Topic: Ripple explained for Bitcoiners! - page 3. (Read 17724 times)

There's no direct profit, this would create a conflict of interest. The wiki has a little more detail (not much though):

https://ripple.com/wiki/FAQ#Who_will_run_validating_nodes.3F

OpenCoin doesn't recommend using XRP as an investment...but that's what they're doing, right? I sold most of my free 35 kXRP for ฿2.5. Perhaps I'll regret that someday, but, OpenCoin won't get rich if we all invest in (and hoard) XRP!

What motivates a person or company to become a ripple validator? Do they make any profit of this activity?

Gateways don't automatically do anything. What you want to ask is whether or not Ripple can find a path that allows John Doe USD IOUs to be converted into Gateway BTC IOUs. If Ripple finds an appropriate offer in the respective order book or order books (considering all combinations of conversions) then yes.

I think trust lines have a "quality" setting, which is the ratio for converting between one type of IOU and another type of IOU. The client doesn't let you set it but you can issue a raw RPC command with JSON in it that sets it. I expect in the future this option will be provided.


I am not 100% certain but it would have to be implemented in a way that says "ignore everything but order books when computing paths." I believe Ripple would still work in practice with this change.

Same here.

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Cool, I'll ping them then. I wasn't sure if I was missing some obvious link on Ripple.com or something.

Same here.

I was able to get access to the source by asking in person. Perhaps a phone call or very courteous email is all it would take.

Huh? But what if I want to hold more than one type of USD IOU? Are you saying everyone should just use a single gateway? Surely there are valid reasons to trust more than one. For example, it becomes more convenient to deposit with a new bank, though you still hold an account at your previous bank.

And I'm still searching for an answer to my question:


Misterbigg, do you know the answer?

That's quite alright, I think he's gotten enough publicity. In any event, the client needs to warn users when they extend trust twice for the same currency.

I think that if your intention is to explain Ripple to Bitcoiners, you should also link to the TradeFortress "Ripple gone wrong" experiment. He didn't cheated the system, he used it as it is designed and was able to create that big mess that is now currently in some threads around the forum. It's important to explain the system as it is, with the pros and cons.

If I understand this correctly what Ripple provides is a very efficient mechanism for the issuance, trading and redemption of IOUs. The best analogy I can think of is bank notes issued by individual private banks, as opposed to central banks, against their reserves. These notes become a bearer instrument and are then used as currency. At one point in the early 20th Century this was common but it is now rare. A good example that remains is Scottish pounds https://en.wikipedia.org/wiki/Banknotes_of_the_pound_sterling. A similar example in Canada is Canadian Tire money http://en.wikipedia.org/wiki/Canadian_Tire_money In this case the currency is backed by store credit at Canadian Tire and it has been used as currency outside of Canadian Tire.

Just as the examples above Ripple IOUs are only as good as the credit of the issuer, and in order for them to become liquid and easy to trade one needs an issuer large enough to have very good credit in the marketplace. The dangers with Ripple are in reality the very same dangers that are present in world banking. In particular when IOUs are used as collateral for the issue of more IOUs there is the ever present danger of overall collapse if the credit of a significant portion of the IOUs becomes questionable. In addition if the underlying asset is Bitcoin or gold rather than say USD, EUR etc then it is not possible for a central banker to come to the rescue by printing more USD, EUR etc.

My take is that the issuers of Ripple IOU's are going to be subject to the same type regulation as banks and the likes of Paypal etc., because that is what they are in reality. I expect that the financial regulators will, quite unlike the situation with Bitcoin, have a field day with Ripple, since it is debt based and regulating debt is their primary mandate.

How do you get a copy of rippled (the binary, not the source) and run a validator?

Whether you "ripple" or not isn't an explicit setting in the client, nor should it be. Rippling happens when you extend trust to more than one issuer for the same type of currency. If you don't want to "ripple", don't extent trust twice for the same currency.

I opened an bug issue asking for an explicit warning in the client when you extend trust the second time:

https://github.com/rippleFoundation/ripple-client/issues/682

I'm not exactly sure to be honest. One of the Ripple developers can probably explain it well.

But from my understanding, you want to make sure that you know who the validator is. They might have a domain, registered corporation, signed SSL key with company information, the company owners might maintain a public social networking profile, etc...

For example, I'm running a validator here:

http://opengroin.com

You can see my ripple.txt configuration file here:

http://opengroin.com/ripple.txt

I still have to get the SSL certificate and also form a corporation.

Even if a validator colludes, the worst they can do is deny users access to the network. They can't drain account balances or discover your private key.

I posed this question to a Ripple employee at the Bitcoin Conference this weekend. He told me that you can indeed prevent the system from "ripple"ing, but the option is not in the current client (and it's on by default). So my followup question is, does ripple still work in practice if this default is switched to "off"?

Who decides who is a reputable validator and who is not?