Topic: Is Ripple a Bitcoin Killer or Complementer? Founder of Mt Gox will launch Ripple - page 10. (Read 34129 times)

http://www.hulu.com/watch/61320

So, from what little I've seen of it, I'm guessing it basically functions the same as Bitcoin + OTC, except the users can't really tell the difference between money and credit, and whenever a loan defaults it just gets quietly converted into inflation.

http://ripple-project.org/Main/FAQ

edit. too much speculation of what ripple is/isnt on this thread.

But loans are just one type of use.  If I am selling a used mobile phone and I accept Ripple for payment (e.g., I price it at 20 units) and you pay with Ripple credits (which you got in lieu of cash for fixing a neighbor's PC), then there is no lending at all in this scenario.

Now the lending concept comes in with regard to how fiat money is created.    But Ripple isn't fiat.  That's obviously the secret sauce that makes or breaks the concept so I guess we'll just have to wait to learn how Ripple.com intends to solve that.   Maybe Ripple's currency is something as simple as being shares that earn future dividends that come from transaction fees.   Who knows.  [Edit: Since this post it has been clearly described as being money created by debt -- loans extended by trusted parties.]

My curiosity is piqued though.

That's the bad way to extend trust to strangers. There is a good way to extend trust to strangers though:

1) You see that these strangers have engaged in numerous real transactions such that the cost to create a fake set of transactions is more than $1.

2) You extend them about $1 of trust.

3) If you lose, you lose $1. No big deal.

4) As soon as this trust has made you more than $1, you increase your trust to $2.

5) Repeat, ratcheting up the trust such that at any time, if they default, your maximum loss is very, very small, way less than their cost to fake such an arrangement. Very quickly you'll reach the point where even the maximum loss they can impose on you is just a small dent in the benefits you've gotten.

However, again, if you don't find this convincing or this is not for you, don't extend trust to strangers. Unless the stranger is well-connected and liquid, there's no benefit anyway. And if they are, it's unlikely they'll abandon that just to rip off a few people for a few dollars. Personally, I believe that people will wind up extending significant trust to strangers and benefiting from it sufficiently that the occasional small loss will be well worth it. But not everyone agrees with me, and I recognize I may be wrong.

What are you talking about? What rep? In Ripple (as I know it) there is no rep, there are only credit lines. If you are going to give credit lines to strangers that's your problem, not Ripple's. You are expected to only give loans to people you know.

What is stopping you from giving more details?  I'm really curious how you've created a decentralized currency to compete with Bitcoin without the use of mining.  The use of proof of work to achieve distributed synchronization is an amazing innovation...I believe it will be adapted to many other contexts where distributed synchronization is required (database vendors are you listening???).  It's hard to imagine an alternative that doesn't quickly degenerate and become either centralized or balkanized.

i can already see what will happen. i see alot of people creating 5 usernames on ripple, then trade small amounts to themselves to get some rep rating. and then ask for large amounts from strangers.

then delete that username keeping the winnings.

i seen it happen alot on OTC people buying rep or just trading with themselves with small amounts just to then beg for large amounts.

hopefully ripple will atleast ask for real life information and ACTUALLY check it out through government databases and other verifiable means to ensure its all valid. eg sending a letter to someone's house with a verification code as a minimum.

but wait that wont happen, even BTCJAM has scam artists even with its so called verification process.

Awww, c'mon Joel you're killing us with the suspense ... could it be used for business-to-business transactions for example?

While there is where the name "Ripple" came from, this is just one of the things you can do with Ripple. I personally think that, at least long-term, it's going to be what makes Ripple great, but you don't actually have to extend credit limits to your friends to use Ripple. And short-term, I don't think that's how people will primarily use Ripple. I wish I could give more details, but I can quote our public blurb:


Notice it doesn't mention anything about extending credit to friends, or credit at all for that matter.

related: https://bitcointalksearch.org/topic/x-iso4217-a3-revised-draft-published-127604

Don't give me no hippie currency.  If someone could run up a "friend's" credit this is going to be so much fail.

That being the case, Ripple would bring further awareness to Bitcoin, and versa visa.

I agree. I don't think Ripple will really work as a currency in itself. But I think it will work very well for more short-term debt, like instant transfers of small amounts of BTC, USD, gold, etc. that are actually settled later through the trust network.

Ironically, three years ago a local who frequently visited a restaurant I use to visit also, asked to borrow twenty dollars from me. I knew he was very sick and didn't have long to live, but loaned him the cash because I trusted him to pay it back, never taking into consideration at the time that he may be dead in few days, of said time frame he did succumb. Now, everytime somebody mentions Jimmy, I remark that the SOB still owes me twenty bucks. We have a quick laugh knowing that Jimmy wouldn't mind us making fun of this debt. In hindsight, I earned a many a mileage on that twenty buck loan, and expect to still collect dividends. In fact, that loan allowed be to add to this conversation. Only if I knew who ended up with his handsome antique gun collection.

~Bruno K~

I see ripple work for small amounts. I wouldn't trust many people with 100$ yet I might want to trade 100Ƀ. Or much more at times. The easier it gets to trade, the smaller the trades may get though.

@Gavin:
If I trust a friend with 20$ and I hear he will not be able to pay back his debt because his terminal cancer treatment is too expensive, I will not complain. I do trust him with this amount cause this is the amount I am willing to loose to him. If he came to me to ask for a much larger sum, I might be willing to give him more after careful consideration but the ripple credit lines are amounts I generally trust to get back but that don't kill me if I don't get them back.

I remember that thread...shortly after I happened upon Bitcoin I had similar thoughts.  Is it possible to design a Bitcoin like currency without the mining?  My conclusion was no, but maybe I'm wrong.  

As a recipient of a transaction, the fundamental question you are asking when deciding whether to accept it is whether that transaction is marketable.  In Bitcoin, you make that decision based on the transaction history in the block chain.  And, you make an assumption that Bitcoins are fungible (see taint analysis for more debate on the importance of fungibility).  If the fungibility aspect of a Bitcoin ever broke down, then you would be checking in with this or that miner or merchant to decide whether you'd accept a transaction.  If they don't accept the transaction, then you wouldn't.  So, if a powerful entity like Amazon.com decided to accept Bitcoin and then started employing some kind of analysis to selectively accept or reject a Bitcoin transaction, it's conceivable that it could destroy the decentralized nature of Bitcoin because so many people would want to check with Amazon.com before accepting a transaction...thus morphing Bitcoin into AmazonCoin.  Mining helps ensure this doesn't happen because there is a clear and simple protocol that people can use to validate a transaction that ultimately works better than a single entity, no matter how influential, from dominating Bitcoin.  Holders of Bitcoin, interested in preserving their wealth, would actively work to foil any taint analysis...they could spread tiny amounts of bitcoin around to random addresses...they could employ and encourage others to use mixers...etc.  And miners, seeing that the threat of AmazonCoin would render themselves irrelevant (why do you need mining if you just need to clear transactions through AmazonCoin?) would also take active measures to counteract AmazonCoin.  Amazon would be left with a choice, go off on a fork, or follow the Bitcoin protocol rules.

In the absence of mining, all you can do is check in with others as to the marketability of a transaction.  I don't see how that ends up being anything other than a completely centralized system or a balkanization with many different coins in different jurisdictions (AmazonCoin, AlipayCoin, UncleSamCoin, etc).

People also shouldn't worry about the energy consumption associated with mining.  I believe as the reward tapers off, we'll enter into a phase where many entities buy mining hardware for the express purpose of sitting idle until and unless needed to thwart an attempted attack on the network.  There will also be miners that get paid a subsidy from other businesses to ensure Bitcoin transactions remain free or very cheap (ensuring that mining without subsidy is a money losing endeavor).  There may even be treaties involved to negotiate how much mining power different entities apply and keep in reserve in order to simultaneously protect the integrity of the network and not needlessly waste energy.

I don't agree. Nothing like Ripple has been used anywhere before, including Bitcoin. It's not your run of the mill web of trust network. With Ripple it starts with your closest friends and you can clearly define the amount of trust, or credit in this case, that you trust them with. With Bitcoin there has been no good way of doing anything like that.

For example, I would trust some of my closest relatives and family, and some of my closest friends pretty much. I would give them, let's say, 20 bitcoins worth of credit. I trust you, Rassah, somewhat, and I might give you 2 bitcoins worth of credit. To total strangers I would give no credit but through the Ripple network they could benefit from my credit through the people that I give credit to, if there is a connection. The bigger the network, the better it works.

It's a really interesting system because you can set the limits very easily. It's smart to start with very small amounts at first and find out about the risks. Settling the debts can happen in any currency, Bitcoin for example, which is actually well suited for it.

Bitcoin is scarce-money, Ripple is credit-money. They serve very different purposes.

I don't think we'll know if it can work until it is tried; it does seem to me that the incentives point the wrong way (if my doctor tells me I have six months to live maybe I decide I deserve to run up my Ripple credit to the max....) but maybe I'm just cynical (maybe there will be an equal or greater number of people who decide to give away all their money through Ripple instead of leave it to their deadbeat children).

Good luck to Joel and Jed and the rest of the Ripple team!