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Topic: Ripple - Bullets and Debt Based Currency (Read 2610 times)

JoelKatz

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Quote from: bitaccumulation on April 12, 2013, 04:26:49 PM

Quote from: JoelKatz on April 12, 2013, 10:51:16 AM

You can also create a DYM pathway and then just make a payment to yourself of, say, some number of DYMs and click the 'XRP' payment button. That can take from combinations of exchanges and pathways to get a better deal, if there is one.

When you make a payment to yourself of DYMs (as an example) if there are no people selling DYMs on the market, will it automatically create a new IOU and create an obligation on the issuer of DYMs or does the issuer have to approve the transaction?

There's no way it could create any such obligation -- what exchange rate would it use? If an issuer wants to sell his IOUs on the market, he has to create an offer to do so at a particular exchange rate in exchange for something in particular. His can sell an unlimited quantity of his own IOUs if he wants, but he has to set the exchange rate.

bitaccumulation

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Quote from: JoelKatz on April 12, 2013, 10:51:16 AM

ericwt

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Thanks JoelKatz,

I was asking just as an example.

I said XRP to DYM's because that is all I have in my Ripple account right now. Walking through the possess was helpful.

Hopefully in the next day or so my account will be loaded and ready to go.

I really appreciate you sharing your knowledge. Finally some of this is making sense. Grin

JoelKatz

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Quote from: ericwt on April 12, 2013, 11:54:23 AM

If this is an offer to buy what would I put there? TTBit issued the currency but I want to post an offer to buy to from anyone.

First, add TTBit to your contacts. Then under advanced/trust, allow TTBit to hold DYMs for you up to some amount.

You can now just make a payment to yourself of, say, 2 DYMs. You will be given the option to pay with any currency you hold enough of that has sufficient liquidity. (You actually have to paste in your own Ripple address as the destination.)

To place or take an offer to buy DYMs directly, go to the trading section and choose the two currencies the offer will be between. You want DYM/XRP (you can type it in, you don't have to use the pulldown). When it asks for the DYM issuer, enter TTBit and select it. This doesn't mean you want to buy from TTBit, it means you want to buy TTBits DYMs from someone. You can then see the order book (by clicking 'Order Book' at the bottom).

To buy DYMs click 'Buy DYM' if it's not already selected. Then fill in any two of the amount of DYMs to buy, how many XRP to pay for each one, or the total XRP value. Click 'Place Order'. If your offer crosses an existing offer or offers in the other direction, it will fill (or partially fill) immediately. You can always cancel the unfilled portion of the order by clicking 'My Orders' and hitting the cancel button.

For some reason right now, the direct liquidity of XRP to DYM is not great. You'll probably do better paying yourself DYMs.

ericwt

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Good information.

Okay on advanced I go to trade.

Then... Base currency
XRP

Counter currency
DYM

Then it says Counter currency issuer (DYM)
Contact name or rijavascript:void(0);pple address.

If this is an offer to buy what would I put there? TTBit issued the currency but I want to post an offer to buy to from anyone.

I have never used the internal trading. (Waiting on by TT to clear)

I am not sure how to make a pathway. But thank you for giving me something more to learn and figure out. Grin

Quote from: JoelKatz on April 12, 2013, 10:51:16 AM

Quote from: ericwt on April 12, 2013, 09:41:12 AM

I am new with Ripple but I suspect with the internal trading features, (Once you have 300 Ripples) that you could make an offer to buy DYM with XRP's.

Yes, you can. You can pick a particular currency pair and place or take offers.

You can also create a DYM pathway and then just make a payment to yourself of, say, some number of DYMs and click the 'XRP' payment button. That can take from combinations of exchanges and pathways to get a better deal, if there is one.

JoelKatz

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Quote from: ericwt on April 12, 2013, 09:41:12 AM

I am new with Ripple but I suspect with the internal trading features, (Once you have 300 Ripples) that you could make an offer to buy DYM with XRP's.

ericwt

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Well I am wrong about that.

Darn.

Quote from: ericwt on April 12, 2013, 09:41:12 AM

Thanks JoelKatz.

I am in love with the DYM's and would not sell it for US dollars.

I am new with Ripple but I suspect with the internal trading features, (Once you have 300 Ripples) that you could make an offer to buy DYM with XRP's.

Again I could be wrong. I am also biased because I think the DYM idea is brilliance.

ericwt

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JoelKatz

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Quote from: ericwt on April 12, 2013, 08:50:11 AM

I do believe you can sell your DYM to another Ripple member. There is a secondary market...I think.

It looks like someone is intentionally maintaining liquidity between TTBit's DYMs and USD at Bitstamp. It's possible that it's TTBit himself because he understands that the less you have to trust him to use his service, the more people will use it. If you want to cash out DYMs and don't want to deal with TTBit, you can cash out USD.

Presumably, if TTBit were to go out of business or have all his dimes stolen, this exchange path would rapidly dry up. But so long as his business is healthy, there is likely to be liquidity in the Ripple network for his balances. You don't have to worry much about TTBit targeting you specifically except for amounts in the process of being redeemed. You do have to worry about the health of his business as a whole, but you can judge that at any time just by looking at whether his balances are liquid. Now, they are.

ericwt

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I do believe you can sell your DYM to another Ripple member. There is a secondary market...I think.

Quote from: bitaccumulation on April 08, 2013, 04:11:31 PM

Quote from: JoelKatz on April 08, 2013, 03:38:27 PM

Yes, transacting in fiat currencies will mean counter-party risk. But Ripple does many things to mitigate this risk. For example, issuers cannot freeze or modify balances. An issuer that refuses to redeem balances for one party can't stop them from exchanging their balance for a balance at another issuer. If an issuer refuses to redeem balances or delays them, the instantaneous value of their balances will show in the exchange, driving their customers away. And, of course, each user gets to choose their own issuers with numerous features to keep payments seamless and avoid default chains. (Payment chains exist only for the instant a payment is made.)

This confuses me if the guy issuing DYMs refuses to send me my dimes on demand, how do I exchange those DYMs to another issuer. Someone has to lose out on that transaction no?

And when you say "if an issuer refuses to redeem balances or delays them, the instantaneous value of their balances will show in the exchange." I'm not sure what this means. Can you give me an example? I know you are saying it will be clear to everyone that someone is defaulting, I'm just not sure how that happens or what you mean by "their balances." (or where that can be found).

akhavr

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Ok, thanks Joel. Can't wait to get my hands over rippled Roll Eyes

JoelKatz

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Quote from: akhavr on April 12, 2013, 05:15:08 AM

Will it work the same for minor gateways? Say, I'd like to run a ripple gateway specifically for developers in my company - I doubt there would be much trading of 42cc/BTC

Most likely, to successfully operate a minor gateway, you'll have to make it your business to ensure liquidity to the same currency from a major gateway. So, for example, if you want to be a minor USD gateway, you'll probably try to have a 1-to-1 (or .995 to 1 or whatever) offer available to trade your balances for balances at, say, Bitstamp. That means you'll have to keep cash on deposit at a gateway to "back" your balances.

Over time, as your reliability is proven, people may not bother taking you up on that offer very much. If you provide your offer at 0.995 to 1, someone else may provide an offer at 0.997 to 1 and make some money on the arbitrage.

Quote from: JoelKatz on April 12, 2013, 05:03:44 AM

Another way would be to look at how much a payment costs. Say someone wants 10 BTC and you decide to pay them with Ripple. Say you hold WeExchange/BTC. If the client tells you that you need to pay 14 BTC to make the payment, that means that your "10 BTC" from WeExchange is not actually being valued by the recipient (more precisely, the combination of paths through the network to the recipient) at 10 BTC, indicating that WeExchange is probably not redeeming reliably. (Or that one recipient might have bad paths. But if it happens on many recipients, that points to a problem with your gateway.)

Aha, so client has ways to calculate the expected transaction costs. Or, more precisely, is it done by rippled?

Correct. The server scans the balances the user holds and the pathways and exchanges in the Ripple network and computes the cheapest paths for each currency the user holds. (Heuristically, it is not perfect.) When the transaction is formed, a set of "best discovered paths" is included. When the transaction is executed, funds can go through more than one of the included paths to get the very best exchange offers, even switching exchanges, available at that moment.

Quote from: JoelKatz on April 12, 2013, 05:03:44 AM

Nobody wants to give $1,000 to a gateway and get a balance that purports to be "1,000 USD" but won't spend like the cash they traded to get it!

s/gateway/bank/ and you'll get what we have now with the fiat currencies

Yes. Ripple is like a cross between Bitcoin and conventional banking. We do unfortunately get some of the downsides of fiat currencies and conventional banking. But lots of people do seem to find them useful, so we can't all move forward to the obviously superior crypto-currencies yet.

akhavr

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Quote from: JoelKatz on April 12, 2013, 05:03:44 AM

There are actually several different ways you can see this. One would be to look at exchange rates to some common currency. For example, let's say Bitstamp/BTC was trading at 80,000 XRP to the BTC while WeExchange/BTC was trading at 120,000 XRP to the BTC. Assuming both prices are reasonably stable and there's adequate market depth, that indicates that for some reason people are valuing WeExchange/BTC much more than Bitstamp/BTC. Of course, there's basically no logical reason for that unless Bitstamp is not redeeming BTC reliably.

Will it work the same for minor gateways? Say, I'd like to run a ripple gateway specifically for developers in my company - I doubt there would be much trading of 42cc/BTC

Quote from: JoelKatz on April 12, 2013, 05:03:44 AM

Aha, so client has ways to calculate the expected transaction costs. Or, more precisely, is it done by rippled?

Quote from: JoelKatz on April 12, 2013, 05:03:44 AM

Nobody wants to give $1,000 to a gateway and get a balance that purports to be "1,000 USD" but won't spend like the cash they traded to get it!

s/gateway/bank/ and you'll get what we have now with the fiat currencies

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: akhavr on April 12, 2013, 03:34:57 AM

Quote from: JoelKatz on April 08, 2013, 05:06:35 PM

If a gateway wants to stay in business, they will need to make it a business objective to have their balances valued at face value by the market

Is this somehow visible on a software/protocol level or such tool is yet to be built?

There are actually several different ways you can see this. One would be to look at exchange rates to some common currency. For example, let's say Bytestash/BTC was trading at 80,000 XRP to the BTC while MeExchange/BTC was trading at 120,000 XRP to the BTC. Assuming both prices are reasonably stable and there's adequate market depth, that indicates that for some reason people are valuing MeExchange/BTC much more than Bytestash/BTC. Of course, there's basically no logical reason for that unless Bytestash is not redeeming BTC reliably.

Another way would be to look at how much a payment costs. Say someone wants 10 BTC and you decide to pay them with Ripple. Say you hold MeExchange/BTC. If the client tells you that you need to pay 14 BTC to make the payment, that means that your "10 BTC" from MeExchange is not actually being valued by the recipient (more precisely, the combination of paths through the network to the recipient) at 10 BTC, indicating that MeExchange is probably not redeeming reliably. (Or that one recipient might have bad paths. But if it happens on many recipients, that points to a problem with your gateway.)

If a gateway wants to stay in business, people will have to be able to use their balances with that gateway to make payments at very, very close to face value. And they'll expect to see exchange rates that reflect the face value of their balances. If not, others will devalue their balances and this will immediately hurt their customers, which they will likely lose.

Nobody wants to give $1,000 to a gateway and get a balance that purports to be "1,000 USD" but won't spend like the cash they traded to get it!

akhavr

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Quote from: JoelKatz on April 08, 2013, 05:06:35 PM

If a gateway wants to stay in business, they will need to make it a business objective to have their balances valued at face value by the market

Is this somehow visible on a software/protocol level or such tool is yet to be built?

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: Neverest on April 12, 2013, 12:19:35 AM

I can't see why a Ripple wallet that can hold BTC could not just send those BTC to any BTC address (without going through Bitstamp etc again)?

The Ripple wallet doesn't really hold BTC. It holds the fact that Bitstamp (or whoever) owes you BTC. You have to go through Bitstamp because Bitstamp is holding your BTC. We do plan to integrate gateways of all kinds (including inbound and outbound Bitcoin gateways) into the client. So you'll still be doing the same thing, but you'll be doing it in one step right from the Ripple client.

Neverest

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Quote from: dchapes on April 12, 2013, 12:10:23 AM

Quote from: JoelKatz on April 11, 2013, 11:54:39 PM

Quote from: Neverest on April 11, 2013, 11:41:41 PM

I see how I can receive, send and trade Ripples, but how do I remove/withdraw the BTC from my Ripple account to my local wallet?

Sign up with an account at Bitstamp or WeExchange (preferably the one who issued the BTC you hold, if possible) and select Ripple under their deposit options. This will let you deposit Bitcoins into your Bitstamp or WeExchange accounts from Ripple. Once the Bitcoins are in your account with the gateway, you can select Bitcoin under their Withdraw options and this will let you withdraw them to a Bitcoin account.

I just want to point out here how easy this is (people seem to be taking crap offers for their XRP because maybe they think it's hard or expensive to get bitcoin out of Ripple?).
Both WeExchange and Bitstamp allow for a quick and easy account signup only requiring a valid e-mail address (for unverified accounts). Both charge no fee for the Ripple to gateway "deposit" (as they call in on their websites) (as Joel says, the fee is zero only if you use the gateway matching the BTC you hold in ripple, otherwise there is ~0.7% fee to switch them) and both send the bitcoin to any bitcoin address without any fee. WeExchange does however require a minimum send of 0.1 BTC (don't know about Bitstamp).

Thanks again both of you. Even with the hand-holding it was difficult as it is so counter-intuitive to send BTC to a Ripple account/address. That is what confused me all the time and I am sure I am not the only one.
I can't see why a Ripple wallet that can hold BTC could not just send those BTC to any BTC address (without going through Bitstamp etc again)?

dchapes

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Quote from: JoelKatz on April 11, 2013, 11:54:39 PM

Quote from: Neverest on April 11, 2013, 11:41:41 PM

I see how I can receive, send and trade Ripples, but how do I remove/withdraw the BTC from my Ripple account to my local wallet?

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: Neverest on April 11, 2013, 11:41:41 PM

I see how I can receive, send and trade Ripples, but how do I remove/withdraw the BTC from my Ripple account to my local wallet?

Neverest

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Thank you JoelKatz & dchapes, much appreciated.

I have some ripples and some BTC in my Ripple wallet and have traded back and forth.
I see how I can receive, send and trade Ripples, but how do I remove/withdraw the BTC from my Ripple account to my local wallet?