Topic: Ripple explained for Bitcoiners! (Read 17707 times)

https://ripple.com/wiki/Transactions, especially https://ripple.com/wiki/Transactions#Sign_.289.29 - MultiSig seems to be at least planned/in the works.

Conditional transfers might be more difficult, but can be emulated with Multisig I guess (e.g. require signatures from 9/10 public oracles + your signature, 11 in total, as soon as 10 of these sign, your condition is met).

Edit: you might want to look into https://ripple.com/wiki/Contracts... not sure how much of that stuff is already available/possible though.

To get straight to the point:  does Ripple support anything like multi-sig or conditional transfers?

Ripple doesn't know anything about the bitcoin block chain and transactions therein.

This means, you will always have to use a gateway or service of some sorts, as there is no way in Ripple or Bitcoin to create a transaction that relies on a certain external event without trusting an oracle to track this event or using a conversion service.

If I understand you correctly, you have e.g. 1 BTC in a Bitcoin address that you control and 0 BTC (just some XRP) in your Ripple account. You want to end up with 1 BTC.Bitstamp in your Ripple account and 0 BTC in your Bitcoin address. You do however trust Bitstamp that they are honest people and if you send them your 1 BTC IOU, they will then send 1 BTC on the Bitcoin network to an address of your choosing. Also, if you send them 1 BTC, they would credit you 1 BTC.Bitstamp.

In this case (you trust Bitstamp + have 1 BTC) you don't need a third party, all you need to do is to deposit your BTC in the Bitcoin network to Bitstamp and withdraw it from there to your Ripple account. And if you don't trust Bitstamp anyways, why would you use their IOUs?

In the more abstract case (e.g. you want Bitstamp USD and Bitstamp does not offer any Bitcoin trading/deposits at all) you would need at least oracles that track the Ripple ledger/Bitcoin block chain + probably also something along the lines of the NashX idea where you risk more by being fraudulent than staying honest. I'd still recommend in this case to find a gateway you trust, get some BTC IOUs from them and trade them for whatever other IOU you want to have. You counterparty can facilitate this by offering a direct path to the IOU of your choice, in case there is none or only bad ones so far.

Trading Cross-Chain doesn't even really work with Altcoins so far, and these are not even IOUs (IOUs make it actually easier to trade, as you can see above) and based on Bitcoin code. I'm not sure if atomic trading between chains/currencies and even for IOUs is very desirable, it seems so simple at the first glance but as soon as you think about race conditions, you run into a lot of things that can go wrong and that seem to be very hard to solve just algorithmically.

Maybe try OpenTransactions and building a way in there to represent not only (colored) Bitcoins but also Ripple IOUs, then it might work that both partners create OT blinded tokens and exchange + redeem them atomically.

I have a question about the operation of Ripple for the purpose of cross-chain-trading.

Suppose I have BTC in my wallet and want to send it to someone 'conditionally' on them sending me Bitstamp.BTC  without having to trust any other party other than BitStamp once the transaction is complete.

I don't want to go first because I don't trust them.  They don't want to go first because they don't trust me. 

So I want to implement atomic cross-chain trading with Ripple.    Is this possible and what would be involved?

Well, anyone can issue IOUs on Ripple who has a handful of XRP, there is no real centralized or decentralized "approval" process. Other than that you gave a fairly correct overview on how Ripple operates or will/might operate.

we cannot foresee that this will happen for sure, but that's the risk.

Ok. Thanks for this thread, I hope I finally understood what Ripple is

In simple words it's trading platform based on a ledger inside crypto-blockchain (like bitcoin), where it stores all exchange/trade history and keeps balances which reflect debts (IOUs) of any type (btc,usd,artists shit, etc) issued by pre-approved vendors named "Gateways". Ripple system doesn't guarantee safety of traded debts. if "Gateway" defaults, you lose value of all its IOUs, so it's matter of trust to "Gateway".
Ripple transactions are final and cannot be manipulated as it's protected by math/crypto formula similar to bitcoin.
Transaction fees are in XRP, which is pre-mined crypto currency and at the moment these fees are almost free because small amounts of XRP coins are being given away to everyone.
OpenCoin company expects making profits by manipulating XRP prices in future, when Ripple trading becomes common and widely adopted.

Am I correct ?

Thanks for all the constructive comments!

The main safeguard in my opinion is that you can choose whom you give credit up to which limit and when you settle it with this entity.

Ripple handles the whole rest (converting currencies/IOUs).

In reality to make any kind of trade that is beyond barter trade in person settled in cash (or trading 10 chicken for 1 cow) will involve IOUs. Sometime quite explicit (MtGox balance), sometimes quite implicit ("you go first, then I immediately will send my funds"). Sometimes for a longer (ASICMINER shares) and sometimes for a shorter (SatoshiDice) amount of time.

Still, the only thing you can receive for BTC are either other BTC or IOUs. There is no system in place in Bitcoin that lets you receive anything else than other ledger entries in the block chain that you can spend with your private key.

If you accept absolutely 0 IOUs or debt ever, then you cannot use Bitcoin as well, as the only way to use it within itself is to get other BTC. You can mine them without owing anyone, but then you're stuck.

Especially with the characteristics of Bitcoin (easy and fast to send + script, irreversible) it makes it easy in combination with Ripple to decrease the exposure to IOUs to a minimum. Instead of sending a balance to Paypal in advance and having it sit there for days/weeks, you can fund your Ripple wallet on the go and also withdraw any incoming payments as soon as they arrive in BTC/LTC/whateverelseyouwant.

Bitcoins are in some sense the ideal fiat money - they have no intrinsic value (they have utility and usefulness though, no doubt!) and are created out of thin air just to exist as money. They can be 100% "owned" (if you keep the private keys safe, yada yada).
IOUs on the other hand exist to be destroyed, either (ideally) by being settled/redeemed or (in the case of TradeFortressBTC) by being deemed useless/worth 0.

Current fiat currencies (USD, EUR etc.) are a mixture between being IOUs (they cover about 1-10% of the economy they represent) and just existing as a useful token. Bitcoin only exists as a useful token, Ripple (as I understand it) tries to exist as far on the other end of the scale as possible.
As much as Bitcoin has useful characteristics to be a money system, Ripple has useful characeristincs to be an IOU trading engine.

I'll admit I'm still quite fuzzy about exactly what Ripple does and does not enable. Here's an outline of my high-level impression, I'd appreciate it if anyone could point out inaccuracies:

Ripple essentially makes it easy to extend and receive credit  (debt). The debt can be passed on, according to a set of rules. It can also be realized into currency taken out of the system.

That's how I've understood it so far, and based on that, I'm not comfortable with Ripple. With currency, increased velocity is good because it increases the usefulness of that currency. With debt, increased velocity seems to me to increase risks. It's all well and good to remind people IOUs are not the same as actually holding currency, but isn't Ripple as a system intended to encourage people to hold and trade IOUs?

What systemic safeguards are there in Ripple against meltdown resulting from a masking of risks as people become accustomed to treating IOUs as currency? This is something that happens with debt, and the results can be quite ugly, as we're seeing in the "real world" now.

Thanks for this interesting thread.

Maybe it's just because it's late and I need to get to sleep, but I feel like after reading this and other threads I'm more confused about how bitcoin will coexist with ripple. I came to this forum because I was interested in learning more about ripple. Personally I don't have too much use for bitcoin as it is currently implemented, but perhaps one day I might see the value in it. However, if ripple were to become widespread, why would I hold bitcoins when I could just hold xrp? I've read your explanation as to how the two can coexist, but it seems like that explanation is predicated upon the assumption that the person would see a value to holding wealth in bitcoin. I can't think of a situation where that might be true for a newcomer to cryptocurrencies. Can you provide an example? If you already did and I just didn't read carefully enough, I apologize. I'll go back and try to find an explanation.

Yes. Not only that, but you could keep a bitcoin balance in your bank account and spend it anywhere that takes your debit card.

Not sure if this was mentioned already - i know MisterBigg said he expects that a real bank will eventually be a gateway on ripple.

Would that mean you could theoretically open an account at that bank, get your paycheck direct deposited there, and buy bitcoins on Ripple instantly, without all the hassle of moving your dollars in and out of an exchange?

Yes you may ask. No his post wasn't particularly useful, I just forgot to remove it. Both of the posts in question are repetition of item #11 in the "Just The Facts" post (first reply to the OP).

mmmmm it's all wonderful, but i will not use ripple until they will implement google authenticator or yubikey.

Thanks fellowtraveler for the clarifications.. my apologies for my many incorrect assumptions about OT.

Truth is, I think all 3 projects are doing great things for financial freedom.  And actually I think all developers would continue to work on them even without monetary reward, but its also nice to sometimes get paid doing it, particularly if it means you can work on it full time.

Anyway, look forward to seeing what goodies OT brings to the table.. its a very exciting time.

Yet another Ripple thread centered on Open-Transactions...

How to get free support for OT:  irc.freenode.net  #opentransactions

How to build OT from scratch:  https://github.com/FellowTraveler/Open-Transactions/blob/master/docs/INSTALL-Debian_Ubuntu.txt

How to install OT via apt-get:  http://www.openwallet.org/downloads/


Coming soon (screenshots): http://ft.vm.to/files/screenshots/

(There are other clients in the works, but that's just an example.)

There's also, of course, the test GUI, from which people can copy sample code: https://github.com/FellowTraveler/Moneychanger


This is half-correct.

Open-Transactions is an open-source project, not a commercial project.

Similar to Bitcoin itself: there will be commercial projects built on top of it, from various entities.

So OT will be used by commercial projects, including my own, but OT itself is not being developed as a commercial project.


I can see how you'd make this assumption, but Monetas (my commercial effort) has no plans to use closed-source.

We don't even really believe in intellectual property, and we will be releasing the code for our products when those products themselves are released.

(And yes, we know how to monetize our products regardless.)


This is a mischaracterization.

Open-Transactions is free and open-source.

Monetas will also release its products open-source.

The protocol is not proprietary whatsoever.


I was fortunate enough in my previous career, to be able to work for several years full-time on OT, at no benefit to myself.

I paid my own bills.

This was what you posted on first page about Selling 1 BTC for USD.

1) Open an account at a gateway (Bitstamp.net for example)
2) Deposit your BTC at the gateway
3) Withdraw the BTC as a BTC IOU in Ripple
4) In the Ripple client send a payment to yourself in USD
    The client will show you the price, you can accept it or cancel
5) Deposit the USD back into the gateway
6) Withdraw the USD from the gateway to your bank account

How are these any easier than:

Open account with Bitstamp
Deposit your BTC at Bitstamp
Sell the BTC on Bitstamp
Withdraw USD to Bank

Why the need for Ripple?

The difference is like night and day! With Ripple you do it with the click of a mouse. The other way you have to do wire transfers, talk to your bank, etc...

This is no different from the person with USD.Bitstamp to withdraw the USD, and deposit the USD into BTC.Foodbit to buy the BTC.  There is zero advantage in adding another intermediary in the transaction, especially one with Ripple, where the transitional currency is also open to price manipulation.

And why use hypothetical example where people kept their wealth on gateways?

Most people will keep their crypto currency on their local wallet, and their cash in the bank.  

It is fairly easy to deposit/withdraw both of these with a local exchange.     For international exchanges, depositing/withdrawing will be harder, but this will be the same problem face by the liquidator in Ripple network.      No problem being solved by Ripple.

What is the value proposition to the end-users for going through this added hassle of using Ripple?

What is the value proposition to the exchanges for them to federate with Ripple?