Topic: How the Ripple payment network and XRP are different from Bitcoin - page 4. (Read 11076 times)

I have seen you are ripping ripple a new asshole all over bitcoin forums. Communism huh? I see why you would say that. I dont like its structure and i dont see a mechanized release of the coins held my OpenCoin as a solution to the problem, it just cant be transparent enough for me. 

This is the first time I actually agree with you, sublime.

Set me straight If I am not understanding any of this.

I would love a video of exactly how ripple is intended to work. Though I would suspect it would be hard to create a video explaining that 4 guys are going to create a currency give 50 percent away then hold the other 50 percent in the hopes that it gains in value. Then convince people that they should use it and even though 50 percent of them were given away for free! and the other 50 percent are held by the 4 oligarchs of digital currency! that they are valuable! 
So basically you have designed what could become the worlds most centralized currency with 4 members issuing and controlling the distribution of said currency oh and you have this little problem too

* Since OpenCoin's business model is to "hold XRP and hope they appreciate", we know that no proposals for fully decentralized distribution (e.g. "proof of work") can possibly be taken seriously.

So we know that you cant be trusted because of the nature of your business model.

Does anyone else see this ending in a repeat of the facebook fiasco between these guys all four of them in court suing one another over who did what and who owns what?

Let me know if i am missing something.
   

MisterBigg's big "revelation" post does clear up a lot of uncertainty and various suspicions of nefarious motives on the part of OpenCoin, Inc's founders, however there does remain one fly in the ripple ointment, so to speak.

I call it "Systemic Risk" or perhaps a better name would be "Flood Risk", i.e. the for whatever reason (divorce, lawsuit, law passed by some unnamed legislative body, kidnapping with torture, whatever)  

The retained 50% of XRPs under direct or indirect founder control are partially or fully flooded onto the network after the initial period of the giveaway AND after the network has grown to rely on a more or less stable equilibrium BTC/XRP and USD/XRP exchange rate (hopefully ?).

I believe it's possible to come up with a post giveaway distribution / sale strategy such that:

A. Flood Risk is eventually eliminated while
B. Eventual total financial gain by founders is maximized, and
C. Ripple's growth rate is not stifled by XRP's becoming too costly to open new accounts.


Here's a sketch of a proposal, let's call it OpenCoin, Inc.'s Sunset Schedule:

1. Large enough remaining portion of the 50% (but not necessarily all of it, let's say 48 to 49% of it) is put up as one giant moving bid wall where a huge amount of XPRs are offered for sale at a small enough price not to stifle the rate of growth of the network that has been observed until that moment.  
That growth could be measured in various ways: percentage of the total world-wide monetary base, or percentage of world-wide GDP transacted on the network, etc (this is where some professional economists could really help).

2. The wall will effectively create a gradually increasing ceiling on the price of XRPs but with the rate of the ceiling increase (or decrease ?) varying to allow total eventual realized gains from the sale of the remaining 48% to be maximized while not endangering the growth rate due to continual presence of the Flood Risk or due to price of XRPs rising too rapidly to where it inhibits adoption by new users relative to the currently prevalent consensus account funding requirement.

3. Eventually the Fort Knox of XRP (except for some residual "retained forever" part which is small enough not to worry about Flood Risk gets emptied of all XRPs, but by that point in time, the price of each XRP should be high enough to prevent any other entity ( including printing central banks !!! ) from being able to seize a large enough fraction of the total XRP money supply to corner the XRP market.
That price might take the XRP way, way beyond parity with USD, $1000 USD per XRP ? Who knows...

This type of schedule could be publicly pre-announced and committed to by OpenCoin, Inc and henceforth can be monitored by world financial press and blogosphere.


Comments, improvements, criticisms are all welcome.


Cheers ...

It's not to late to "Edit post"

No it was not, but I am forum lurker not a frequent poster (until recently) so apologies for my lack of proper forum netiquette :-)

If Ripple is found useful by the masses, it will be used. Users will need to obtain XRP to push transactions. As long as they are comfortable with the cost of transaction fee, I don't care where they got the XRP from (50% chance it's from OpenCoin if they keep their promise of giving away 50%). All this does not affect me as a user - whether it's bitcoin miners, or Ripple developers, or my bank executives. If I am happy with the free choice I can make, and the cost of transacting, and the security, and level of privacy or transparency, and social and environmental implications of the system, and any externalized cost they create - as long as I'm happy, I don't care who pockets the fee. In fact, I'm glad it's kind of folks behind OpenCoin.

Can you comment on the magnitude of information asymmetry between OpenCoin and the general public in terms of prediction models for the XRP exchange rate? Let me give you an example. In MMORPGs like World of Warcraft or Eve Online, economists build prediction models to determine how changes in system parameters affect the virtual economy. A change might be made to gold sinks to drain excess currency from the virtual world in order to reach a price target for specific goods.

What models have been developed for the XRP economy? Are there any? Can we get details? Has there been any research consulted, simulations performed, or modeling software written, to calculate future expectations of XRP exchange rate with respect to how network parameters like transaction cost, growth in transaction volume, or any other emergent characteristic of the network evolves?

Can you comment on whether or not such research was performed prior to final decisions regarding the XRP system?

Has OpenCoin developed any metrics for calculating the economic "performance" of the network, which might be used to set XRP distribution policy?

As far as I know, it has not been discussed in any kind of detail. We did discuss the downsides of raising the reserve -- people will suddenly find XRP that they expected to be able to transfer would be locked up. Also, large drops in the reserve could disrupt expectations. So I expect we'd argue that the reserve should only be raised if absolutely needed and should only be lowered slowly.

I would expect validators to vote their own personal interests -- which brings up an interesting consequence. You want to trust validators not only that you trust to be well managed and not collude but also that you expect to "vote" on fee and feature changes in ways that make sense to you. Of course, validators cannot vote in secret, so if a validator votes against a widely-desired feature or for an unfavorable fee change, expect that to reduce their trust.

LOL @ the thread title.

Nice sarcasm.

Make no mistake, I see nothing wrong with OpenCoin monetizing their business but I take umbrage with the opaque way that it was done. People coming out here and evading direct questions about the currency built in to Ripple. It stunk of week old fish. Even worse are the fanbois and apologists who swore up and down that "XRPs are just like stamps and they are only used to pay for transactions." Anyone who keeps tooting this horn deserves a forum ignore.

Kudos to Jed for coming out and saying what needed to be said in clear and certain terms. Did he do this because he was sick of the bitching (admittedly with a lot of it coming from me)? Because he is generally a nice guy? Or because Ripple is already bootstrapped to the point where the revelation can no longer influence the outcome? I'd like to think it's because he's a nice guy.

This this this.


How OpenCoin will monetize XRP

Vinnie:  ...What's the OpenCoin business model?
Jed:  ...we hold xrp and hopefully they gain value

That is a point - although as I did get free XRPs I would probably provide the 200+ XRP for at least the first hundred or so people that wanted to be paid by this method (and who don't have sufficient funds for this).

If people learn from others that they are able to get paid for tasks in their own currency with little fees then an initial small amount to "open an account" would probably not be such an impediment.

You're welcome but was it really necessary to quote the entire post     

It's really hard for me to analyze but my intuition tells me that the strategy for a rational actor who controls the distribution of XRPs would be engage in price maintenance. There are two opposing goals:

1. Allow more funded accounts by expanding the XRP supply.

2. Maximize the exchange rate by limiting the XRP supply.

There exists some equilibrium XRP exchange price which just low enough to discourage the need for validators to lower the reserve requirement. If I was controlling the XRP supply I would do my best to sell it off near this equilbrium rate. Furthermore, I would enter into agreements with gateways and merchants to sell them blocks of XRPs with price maintenance contracts (i.e. gateway agrees only to sell with prescribed daily volumes and prices).

I can't prove it but I believe that for as long as the initial volume of XRPs are employed as a price maintenance tool, validators will have no incentive to change initial network parameters like the reserve requirement.

Let there be light !

Thanks for posting this misterbigg !!!

It doesn't bother me at all for people to be enriched.

If OpenCoin continues to play a significant role in the network in the future (by having trusted validators and by their position in the Ripple community), what will their policy on account reserve changes be?

Whatever it's worth to a business to gain a new customer. So probably 200 XRP will be significant. If each XRP is one cent, the founders keep half a billion dollars for themselves and centrally plan the distribution of the other half. And that's just the valuation XRP could have for one purpose. In reality, businesses will be competing in their bids for XRP with many other parties.

That assumes the base reserve stays at 200 XRP, which it may or may not do. It's established by a consensus of validators weighted by how much other validators trust them. I expect that in the future, this will mainly be merchants, so if they want the fee lower, they can probably push it lower.