Topic: How the Ripple payment network and XRP are different from Bitcoin - page 5. (Read 11043 times)

I'm not sure I agree. People are getting misdirected by the XRP cost of transactions, currently set to 10 drops, and completely forgetting about the reserve requirement of 200 XRP to fund a new account.

The cost for a new user to participate in Ripple is 200 XRP, not the marginal transaction cost.


Once all of the free XRPs have been given out, then in order for anyone to receive payments they would have to buy 200 XRP to fund a new account.

Thinking about it from a business perspective, I don't think it is practical to push the burden of paying for new accounts on to customers (online shoppers for example). Instead, it would make sense for internet businesses to subsidize the cost of new account creation by buying large blocks of XRP from OpenCoin and then paying for new users' accounts as a value-add for shopping online with them.

Note that the users will still indirectly bear the cost of new account creation (and accompanying enrichment of the founders) through slightly higher prices passed on to them by merchants.

If you want to speculate on the future value of XRP: What is a reasonable price customers can be expected to pay to fund a new Ripple account? One dollar? 50 millibitcents? What?

One observation that I haven't seen in these discussions is the following: the relationship between the value of XRP and the size of Ripple (say number of users, or transaction volume) is different from the relationship between Bitcoin price and the size of Bitcoin. People can (and some people will) use Ripple without using a significant amount of XRP, for a number of different reasons. (Not wanting to deal with currency risk is a big one; another is that if you're converting your funds to XRP as a store of value, you might as well convert them to BTC and store them on the blockchain, which has a longer history of success than the Ripple ledger, and probably more privacy.) It's theoretically possible that Ripple will take off without XRP taking off at all, in which case OpenCoin would get very little payoff. XRP might also take off in a big way. It's very hard to say. However, analogies like "what if half the bitcoins were premined" don't translate directly to Ripple.

In launching any new currency the founders can always choose to enrich themselves. What prevents them from doing so is that people find it unjust or can't really believe in it ideologically or philosophically, so they don't support it.

However, conditions are different now. People already believe in cryptocurrencies, and OC has a lot of marketing power behind it. The more people trust the idea of cryptocurrencies and the more they can be swayed by marketing and/or deception, the bigger a cut the founders can justify taking for themselves. I just happen to think this Ripple implementation has been way too greedy, way too closed, way too central-bank-like, and way too deceptive ("XRP=chits, stamps") to be adopted despite all the marketing power. I could be wrong.

The *only* concern that I have is whether or not it will work as promoted which is that it should be very simple to make payments to people between currencies including BTC with an extremely low risk of any failed payment (assuming I have not blindly trusted unknown entities) and in a manner that is fast and has significantly lower fees than using existing payment systems.

If it delivers this then I am 100% happy for the guys to "get rich" from it (as I am sure it would help my own project greatly).

To clarify the order book issue, it works like this:

To place an order, it must be at least partially funded. That is, if you are offering something, you must have some of it. The offer need not be fully funded however. You can, for example, offer to buy 100 XRP for 2 BTC even if you only have 1 BTC.

If an offer is discovered to be unfunded (or runs out) while it's being taken, the offer is removed. Otherwise, an unfunded offer stays. Partially funded offers always stay. So my example offer would stay on the books until it ran down to 50 XRP for 1 BTC. At that point, if anyone tried to take from that offer, it would go away.

The server doesn't provide the client the information needed to tell how funded an offer is. The plan is for the server to, when reporting orders, also report how much the offer is funded. The client could then show only the funded portion of the offer.

This makes order books appear deeper, sometimes absurdly deeper, than they really are.

This wasn't at all planned or intended behavior. We just never considered how support for partially-funded offers would affect the order book view. Because this requires both server and client support, it will take awhile.

The ledger is public, I update the downloadable ledger from time to time, so anyone can find particular offers to see if they are funded. If anyone has a particular need for a current ledger, feel free to PM me and I'll update it.
http://goo.gl/GfoZW

Most of my conclusions regarding the Ripple system have been confirmed after an enlightening session with one of the Ripple principals, Jed McCaleb (thanks for providing clarifying insights into this exciting technology). With his permission I am passing along relevant excerpts from today's #ripple Freenode-IRC channel log. In retrospect, anyone could have figured out these answers simply by making the assumption that "actors always act in their own economic self interest according to the best of their knowledge."

Regarding the apparent 1 billion XRP "bid wall"

Vinnie:  ...OpenCoin's wall would value all XRPs at $225 million USD
Jed:  ...what do you mean Opencoin's wall?
Jed:  That isn't opencoin I assure you
Jed:  No right now the orderbook will show unfunded offers. It is on the list to fix
Vinnie:  Is this a client bug?
Jed:  no it is a server issue

On the amount of XRP already distributed

Blitzboom:  ...can you guys release updated information on how much ripples have been given out so far out of the total planned 50%?
Jed:  ...we have given away 76,786,010 xrp so far

Insider access to Ripple server binaries

Vinnie:  ...How many organizations have been given Ripple server binaries which have not come online yet?
Jed:  2 maybe
Jed:  oh 3

Regarding the closed source schedule of the Ripple software

Jed:  ...we are pretty open. what is it you want us to be more open about other than the server source?
Comboy:  ...what if gov takes down OpenCoin?
Jed:  ...no we would just release the source at that point. the source will be out in 2 or 3 months anyway
Comboy:  ...what is the reason why you don't realease it right away? (sorry for noob questions)
Jed:  ...there are still tons of bugs and we might have to make protocol changes which is way harder to do if there are lots of servers out there

How OpenCoin will monetize XRP

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

The economic incentive for OpenCoin to bootstrap Ripple before open sourcing

Vinnie:  ...Isn't there a risk of a hard fork after releasing the source code, which could make XRPs held by OpenCoin worthless?
Jed:  ...yes. hopefully there will be a lot of users before we release though

On the XRP distribution schedule

Vinnie:  ...How many XRP will be distributed before the source is released?
Jed:  ...no set number

The roster of individuals participating in the Ripple project

Comboy:  ...and are you able to share names of people responsible?
Jed:  the consensus idea was mine. a lot of improvements on it from david and arthur. arthur realized we could do something like the old ripple-project on top of the ledger concept. the contract idea was mine. stefan has made it much better etc
Jed:  ...sure the main developers are me, david schwartz, arthur britto, stefan thomas

On the identity of Jed McCaleb

Vinnie_win> Jed McCaleb author of eDonkey, founder of MtGox, Founder of OpenCoin (http://www.linkedin.com/pub/jed-mccaleb/0/2a4/405)
Jed:  heh glad you have my linked in at hand

Informed disclosure

Vinnie:  Do you mind if I save the log and publish these answers?
Jed:  ...yeah that's fine

My thoughts on this

* XRP is designed to function as a currency

* XRP value is beyond a mere "stamp". People who believe they have trivial value because they are "just used to prevent spam" are misguided, and the founders have implied as such.

* The technical principals behind the development of the Ripple software have top credentials. I have no doubt they will open source their product, and I have no doubt that Ripple will perform exactly as advertised (i.e. mathematically secure).

* It is in OpenCoin's best interests to open source the Ripple software and encourage widespread adoption; This will lead to the highest possible value for XRP in the future

* 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.

The real question now becomes:

Do the benefits that the Ripple system bring to participants outweigh the enrichment of the authors through the self-issuance of the entire block of in-system currency units?

Discuss.