Topic: Ripple: A Distributed Exchange for Bitcoin - page 3. (Read 66713 times)

Depends on the aspects of Paypal you refer to.

Possible to send IOUs to someone you just know the address from? Definitely. The ledger however is distributed and public, not in a private datacenter from the service provider.

The blanket statements and one-liners that creep up again make it quitre hard to discern however what the real issue is.

My guess is that people see several things in Ripple that it isn't and also isn't designed to be:

Ripple != XRP for example. XRP are a part of the system, but they are not really required for users after funding and definitely not the main investment vehicle in Ripple.
Ripple is also not a way to deposit/redeem money or other assets. These are the gateways and YOU are responsible to choose which of them you want to use and trust, not Ripple.
Also, Ripple is just "the other side of the coin" in the struggle to create digital assets. Bitcoin created transactions in a central shared database with units that start off as worthless and that are traded at the borders against other things. Ripple allows you to create anything really that is worth something (a cow, a coin, a cake) but since the thing that is represented is actually existing it can be traded at the borders mostly/only(?) against the real thing while the "IOUs" can be traded inside the system.

Huh? Anyone can run a validator and anyone can act as an ad hoc gateway.

Ripple is about as P2P as PayPal.

No, and that's what makes Ripple superior to them IMO. But I get your point, they aren't a counter example. I still don't understand why you think Ripple cannot be a successful p2p currency exchange.  I'd say it's an operational p2p currency exchange already, though it's perhaps too early to tell if it will be successful.

If Ripple were a horse...

This is like the following scenario:
You have an accout at MtGox that can hold up to 10k USD (because of AML issues or whatever). Now you are afraid to actually use it, because MtGox might arbitrarily credit your account 5k USD out of thin air.

The proper way to protect against this is fairly easy and known for centuries at the very least: Audits.
Do not trust a goldsmith that might do such things in a way that you (or regulators) won't know about this and require him to have a daily/monthly/quarterly... audit where he gives proof of holding at least the 1337 oz of XAU that the current Ripple ledger states he owes his customers.

You are being afraid to get free money (from the goldsmith) or worthless money (someone else pays you in Au.Goldsmith, even though he is bankrupt in reality). This is why banking laws and regulations exist. If your goldsmith publishes a picture of a big gold bar with the current edition of a popular newspaper right next to it (as a very simplistic way of having an audit) or MtGox would publish a bank statement every month that shows that their funds are actually enough to cover the balances issued to customers (or even just a simple audit...) this might make it more likely that people trust these issuers.


Gox and 'stamp are P2P, you are not dealing with brokers but directly with orders from other users. The biggest issue (and the one that Bitinstant for example tried to solve) is liquidity of the balances on these platforms and their redeemability.
If you only want to use Ripple as trading platform, not as a payment platform (where trading is done at the time of purchase, not beforehand) and you want to make sure you don't receive any payments from others, a first step might be not to accept payments on Ripple from others instead of nulling trust lines. Everything that comes inbound that is not from your trades then is a donation with purpose beyond that.

Are Mt Gox or Bitstamp P2P currency exchanges?

How is this different from Mt Gox or Bitstamp? By that reasoning they couldn't exist, but they do.

Old and FUD

Just found this:

Bitcoin rip-off Ripple peddled shamelessy by Business Week

I think there is not too much to add ...

OK, but in that regard it still looks superior to existing exchanges to me.

Why not just reduce the maximum to zero immediately? Ripple has no problem with a line that's over its limit. Nothing special happens except that the balance cannot increase, which seems to be exactly what you want.

A line that is at or over its limit can't be used to receive payments though. It seems odd to me that you would be willing to hold an asset but not willing to receive it in payment. If there's an actual use case for this, I can't figure out what it is. But you can get it by just reducing the limit to zero when you don't want to acquire more of the asset.

The only thing I (potentially) care about with regards to Ripple is everything about it that isn't XRP.

A traditional, non-revolving credit line. You could call it a simple, or a one-time use trust line.

It could be implemented as a trust line whose maximum decreases every time the balance decreases by the exact same amount.

Huh? I don't see how Ripple will be more vulnerable to this than existing Bitcoin exchanges. And because of the possibility of rippling between trusted associates I think it is actually far superior to other exchanges. And don't forget that XRP has very similar properties to Bitcoin, your concern only applies to the fiat/crypto exchange layer, not to XRP.


What primitives do you think are required?

And this is why Ripple will never be anything more than a PayPal clone with severe regulatory liability issues.

In the real world, trust is not binary. That's also why there exists in the world more than one primitive for representing trust in financial terms (credit).

Still it could be a nice feature of some types of client or clients for some types of people to have the client watch such things and point them out to you.

-MarkM-

No harm done, since nobody has any gold issued by the goldsmith to give you. So you trust the goldsmith for gold he doesn't have, but because he doesn't have the gold, nobody can give it to you anyway. No problem.

Of course. You agreed to trust him. He can betray that trust, in which case you lose. That's how trust works.

Do you trust him or not? You are trying to create some case where you both trust him and don't trust him. It has to be one or the other.

This scenario doesn't make sense in the case of using a trust line to receive a payment. And if you just want a trust line so you can receive a balance from the issuer, you can drop the trust to zero immediately -- as soon as a balance is issued.

At one time I was considering using Ripple as an accounting system needed to build a peer-to-peer currency exchange, but unfortunately it is wholly unsuitable for this task.

Their debt/trust model only has one type of primitive: an indefinite duration revolving credit line.

Because of this, there is no way to implement a reliable interface with meatspace.

Assume I want to recreate the classic origin-of-currency example of letting the goldsmith store my gold for me and trade with tokens, but in this case instead of paper money I want Ripple:Au.

As the client exist now everything appears to work find, but there's a fatal flaw in the system.

Assume I can find a person willing to store 1 physical ounce of gold, issue me Gold units in Ripple, and redeem those units for the physical ounce to whomever ends up with the Ripple units.

Here's the sequence of events.

I trust the goldsmith for 1 oz. (in Ripple)
I hand the goldsmith 1 ounce of gold (in meatspace)
The goldsmith transfers 1 oz. of Au to me (in Ripple)
I spend those Ripple units somewhere. (Online)
The merchant I bought from wants the physical gold.
He goes to visit the goldsmith (in meatspace)
Merchants transfers 1 oz to the goldsmith (in Ripple)
Goldsmith hands the merchant 1 oz gold (in meatspace).

So far so good, right?

Wrong.

I still trust the goldsmith for 1 oz, but he doesn't have any gold. Unless I am constantly checking my open trust lines I haven't noticed that the balance on that line has dropped to 0. The goldsmith can issue another oz. of Ripple gold units, but he has no way at all to redeem them.

In order to support exchange functionality between Ripple currencies and real-world currencies, Ripple needs the a non-revolving credit line, but it doesn't have one. Nobody is going to be able to implement a successful P2P currency exchange on Ripple, because of this infinite inflation feature.

This might be a joke. I do not remember how much money I lost in this life just because people have not payed back what I gave them. And finally I must say - considering the debt system - it is OK because I decided to give that loan the money without any guaranty for payback. People are not responsible. And it is time to overcome disruptive concepts like debt.

Apart from that Ripple as far as I got Ripples concept it finally goes to the same direction as Bitcoin. When it will be connected to all payment systems with interest Ripple will be the only one without interest (not to talk about cryptocurrencies). This would simply result in XRP being the only money which preserves its value while all others will loose. This in mind Ripple has the same end state like any other cryptocurrency - just with the little difference that
1. someone must distribute the initial 1E8 XRPs - who will get them ??
2. the disruptive concept of debt is part of the system

Everything else seems to be comparative. From my point of view Ripple might be a good money exchange between cryptocurrencies if it works without XRPs. But I see a big mismatch between fiat currencies and Ripple.

Arthur just explained why it can't. Responsible people don't default on their obligations just because other people default on obligations to them. They act as circuit breakers.

Every payment in Ripple is irreversible as well. And if you only use the internal currency in Ripple, you have that same simplicity. You're essentially arguing that giving people choices is bad because they might make bad choices that can hurt them. If you believe that, then irreversible payments are a bad thing.