Topic: Ripple explained for Bitcoiners! - page 4. (Read 17707 times)
removed.. echoing things already said. .. mod please remove.
I understand this, I get this, I think it's a brilliant idea.. . the natural next evolutionary step in exchange..
But right now, I think it is serious issues.. the creators holding so many 'coins', it's not decentralised.. makes this incredibly risky.
But right now, I think it is serious issues.. the creators holding so many 'coins', it's not decentralised.. makes this incredibly risky.
I'm wondering whether to moderate this post or not....I guess I will leave it here but you are repeating information already stated so your post is mostly noise. From now on any more repetitions from anyone will be moderated.
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The XRPs used to pay for transactions are destroyed (this might seem counter intuitive but trust me its the right thing to do).
And why is that? Just curious.I'm not going to pretend to understand it as well as David Schwartz but the way that he explained it is that the alternatives create the wrong incentives. For example, if the server who first hears the transaction claims the fee then they could spam. Validators could split the fee, but then there is an incentive for people to become validators just to claim the fee. Having lots of random validators doesn't help Ripple. Having reputable validators (where reputation is defined as "not colluding with a significant fraction of other validators) does.
OpenCoin doesn't receive the fee. If they did, it would also create the wrong incentive because then they could spam. To which account would it go? Anyway that sort of change would never be accepted, and whoever gets the source code might just change it to go to their own address.
Bitstamps can borrow BTC to pay back everyone else. I'm not saying they will, but that is an option. Most likely they'll be able to trade their debt for Ripple XRP until they can get back on their feet. Ripple founders and OpenCoin have a lot to lose if Bitstamp defaults.
Gateways can and will default, sometimes for reasons out of their control. MtGox customers just experienced a partial default with any funds held in the Dwolla account. MtGox is still holding onto the Bitcoinca funds due to the lawsuit, this is another form of default. In both cases MtGox is breaking the settlement agreement.
Here are my questions so far.
1. Account management & centralization
I only used ripple.com, so far and I have a wallet login and within that wallet one public address, so I guess, this address is linked to my wallet account. For creating an semi-offline wallet, one suggested to use ripple.com/client, create an account there and write down the info. So it seems, I have no way to participate without using ripple.com and I'm completely dependent on ripple.com. (edit: ripple.com seems to be the interface to the "ledger/shared database similar to the blockchain" - tell me more, I don't see anything shared right now and I'd like to know how it works). If they go down, my account is lost. Or another concern: if they don't like me, they could easily lock me out. Is that correct? I know Gox could do the same, but I'm asking, to understand the underlying system.
2. The role of XRP
They weren't intended as currency-to-use at all, why do we need them and what is their role? Fees could be charged in a different way and the system "ripples" through the books anyway, so you don't need it as inter-currency.
3. Toxic IOUs
Let's say you have two or three larger networks of trustful people in which users trust each other and there are connections between those networks and the system "ripples" orders, so [person A], which belongs to [trusted network 1], which is somehow connected through trust to [trusted network 2], which is somehow connected to [trusted network 3], could get an IOU from [person B], who belongs to [trusted network 3]. What happens, if [person B] now gives trust to villain [person C], which has many many toxic IOUs which aren't backed up by anything (i.e. TF BTCs). Wouldn't that compromise all three networks? Is there a way to see, if a IOU is toxic or was issued from a legit gateway? Is there a way to prevent the system to "ripple"?
4. Trust & gateways
As it seems, gateway IOUs are the only legit source of IOUs so far. Talk about that a bit please and I'm also interested in knowing who decides that a gateway is trustful and who can become a gateway.
I'm looking forward to some answers.
1. Account management & centralization
I only used ripple.com, so far and I have a wallet login and within that wallet one public address, so I guess, this address is linked to my wallet account. For creating an semi-offline wallet, one suggested to use ripple.com/client, create an account there and write down the info. So it seems, I have no way to participate without using ripple.com and I'm completely dependent on ripple.com. (edit: ripple.com seems to be the interface to the "ledger/shared database similar to the blockchain" - tell me more, I don't see anything shared right now and I'd like to know how it works). If they go down, my account is lost. Or another concern: if they don't like me, they could easily lock me out. Is that correct? I know Gox could do the same, but I'm asking, to understand the underlying system.
2. The role of XRP
They weren't intended as currency-to-use at all, why do we need them and what is their role? Fees could be charged in a different way and the system "ripples" through the books anyway, so you don't need it as inter-currency.
3. Toxic IOUs
Let's say you have two or three larger networks of trustful people in which users trust each other and there are connections between those networks and the system "ripples" orders, so [person A], which belongs to [trusted network 1], which is somehow connected through trust to [trusted network 2], which is somehow connected to [trusted network 3], could get an IOU from [person B], who belongs to [trusted network 3]. What happens, if [person B] now gives trust to villain [person C], which has many many toxic IOUs which aren't backed up by anything (i.e. TF BTCs). Wouldn't that compromise all three networks? Is there a way to see, if a IOU is toxic or was issued from a legit gateway? Is there a way to prevent the system to "ripple"?
4. Trust & gateways
As it seems, gateway IOUs are the only legit source of IOUs so far. Talk about that a bit please and I'm also interested in knowing who decides that a gateway is trustful and who can become a gateway.
I'm looking forward to some answers.
This is a waiting game. If you put money into Ripple at this time, you are risking that OpenCoin never open sources or simply disappears. Speaking as an investor in XRP, I am well aware of this. As with any investment, use your head, think about the risks. Never risk more than you can afford. Don't listen to people on forums, make up your own opinion.
Of course you'd figure once OpenCoin becomes open source the Ripple price will go up... But it has already gone up. Way da hell up. 52 XRP / $1. Something is wrong when a Bitcoin Talk account is worth $200.
At that price, the total XRP pool is worth almost 2B USD, and OpenCoin's share is already worth 500M (albeit in a very illiquid/fragile market). I bet they're not raising money at that valuation from investors, though.
It's based on the scarcity of the currency... which isn't scarce at all. But this obviously won't stop speculators.
I had another random question.
Let's say I have a "John Doe - $5 USD" IOU pending. John Doe does not have $5 USD in the gateway, but he does have 5 dollars worth of BTC in a gateway. Will the gateway automatically sell John Doe's BTC to pay me $5?
This is a waiting game. If you put money into Ripple at this time, you are risking that OpenCoin never open sources or simply disappears. Speaking as an investor in XRP, I am well aware of this. As with any investment, use your head, think about the risks. Never risk more than you can afford. Don't listen to people on forums, make up your own opinion.
Of course you'd figure once OpenCoin becomes open source the Ripple price will go up... But it has already gone up. Way da hell up. 52 XRP / $1. Something is wrong when a Bitcoin Talk account is worth $200.
At that price, the total XRP pool is worth almost 2B USD, and OpenCoin's share is already worth 500M (albeit in a very illiquid/fragile market). I bet they're not raising money at that valuation from investors, though.
This is a waiting game. If you put money into Ripple at this time, you are risking that OpenCoin never open sources or simply disappears. Speaking as an investor in XRP, I am well aware of this. As with any investment, use your head, think about the risks. Never risk more than you can afford. Don't listen to people on forums, make up your own opinion.
Of course you'd figure once OpenCoin becomes open source the Ripple price will go up... But it has already gone up. Way da hell up. 52 XRP / $1. Something is wrong when a Bitcoin Talk account is worth $200.
Now let's say Bitstamp gets hacked and those 2907 BTC are wiped out. People start withdrawing BTCs from Bitstamp. How does that get resolved? In order or does Bitstamp choose which IOUs to deal with first?
They would become worthless. Imagine if Bitstamp was hacked and their wallets emptied. What would the value of your Bitstamp account with a 1000 BTC balance be? Close to zero.
This is under the assumption Bitstamps won't make good on their debt. Bitstamps can borrow BTC to pay back everyone else. I'm not saying they will, but that is an option. Most likely they'll be able to trade their debt for Ripple XRP until they can get back on their feet. Ripple founders and OpenCoin have a lot to lose if Bitstamp defaults.
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The XRPs used to pay for transactions are destroyed (this might seem counter intuitive but trust me its the right thing to do).
And why is that? Just curious.
Great explanation, misterbigg. One of the best high-level explanations I've seen about Ripple, and this is after spending hours at the Ripple booth this past weekend hearing from David Schwartz directly about how things worked.
Your comment about the. bidirectional order books clears up why OpenCoin thinks XRP will be so valuable; because it's the only non-IOU (real XRPs are sent), the only non-gateway-issued currency, it would become the default reserve currency in this ecosystem, just like the US dollar is in the world today.
Your comment about the
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Well, you're posting this on a forum for a p2p cryptocurrency that was designed to give the _users_ of the system control over their crypto-tokens, so let's be clear-- you _must_ hold XRP in order to gain anything like the control over your own tokens that you have in Bitcoin.
Yep, I agree with that. Only XRP offers similar functionality to what Bitcoin provides. And it differs from Bitcoin both in the method of distribution, and that the code hasn't been made open source yet (although they promise to do so soon).
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When I say "control", of course I mean a type of control that comes with all the price swings/risks of scams/hacks/bugs, and everything else that may in the end make that control more theoretical than practical. That control includes...
This is all correct. But we need to recognize that even though we're on the Bitcoin forum, it is unfortunately a necessity today to extend trust to various entities. I use MtGox as my favorite example. Until we can "close the economic loop" with Bitcoin by dealing only in Bitcoin and not having to go to and from fiat, it will be necessary to interface with non-Bitcoin systems. Ripple does this exceedingly well, and does as well as you can hope to do while still dealing with fiat.
Just The Facts
I've made this a moderated to prevent repetition of baseless accusations. To be clear, here are some well established facts about Ripple:
1. Ripple is a payment and accounting system, not just a cryptocurrency.
2. XRP is Ripple's built in currency, and it is used for important things.
3. Only 100 billion XRP can ever exist, and OpenCoin starts out with all of them.
4. Transaction fees, paid in XRPs, can be lowered or changed through consensus.
5. Ripple server is closed source but will be open sourced soon. The client is open source now.
6. OpenCoin says their plan to make money is to "hold XRPs and hope they go up in value."
7. Ripple founders own 20% of all XRP.
8. OpenCoin plans to give away 50% of all XRP to fund new accounts and promote the system.
9. OpenCoin will sell the remaining 30% of all XRP to finance operations and repay investors.
10. As long as OpenCoin holds most of the XRP, they can influence its price.
You do not need to invest large amounts of money in XRP or hold a significant amount of XRP in order to benefit from Ripple!
I've made this a moderated to prevent repetition of baseless accusations. To be clear, here are some well established facts about Ripple:
1. Ripple is a payment and accounting system, not just a cryptocurrency.
2. XRP is Ripple's built in currency, and it is used for important things.
3. Only 100 billion XRP can ever exist, and OpenCoin starts out with all of them.
4. Transaction fees, paid in XRPs, can be lowered or changed through consensus.
5. Ripple server is closed source but will be open sourced soon. The client is open source now.
6. OpenCoin says their plan to make money is to "hold XRPs and hope they go up in value."
7. Ripple founders own 20% of all XRP.
8. OpenCoin plans to give away 50% of all XRP to fund new accounts and promote the system.
9. OpenCoin will sell the remaining 30% of all XRP to finance operations and repay investors.
10. As long as OpenCoin holds most of the XRP, they can influence its price.
You do not need to invest large amounts of money in XRP or hold a significant amount of XRP in order to benefit from Ripple!
Well, you're posting this on a forum for a p2p cryptocurrency that was designed to give the _users_ of the system control over their crypto-tokens, so let's be clear-- you _must_ hold XRP in order to gain anything like the control over your own tokens that you have in Bitcoin.
When I say "control", of course I mean a type of control that comes with all the price swings/risks of scams/hacks/bugs, and everything else that may in the end make that control more theoretical than practical. That control includes:
* irreversibility. I send you XRP/Bitcoin, you have XRP/Bitcoin. No double spends, no questions.
* no counterparty risk. You send XRP/Bitcoin to a nonprofit, that nonprofit _has_ those XRP/Bitcoin. No third party can "freeze" those funds (though idiots can certainly make overlay coin-taint systems that hurts the fungibility of the currency in general)
* there is an unblockable (or at least _extremely_ difficult to censor) route from me to you that only depends on the system itself holding to the minimum protocol rules required for the system to function. If there's a bug in the system, or some unexpected fork it can make me decide to delay my payment, but if there is some bank account of an exchange that holds an alarmingly large portion of the currency that gets frozen it does absolutely nothing to delay my transaction (unless of course they hold my coins on my behalf).
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Investing in XRP is risky as fuck!
Yep.
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they should enable two-factor authentication (Google Authenticator or SMS Text are my preference).
I don't have a lot of knowledge about two-factor authentication but I believe that it requires a central authority. Can someone enlighten me? Is it possible to have two-factor authentication in a client application? It seems that the client would have to store your private key anyway - rendering two factor authentication useless.
"Authentication" is different from decryption in the sense that in an authentication system it is presumed that you are authenticating against a central authority. Where in the decryption scenario, there is no server that is checking your credentials (the decryption operation simply produces garbage). Two factor systems are authentication based not decryption based.
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If you could please edit your post to not quote the entire block especially the image that would make things look neat.
Most likely it would be a chaotic free-for-all. If there were any bitcoins, whoever redeemed first would get them. People who then realize that the Bitstamp IOUs are worthless would try to trade them for something else as quickly as they could, likely at a discount (to get out fast). Whoever hears the news last would probably end up holding the bag.
It would be very similar to what happens at MtGox if they get hacked and lose a bunch of Bitcoins, or if the government seizes some of their USD.
let's say Bitstamp gets hacked and those 2907 BTC are wiped out. People start withdrawing BTCs from Bitstamp. How does that get resolved? In order or does Bitstamp choose which IOUs to deal with first?
Most likely it would be a chaotic free-for-all. If there were any bitcoins, whoever redeemed first would get them. People who then realize that the Bitstamp IOUs are worthless would try to trade them for something else as quickly as they could, likely at a discount (to get out fast). Whoever hears the news last would probably end up holding the bag.
It would be very similar to what happens at MtGox if they get hacked and lose a bunch of Bitcoins, or if the government seizes some of their USD.
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