripple in the first place, a resilient distributed exchange for fiat and cryptocurrencies. That's what my signature refers to. Whether XRP succeeds as a currency or whether it is "fair" or not doesn't matter for that.

And as for fairness, I fail to see what is unfair about generating the XRP and the distributing them as they see fit. This is no different from store credit, gift vouchers etc.

[mmeijeri]

A Ripple wallet holds your ripples, a bunch of blank checks, and a signature stamp?

It also holds (or controls) any IOUs you might own. The underlying asset is kept by the issuing gateway, or at least you hope that's true, and you have to trust them to redeem it for you, possibly for a fee. That's why IOUs are always linked to a specific issuer so you know who is responsible for it. It's just like a Bitcoin coloured coin, the Ripple network provides a reliable and impartial public record of who owns what, but you have to trust gateways to abide by their promises. If you are dealing with a legitimate gateway, then you could use the court system to try to recover your money if necessary. This is a complement to the trustless system used by Bitcoin and XRP, not a replacement for it.

[mmeijeri]

So, instead of XRP we have XBB so as to not use a confusing name. One XBB is created by verifiably destroying 1 satoshi. This way the creation of XBB is decentralized.

Sure, this is the principle of migrating to a new currency through proof of burn. You could fork Ripple and issue the fork's internal currency by provably burning BTC at a fixed conversion rate, or following some predetermined time-varying schedule.

[mmeijeri]

Well, the "very small" minimum reserve requirement says that I do have to use XRP.

That said, if Ripple can currently be used as a BTC-fiat exchange which gives me a better exchange rate than Coinbase with equal ease and assurance that I'm not being scammed, then I'm interested. That's worth a few bucks for the XRP, even if XRP goes to zero. But does Ripple offer this currently? If so, how would I go about doing it?

You could try to "mine" the XRP at https://www.computingforgood.org/, but it's slow going. You could also buy it from someone on the internet with BTC. You only need a couple of dollars worth to last you a lifetime.

I don't think I said anything about fair.

There's nothing unfair about setting up your own currency.

There's nothing unfair about me avoiding it either.

Exactly, I agree.

Come invest a "very small" amount in my new currency doesn't convince me. In fact, it causes "scam" alerts to go off.

Spending <$5 in order to be able to open a Ripple wallet doesn't strike me as excessive. I don't know what the current reserve is, I think it's 50 XRP, which I think is about $2.50.

[mmeijeri]

So other people's checks. (They're more like checks than IOUs, aren't they?)

I'm not sure that's true. A check is more like a signed instruction to a bank isn't it? It involves three parties: the payer, the payee and the bank. A Ripple IOU on the other hand is something that can be transferred directly and then redeemed at the issuing gateway, provided it is trustworthy. It involves only two parties: the issuer and the owner.

Just like checks.

It's similar, but in the case of a check you have two risks: the payer might not have a sufficient balance and the bank itself might be insolvent. With Ripple IOUs you have only the latter risk.

My vision for what Bitcoin checks are going to be like is more like this. Instead of depositing her bitcoin at MtEyeou and giving them full access to it, Sonia creates a split-key so that any transaction has to be signed by Sonia and by MtEyeou, and Sonia puts her bitcoin behind that split-key.

MtEyeou plays the part of the issuing gateway. They promise to never sign a double-spend transaction without permission from all recipients. If you trust MtEyeou to abide by its promises, then you can accept a transaction signed by it immediately and you don't have to wait for a confirmation. If they collude with their customers to double-spend and thus scam you, you can use the court system. MtEyeou could also post a bond guaranteeing payment for a certain amount of damages in the event of a double-spend.

No need for Ripple or XRP or anything like it in that scenario.

Sure, but that's because Bitcoin is a trustless currency. If you are going to use Bitcoin payments, Ripple doesn't add much. It's when you want to move fiat that Ripple gives you something Bitcoin currently doesn't. I think one major application would be buying and selling Bitcoin with fiat currencies.

[mmeijeri]

They're still giving away XRP, though the amounts per person are coming down. And I don't think asking people to contribute CPU cycles to cancer research is a bad way to get XRP into circulation.

[mmeijeri]

How is the gateway not a party?

It is, the issuer is a gateway.

In fact, how is the gateway not in fact a party which is completely equivalent to the bank?

It is, except that it's not the gateway keeping the books, but the impartial and reliable P2P network of Ripple validators.

In Ripple, as I understand it, you deposit funds at the gateway and sign an instruction to the gateway saying to pay those funds to the order of the payee. The payee can then redeem those funds at the gateway, or can sign the instrument over to yet another party. Eventually one of the holders redeems the funds by presenting the instrument.

The signing over happens inside the Ripple network, under the supervision of the validator nodes. The gateway only deals with issuing and redeeming IOUs.

And I'm not sure I see the incentive. To be a gateway, it seems you'd have to be regulated as either a bank or a non-bank financial institution (like Paypal). At that point, once you've gone through that trouble, you might as well just connect to ACH and SEPA and the other various clearing systems already in place.

You would connect to those for sure, because that's what allows you to serve as a gateway into the Ripple system, including its distributed order book for currency exchange.

Well there you go.

Conversely, Bitcoin doesn't add anything above and beyond Ripple, except for greater current mindshare.

What exactly does Ripple offer there?

A distributed order book, plus the ability to pay in any currency with any currency. Say you want to buy BTC with EUR and the seller wants to sell BTC for USD, then the system automatically matches the orders if the price matches.

Yeah, if someone who accepts ripple payments allows me to exchange USD for Bitcoin, and I trust them, then I can buy and sell bitcoin with USD through Ripple.

Also if you both trust the same gateway, or if there is another connecting path between the two of you in the Ripple trust graph.

If someone who accepts ACH transfers allows me to exchange USD for Bitcoin, and I trust them, then I can buy and sell bitcoin with USD through ACH.

The latter already exists (Coinbase). I don't know about the former.

The distributed order book is the biggie for me.

[OnkelPaul]

...

But I still have these 4 'bitcoins' in my ripple account - they look the same as normal bitcoins, ripple tells me I have 4 bitcoins, but I know I have no bitcoins in my Ripple account.
I cannot now use Ripple, since I cannot tell which bitcoins are real and which are not.
It doesn't work, becasue it lets you store fake bitcoins and you have no way of telling which are real and which are not.
I do not trust it. So I will not use it.

How did you get 4 BTC that you know you don't have? It sounds like you created another account, extended trust to that account, and then sent 4 Bitcoin from one to the other. What you did was 'write a check' off of one wallet and put in another. Can you please post the trust lines that are currently in that wallet?

As I tried to get at earlier, I can write a check for a million dollars issued by the Bank of PirateButtercup. But why in the world would anyone take it?

You're not storing 'fake' Bitcoin. You're storing outlandish checks that you have written to yourself (or have accepted from a friend). Try to redeem your check at a gateway and you'll get nowhere.

Until you understand what you're doing, it is HIGHLY recommended that you do not extend trust lines (accept checks) from anyplace other than the bank (Gateway) where you deposited your money.

dancupid got scammed by TradeFortress. TradeFortress claims that he was just doing this as a social experiment to show that Ripple sucks, but in fact he was exploiting people who did not understand how the trust system works in Ripple.
dancupid could get rid of the fake bitcoins by sending them back to TradeFortress (they're worthless anyway). Yeah the UI does not make that easy because you can't simply send BTC issued by a specific party, I know. I think it should be possible by sending those 4 BTC to an address that only accepts TradeFortress BTC.

@dancupid: In case you care at all, I can help you get rid of the TradeFortress fake BTC - I'll send you a PM explaining how. If you don't care for Ripple anymore, just igore it.

Onkel Paul

edit: I just found that there's a trade offer on Ripple where you can sell TradeFortress BTC for 0.001 XRP each. So getting rid of them is possible. Whether you want that or not is your personal decision.

[mmeijeri]

But a check can be written to "Cash". Then it's payable to the bearer. Would that be more equivalent to a bitcoin "IOU"? (Given that everything is electronic and signed digitally, I don't think it makes much difference. Whether the check is written to "Cash" or "the order of 31uEbMgunupShBVTewXjtqbBv5MndwfXhb" is just details.)

I'm not sure if it matters, but I think the Ripple ledger works slightly differently than the Bitcoin blockchain. While the Ripple ledger must somehow store the transactions, it adds up amounts into a single balance instead of keeping track of the fate of individual outputs. In other words, you don't have the situation as in Bitcoin where you have multiple inputs that are combined in a transaction and then split into multiple outputs. If I understand it correctly the collective effect of all transactions in a new ledger is reflected in the new balances stored in that ledger.

So if you start with $100 in Bitstamp IOUs and send $10 to me, then both our new balances aren't directly linked to a sender anymore, but they are still linked with a receiver and the issuing gateway. To do the same thing in Bitcoin you would have to combine all transaction outputs in your wallet into one new output.

Yeah but what's the point? If you're already in the networks that the rest of the world actually uses, why bother joining some network that no one uses?

Right now, I think the main attractions are for merchants who want to accept fiat payments from abroad without the risk of chargebacks, for remittance and for its distributed order book. The latter is what makes me enthusiastic about Ripple. Right now, the creaking system of exchanges is Bitcoin's Achilles heel. Ripple offers a robust distributed exchange and the gateways offer access to it. The only thing that's holding me back is a lack of confidence in Bitstamp and the fact that I have to make relatively slow SEPA payments instead of lightning fast local payments with iDeal.

Oh I don't agree with that at all. Bitcoin is a decentralized currency. The creator(s) of bitcoin didn't give 80% of bitcoins to their for-profit company and the rest to themselves. The creator(s) probably have a lot of BTC, but if so all indications are that they got it the same way as anyone else.

I don't really care about that, but if others do that's fine by me. Do note that once ripples have been released into circulation Ripple Labs no longer has any control over them.

That said, greater current mindshare also goes a long way .

It will be interesting to see how it plays out. Right now, I think Ripple could offer great value to the Bitcoin ecosystem because of its robust exchange system while Bitcoin can provide Ripple with a customer base and demand for its services.

[Sukrim]

There are already people showing up to arbitrage on Ripple. There is at least one US based gateway (PeerCover) that even accepts credit card payments, so I don't really see difficulty there getting USD in and out. BTC anyways are easily accessible within Ripple, depending on market situations I'd recommend though not to buy in huge market orders - after all the BTC market is about 1% the volume of Bitstamp.

Once you have USD in Ripple, you can trade BTC and withdraw them to any BTC address (if Bitstamp's bridge doesn't stall again, sometimes it does, usually it doesn't) in about 10 seconds flat.

Bitcoin currently depends on exchanges, if you take these away, both Coinbase and BitPay (who process a LOT of transactions on the block chain) are out of business in one single swipe. Bitcoin can still continue to exist, but will have very limited usability without exchanges.

Ripple would take over in that regard, that you do not need to exchange anything as gateway yourself - you only offer to do AML/KYC and deal with deposits and withdrawals of whatever currency or asset you like, that's it. Every exchange to whichever obscure currency that actually happens is distributed inside the system and out of reach for any government interference.

[bitcoinrocks]

Can I buy Ripple like I can buy Bitcoin?  If so, how?

[Cygnify]

Is there somewhere with a really good explanation of ripple, still not 100% clear on it. In particular, to me it seems like its not really a decentralized system?

[Sukrim]

Is there somewhere with a really good explanation of ripple, still not 100% clear on it. In particular, to me it seems like its not really a decentralized system?

Which parts of Ripple don't you understand? Just like with Bitcoin, some people don't get mining while others don't know how to operate their wallet software...

Why shouldn't it be decentralized? You sound a lot like someone reading ripplescam.org but not really understanding what's written there is a mixture of bullshit (a hint: BitTorrent is NOT distributed at all), statements out of context and misinformation, paired with a very carefully selected range of comments.

I liked the more casual "primer" white paper at https://ripple.com/ripple_primer.pdf - if you have more concrete questions after that, please ask them, as you actually did not ask a real question so far...

Can I buy Ripple like I can buy Bitcoin?  If so, how?

No, Ripple is a decentralized exchange, bitcoin is a digital asset. If you want to buy a digital asset that is native to Ripple, you can buy some XRP (confusingly called "ripples"). You can do so on various sites which I haven't really used so I'm not going to list them here, sa it might sound like a recommendation.

[OnkelPaul]

Is there somewhere with a really good explanation of ripple, still not 100% clear on it. In particular, to me it seems like its not really a decentralized system?

I'm not going to write up "a really good explanation of ripple" on the spot.
The network of validators does not depend on a central server to operate, and thus it is decentralized. However, in the current phase the main validators are operated by ripple labs.
Yet since the various exchanges run their own nodes with validators, they could ensure continued existence of the ripple network and the transaction ledger (I don't know whether they have appropriate UNL settings yet to trust each other).
This is different from the bitcoin p2p approach that is based on lots of mostly anonymous nodes - ripple nodes are not anonymous. But the network is decentralized.

Onkel Paul