Ripple is not a scam - and you may be making yourself vulnerable to actual scams

[Sukrim]

It is a POTENTIAL legal one and if you read the link I gave before you might be able to guess in which direction gateways need to be licensed probably.

Bitcoins are far less legally explored than digital IOU transfer systems and while I definitely would see that as a major risk, I wouldn't call it a "core flaw" of that system (Bitcoin is also a bit more "safe" in that regard as it advertises 0 backing, it tries to be a pure bubble right from the start).

Anyways, I hope to also get some legally binding opinions in the future about what transferring Ripple IOUs means and when you have to redeem them, how to do that and so on. In the meantime I would recommend nobody to see Ripple IOU transfers as something that can be ignored, not binding or something that won't hold before a court. I have yet to see actual arguments that would support such a view actually other than that contracts in that regard are implied by the network, but not always explicitly written, printed and signed by both parties directly and then filed away.

By the way: There already have been HUGE amounts of BTC scammed out of bitcoin users by misusing trust, still it didn't hurt the system at all - why should the occasional dishonest/fraudulent gateway hurt Ripple so much more or be a core flaw?

[mmeijeri]

It is a POTENTIAL legal one and if you read the link I gave before you might be able to guess in which direction gateways need to be licensed probably.

As far as I can tell there is zero legal difference between using Ripple to buy or sell Bitcoin and using a non-Ripple Bitcoin exchange. In both cases there is credit risk and you have to trust the exchange or Ripple gateway to give you any fiat or crypto owed. At least in the case of Ripple you have a trusted third party (the Ripple network) keeping the books rather than the exchange itself.

[sighle]

After reading through this thread I can safely say that I will not be "investing" in Ripple.

Everything about it meets some theoretical ideal that only exists on paper.

And then scam phrases come out like "Anyone can buy and sell Ripple". Oh really? Anyone can buy and sell the US dollar, anyone can buy and sell Bitcoin or Litecoin or any of the other cryptos that have been released over the last year.

The problem is WHO owns the Ripple currency. These developers come up with this whole idealistic system, try to pump it as a business and then say that "anyone can buy Ripple" while leaving out the fact that the only people selling are the developers.

I don't have an opinion on the overall goal of Ripple as a system, but as a currency it's shit. I am not going to hand over money(or cryptocurrency) that I have legitimately worked(or mined) for and wish upon a star that it somehow succeeds. The mere fact that the Ripple system has this 100% premined and centralized cryptocurrency associated with it means that it will not succeed.

/thread

[Sukrim]

Ripple is not a currency, XRP are and they are called "ripples" (which is an unfortunate name imho).

They are getting distributed more and more, if you dislike this aspect as the only one that much though, you might like to work together with Iain on getting Splash off the ground:
https://bitcointalk.org/index.php?topic=372486.0 / https://en.bitcoin.it/wiki/Splash
If he manages to keep his stuff reasonably localized in the code (should be possible imho), he'd be able to pull improvements from upstream relatively easily.

[mmeijeri]

They are getting distributed more and more, if you dislike this aspect as the only one that much though, you might like to work together with Iain on getting Splash off the ground:
https://bitcointalk.org/index.php?topic=372486.0 / https://en.bitcoin.it/wiki/Splash
If he manages to keep his stuff reasonably localized in the code (should be possible imho), he'd be able to pull improvements from upstream relatively easily.

If this is enough to change people's minds, then it suggests their objections were dishonest... But the more the merrier, I'm all in favour of competition. May the best one (or ones) win!

[casascius]

By the way: There already have been HUGE amounts of BTC scammed out of bitcoin users by misusing trust, still it didn't hurt the system at all - why should the occasional dishonest/fraudulent gateway hurt Ripple so much more or be a core flaw?

This is an excellent question!

The definition of possession of a Bitcoin is very concrete and there is nothing subjective about it: it's algorithmically determined entirely by computers.  You either possess the private key or you do not.  Nobody can change the way that works (other than perhaps the community as a whole), that's why it's so revolutionary.

The definition of a debt, it's a sort of claim against another person you can enforce using some societal framework made of people who have used their subjectivity to define what a debt is, and to create a framework to help make future decisions as to what constitutes a debt.  That framework is a legal system based on a combination of human judgment and written law.

Ripple correctly points out that simple social capital is great for enforcing lunch money debts - the sort of thing you won't miss if someone jerks out on you.  They pretend that this sort of courtesy scales up to bigger communities and bigger amounts when it simply doesn't.  That's why in the real world, any time there's a big deal or a big project, involving legal counsel to dot the i's and cross the t's is routine business.

A court of law can't stop a bitcoin from going to person A to person B, but absolutely can refuse to force person A to repay a claimed debt to person B if that court does not believe the debt to be valid or exist in the first place according to its own rules.

[mmeijeri]

A court of law can't stop a bitcoin from going to person A to person B, but absolutely can refuse to force person A to repay a claimed debt to person B if that court does not believe the debt to be valid or exist in the first place according to its own rules.

The same is true of Bitcoin or fiat held at a non-Ripple exchange. Or money held in a bank. And yet both operate successfully, to various degrees. As long as we don't live in a pure crypto world, we're going to need exchanges. That is where Ripple's exchange mechanism shines, as it is a distributed alternative to the exchanges we have.

[mmeijeri]

The definition of possession of a Bitcoin is very concrete and there is nothing subjective about it: it's algorithmically determined entirely by computers.

As is the possession of XRP.

[Sukrim]

@casascius:
Currently the only asset that fulfills your "you own it 100%" criteria on Ripple is XRP and in my opinion they are a quite sucky currency, so yes, that is a core problem on Ripple as you described it.

BUT:

A much larger part of BTC is transacted off-chain (mainly on pools and exchanges, some as physical coins or paper wallets...) as IOUs and the transaction volume of even a single larger exchange is huge compared to what happens on the block chain. Also large parts of on-chain transactions only exist to settle off-chain balances (e.g. depositing/withdrawing from mining pools or exchanges). Ripple offers help in this regard, it does not really try to tackle the "own your own asset" part of Bitcoin anyways. That's why I also hold (and will continue to hold) BTC - I really hope that in the future I can spend them using Ripple even more often instead of having to hope that MtGox does not do another "audit" where millions of BTC IOUs get issued in the process secretly.

A court by the way cannot stop Ripple transactions from happening either, they can only influence the need for redemption. That's why finding a trustworthy gateway is important in Ripple and not in Bitcoin (as real BTC can't be redeemed for anything anyways) unless you want to use Bitcoin IOUs (on any service where you "deposit" coins) for whatever reason, mostly to trade them or earn interest on them or to avoid dust transactions.

That's why it is a bit puzzling to me why so many people here seem to oppose Ripple THAT much - it will if at all increase Bitcoin adoption and enable more people to acquire them. Most Bitcoins that were stolen were deposits at centralized services, NOT individual balances (well, some because of RNG weaknesses for example, but these amounts are tiny compared to what was simply carried out by the operator of that "Sheep market place") by the way, hence the title of this thread - Ripple would enable you to keep your BTC on your own wallet for longer amounts of time or limit the amount of services you deposit BTC to by decoupling depositing/redemption from the actual marketplace. Also BTC is one of the currencies and payment networks that is naturally one of the easiest to work with and integrate in something like Ripple (relatively fast confirmations and finalization of payments) - the real challenge is for example to offer a bridge from and to SEPA.

(As a personal note: I really enjoy the fact that you are able to find a core problem with Ripple (which is in my opinion just not that much of a problem, since BTC solves it nicely instead and Ripple focuses on something else) and articulate this instead of just blurting out one-liners like some other people around here)

[mmeijeri]

(As a personal note: I really enjoy the fact that you are able to find a core problem with Ripple (which is in my opinion just not that much of a problem, since BTC solves it nicely instead and Ripple focuses on something else) and articulate this instead of just blurting out one-liners like some other people around here)

I haven't seen him make a single substantive point. All the "problems" he points out exist with Bitcoin too.

Remember, Bitcoin possession is very centralised too at the moment. A very small number of people hold more than half of all BTC. I suspect that most people here own more than one bitcoin, some even very many bitcoins. In the long run, if Bitcoin is successful, only the wealthiest of people in the whole world will own that much wealth in cash. For someone who is new to cryptocurrencies, i.e. for most citizens of Planet Earth, there is very little difference between the level of centralisation of both currencies.

[sighle]

(As a personal note: I really enjoy the fact that you are able to find a core problem with Ripple (which is in my opinion just not that much of a problem, since BTC solves it nicely instead and Ripple focuses on something else) and articulate this instead of just blurting out one-liners like some other people around here)

I haven't seen him make a single substantive point. All the "problems" he points out exist with Bitcoin too.

Remember, Bitcoin possession is very centralised too at the moment. A very small number of people hold more than half of all BTC. I suspect that most people here own more than one bitcoin, some even very many bitcoins. In the long run, if Bitcoin is successful, only the wealthiest of people in the whole world will own that much wealth in cash. For someone who is new to cryptocurrencies, i.e. for most citizens of Planet Earth, there is very little difference between the level of centralisation of both currencies.

Is this you justifying how centralized Ripple is?

[mmeijeri]

Is this you justifying how centralized Ripple is?

No, I don't have a problem with the centralised distribution of Ripple any more than I have with the centralised distribution of Bitcoin. Ripple is just as decentralised as Bitcoin, or more so if you look at exchanges, except if you include Ripple-based exchanges like Bitstamp as part of the Bitcoin ecosystem, in which case they are equally distributed thanks to Ripple. XRP is only slightly more centralised than BTC, and even then mostly because BTC has been around for longer.

I own a modest amount of BTC and a very small amount of XRP. I intend to incrementally invest a bit more in both. I think XRP has greater upside potential simply because BTC is much further ahead on the adoption curve, but that also makes it even more risky. Both are very speculative investments, both could be very good for society as a whole. At the moment XRP is the more capable and technically advanced of the two, but that could easily change as I expect both to evolve and to adopt features from successful competitors. Zerocoin comes to mind as but one example.

[Sukrim]

Is this you justifying how centralized Ripple is?

Ripple is NOT centralized, XRP are.

I haven't seen him make a single substantive point. All the "problems" he points out exist with Bitcoin too.

His point was that Ripple being centralized on trading balances/IOUs adds the problem of redeeming these unlike trading native assets (which STILL does not work by the way after years, I have yet to see a successful BTC <--> LTC trade using Mike Hearn's or any other contract transaction protocol!). This does not exist in native BTC, as they are unbacked and just floating on the free market, unlike IOUs.

Native BTC are actually more centralized than e.g. USD, have currently a higher rate of inflation... anyways, as I said the problem exists, but in my opinion it is not a real problem for BTC users in the first place, it can be limited to reasonable degrees for fiat users and it can be priced in as well as prevented individually.

[mmeijeri]

His point was that Ripple being centralized on trading balances/IOUs adds the problem of redeeming these unlike trading native assets (which STILL does not work by the way after years, I have yet to see a successful BTC <--> LTC trade using Mike Hearn's or any other contract transaction protocol!). This does not exist in native BTC, as they are unbacked and just floating on the free market, unlike IOUs.

That is true, but that's just a downside of IOUs in general, not a downside of Ripple. Bitcoin exchanges (and banks!) have exactly the same problem, and yet they do work. Undeniably they have problems too, but those are mostly related to insolvency (which is a serious problem), not to legal uncertainty as Mike suggests.

And of course, Ripple doesn't only have IOUs, it also has a native asset in the form of XRP. In other words, it is more capable than Bitcoin in this respect.

Native BTC are actually more centralized than e.g. USD, have currently a higher rate of inflation... anyways, as I said the problem exists, but in my opinion it is not a real problem for BTC users in the first place, it can be limited to reasonable degrees for fiat users and it can be priced in as well as prevented individually.

I think the potential killer advantage for Ripple is that it can piggyback on the success of Bitcoin, and more importantly on that of cross border fiat payments, which do not involve the tremendous exchange rate risks of crypto currencies. Then again, copying those features is easy enough, especially if you simply fork Ripple and use new initial ledger derived from the Bitcoin UTXO set at some fixed point in time, or through some more advanced proof-of-burn scheme.

[PirateButtercup]

In the end, Ripple is a currency agnostic payment and exchange network. It allows people to send any amount in any currency directly to anybody anywhere instantly. No other system, network, exchange or currency can offer a service close to this.

Cypto-coin and fiat zealots who are religiously devoted to their denomination are incapable of rising above their dogma to appreciate the need or value of a secular financial system like Ripple. Even if crypto-coin profit…I mean….prophet….Satoshi Nakamoto, was revealed to be the Ben Bernanke, and he owned up to the million+ BTC that he pre-mined, BTC fundamentalists would remain unfazed. …. They would simply spend the hour or so it would take to get 3 to 6 confirmations to create new denial mechanisms.  

If a currency or payment system cannot be used to transact business instantly, it has no place in the future. BTC cannot be used as a point of sale protocol. It is too slow….plain and simple….end of conversation.

Much to the chagrin of the fundamentalists Bitcoiners, Ripple is the only present way to make BTC viable in the future.

[SGExodus]

Ripple is not a scam, it's just full of trading options which most of you obviously don't understand. Identifying Ripple network with one of this options is not a good representation of the real situation.

For example trust... All of you think that you have to trust someone in order to use Ripple, non-sense.

Bitstamp is exchange in Bitcoin world and is gateway in Ripple world. If you know how to use Bitstamp in Bitcoin world, you will know how to use Bitstamp gateway in Ripple world. I'm using Ripple for about 6 months and only trust line I have set is towards Bitstamp and I only set that trust line when I deposit BTC from Bitstamp gateway to Ripple. After I complete the deposit, I exchange BTC to XRP and I set trust line toward Bitstamp gateway to zero, so I don't trust anyone in Ripple and I'm trading all the time in the Ripple integrated order book. If you still after reading this say that it's needed to trust someone inside Ripple in order to trade, you have to learn basics about Ripple. Best way to learn is to try, don't base your opinion on theory.

Cheers

Why are you going through all this hassle when you can just use Bitstamp directly, without Ripple in the middle?

[Mjbmonetarymetals]

Scam is just about the most overused worn out word across the forum, if it doesn't meet with strict parameters of "it has to be how I want it to be" or "I don't own any of it" or "I can't understand it' then it's a scam,

Most in the altcoin section don't think for themselves so it's a completely wasted discussion here, hopping from one coin to another hating everything they sold cheap in order to jump on the next coin.

When someone sticks with a coin rather than building that coin they usually just go attacking other coins in order to take market share so there isn't any reliable info on this forum any longer.

[SGExodus]

In the end, Ripple is a currency agnostic payment and exchange network. It allows people to send any amount in any currency directly to anybody anywhere instantly. No other system, network, exchange or currency can offer a service close to this.

Cypto-coin and fiat zealots who are religiously devoted to their denomination are incapable of rising above their dogma to appreciate the need or value of a secular financial system like Ripple. Even if crypto-coin profit…I mean….prophet….Satoshi Nakamoto, was revealed to be the Ben Bernanke, and he owned up to the million+ BTC that he pre-mined, BTC fundamentalists would remain unfazed. …. They would simply spend the hour or so it would take to get 3 to 6 confirmations to create new denial mechanisms.  

If a currency or payment system cannot be used to transact business instantly, it has no place in the future. BTC cannot be used as a point of sale protocol. It is too slow….plain and simple….end of conversation.

Much to the chagrin of the fundamentalists Bitcoiners, Ripple is the only present way to make BTC viable in the future.

Nonsense.   Ripple offers zero value in the payment system.

For cryptocurrency to cryptocurrency, we can already send any amount directly to anybody anywhere instantly.

For Fiat currency, even with the use of Ripple, you will still need to use the banking system to move the money to the end point.  You can't magically move US$100K from one place to another.     Someone will still need to absorb the banking fee for the transfer.

So why even create a complex system when it doesn't improve things at all?

[HairyMaclairy]

Why does Ripple force me to manually reduce my trust with Bitstamp to zero after a transaction.  Why isn't this automatic?

[Sukrim]

Why are you going through all this hassle when you can just use Bitstamp directly, without Ripple in the middle?

Because using BTC.Bitstamp on Ripple you can trade over a dozen different currencies both fiat (e.g. CNY) and crypto (e.gg LTC). Using BTC.Bitstamp on Bitstamp internal, you can buy XRP at inflated prices or trade USD.Bitstamp, that's it.

Nonsense.   Ripple offers zero value in the payment system.

For cryptocurrency to cryptocurrency, we can already send any amount directly to anybody anywhere instantly.

For Fiat currency, even with the use of Ripple, you will still need to use the banking system to move the money to the end point.  You can't magically move US$100K from one place to another.     Someone will still need to absorb the banking fee for the transfer.

So why even create a complex system when it doesn't improve things at all?

Please send LTC using BTC (it would even theoretically possible!)...

With Ripple you can choose which part of the banking system (if at all) and which interface you want to use. You pay fees only for clearing balances - if you needed to pay banking transaction fees (or Bitcoin transaction fees for that matter) for every single trade on Bitstamp or MtGox, you'd not trade much any more.

Bitcoins (mostly) don't get traded on-chain for cash - they are traded BTC IOU for USD IOU. Currently the issuers of these IOUs must be the same (you can't trade on MtGox with your Bitstamp balance), with Ripple they only need a market path between them and can be different.

Why does Ripple force me to manually reduce my trust with Bitstamp to zero after a transaction.  Why isn't this automatic?

Because it does not really make sense in my opinion to change your opinion about believing that you could redeem e.g. BTC issued by Bitstamp just based on the fact that you received some.

Anyways, for something like this there are 3 possibilities:

Integrate it in the client which would then watch out for a certain trust line and address, once something is received there from this address - e.g. Bitstamp's hot wallet - sign and send a trust changing transaction. This means you need to be online when receiving funds and also means that you need to be able to ensure that you receive funds in one single payment (e.g. Bitstamp could send you 100 single USD for whatever reason).

or

Integrate it as flag or other server/protocol side measure. This would be probably the better long-term choice, might need some convincing to get someone at RippleLabs to write the code for you though or to get your own code for this pulled. I've heard about this idea (nulling trust lines after the first incoming transaction to ensure you only receive 1 single payment - could be made more generic by allowing time frames or numbers of transactions) already 2 or 3 times, so if you really implement it well, it might even get pulled even though they disagree with the general idea because it is a valid use case after all.

or

Wait for contracts to be done and hope that this can be encoded in there (it most likely can, requesting this feature might likely get the response "possible with contracts").