Topic: Ripple: A pre-mine? Does it matter? - page 4. (Read 13975 times)

I was defending Ripple's decision to not use a 100% proof of work distribution. I'm not sure about the rest of Ripple. It's kind of a decade old vaporware project and its hard for me to get that out of my mind when trying to think about its implementation. Basically its hard for me to pay attention to because I remember its history.

Its not a premine as its not an actual coin imo, the correct word would be creation, as no mining is involved

Now this is an interesting observation which attempts to provide some explanation for partially opaque replies.


But then you mention Freicoin which I think cheapens the discussion. Freicoin is nothing more than a toy currency that tries to piggyback on the greater works of others. Freicoin is flawed because it pretends that market participants have no time preference. It tries to push its social engineering agenda in a way that ignores economic principles.

Please don't turn this into a discussion on Freicoin. Let's stick to the question of the Ripple pre-mine.

Please stop referring  to your failcoin, it has nothing to do with ripple anyway.
OpenCoin got the coins and distributes (some of) them via giveaways, you, on the other side, are "collecting" taxes from miners work, without even a faucet made by you and without doing anything actually.

YOU have NO right to speak about GREED and you know why (i guess.. if not, re-read all the failcoin threads)
And btw, wasnt you that was defending ripple the other day on some thread?

If Ripple is not vaporware the biggest risk is the legal risk of running everything under one for profit umbrella, OpenCoin Inc. As a veteran of the filesharing industry at least one principal of OpenCoin has a history of viewing the legal system as a technical problem. They only aim to fit exactly within the specification and tolerance. For an example that others in OpenCoin feel this way, Joel will basically respond "I do not acknowledge that Ripple has any market value" in the other thread about Ripple. He probably mistakenly believes this will allow him to avoid scienter if Ripple is doing something illegal. This guarantees failure upon scrutiny, because the legal system is more interested in seeing that actors are trying their hardest to do the right thing. Ideally the point is to soar into the net. Ripple seem to want to bounce off the goal post on their way in.

Personally, I'm glad Ripple is here to act as the canary in the coal mine for similar projects. We can at least agree they are running a lot more "hot" than Freicoin is.  Freicoin's distribution method does not involve us holding onto any tokens. To me it betrays the point of trying to make a more fair and decentralized economic system as an experiment. Keeping a large portion of the initial coins is greed with little reason. Ripple is building a dizzying array of well designed web services on their site. Why not distribute all the coin and "earn it back" by charging for their web services?

It definitely looks like a classic alt coin pump and dump.

Do you call this "virtually worthless?"



If you control the issuance of a currency, you can control the exchange rate. Bitcoin is popular precisely because no one directly controls the issuance of the currency. Ripple is troubling for the opposite reason.

I dont understand how ripple prevents spam since XRP is virtually worthless. If the cost of 1 XRP is less than the benefit a spammer gets from spamming how can you combat it ?

I would like to see a discussion of any anti-currency properties considered for Ripple, and why they were rejected.  Like having a huge extra tx fee for transferring Ripples from one account to another, effectively forcing any Ripple trade to go only one step: from miner to antSpamRipple user.

https://bitcointalksearch.org/topic/m.1555554

"You start off with premine of 1000 trillion antiSpamRipples. You sell them for 1 US cent (or a few sathoshis) each, or give them away for 3 years - the rest is destroyed. After these 3 years replacement of the destroyed ripples will be by demurrage, like Freicoin, about 5% every year. This is the miner grant for making new antiSpamRipples to somewhat replace those destroyed, and to have a distributed way of securing the network. Tulip mania is averted by making antiSpamRipple useless as a currency by having an extra large destruction of antiSpamRipples transferred from one Ripple account to another, above the mandatory tx fee. Like 10%: enough for you not to shrink from sending a few to your auntie and nephew, but enough to prevent any speculation on it becoming a currency. "

Good observation, I will update the OP.

Another way XRPs are privileged is that no path finding or intermediate fees (beyond tiny tx fee) will ever be required to transact in them

I agree with you 100%. I said that XRPs have no counter-party risk (this is direct from the wiki). Of course the gateway IOUs that get swapped around the Ripple network will have counter-party risk. But the XRPs are every bit as secure as Bitcoins are. XRP occupies a privileged and special position in the Ripple system: it is the only currency transmitted by the system that has no counter-party risk.

Users will always prefer to transact in XRPs over IOUs (because XRPs have no counterparty risk). Take a look at the BitStamp order book for BTC/XRP. It has a fair amount of depth. Now look at the order book for BTC/USD. Not much there.


Ah yes, of course you are right. I will update my post to reflect the assumption that the Ripple protocol will be decentralized and that its algorithms will withstand rigorous mathematical analysis.

We don't know if this is true or not. As it is set up now, with just a single website, XRP/ripple has infinite counterparty risk.

OP's post is mostly about the privileged status of XRPs and their issuer relative to all the other IOUs inside the ripple system.
XRP's (inside that system) may end up having no counter-party risk, but instead perhaps ripple as a whole is subject to Systemic Risk.

Here's one scenario:

Divorce of one of the holders of the keys to XRP Fort Knox forces disclosure or master secrets by soon-to-be ex-wife's lawyers and despite her best economic interest she decides to dump her 50% of all XRPs she's entitled to simply to destroy her ex's legacy :-)

From the ripple project website https://ripple.com/working-with-ripple/ it states:


I would call trust-based financial relationships a counterparty risk. I'm on the fence about its utility, but I don't think you can misrepresent the probability of an I.O.U. default.

Note: The following analysis assumes that the Ripple system eventually becomes open sourced, gets decentralized, and that rigorous mathematical analysis proves that the system is robust and fulfills its technical promises.

From the Ripple wiki


This analysis brings us to one very disturbing conclusion:

The founders of Ripple will control over 99% of the purchasing power of XRPs for hundreds if not thousands of years.

Despite the lack of any significant goods and services enabled by the fledgling Ripple network recently opened to the public, there is already a robust trade in XRPs for other currencies like Bitcoin, US dollars, and foreign currencies:



To preserve XRPs function as an spam prevention, OpenCoin foundation must maintain the scarcity of XRPs by limiting their supply. This is also what creates the market for XRPs and gives them value. It is not possible to have XRPs be both worthless and also useful for preventing spam.

Combine all these facts with the odd statements and the carefully managed customer-facing facade of OpenCoin representatives and we have all the volatile ingredients necessary for the Next Big Cryptocurrency Drama.