Topic: Ripple is not a scam - and you may be making yourself vulnerable to actual scams - page 4. (Read 10282 times)

This is an excellent question!

The definition of possession of a Bitcoin is very concrete and there is nothing subjective about it: it's algorithmically determined entirely by computers.  You either possess the private key or you do not.  Nobody can change the way that works (other than perhaps the community as a whole), that's why it's so revolutionary.

The definition of a debt, it's a sort of claim against another person you can enforce using some societal framework made of people who have used their subjectivity to define what a debt is, and to create a framework to help make future decisions as to what constitutes a debt.  That framework is a legal system based on a combination of human judgment and written law.

Ripple correctly points out that simple social capital is great for enforcing lunch money debts - the sort of thing you won't miss if someone jerks out on you.  They pretend that this sort of courtesy scales up to bigger communities and bigger amounts when it simply doesn't.  That's why in the real world, any time there's a big deal or a big project, involving legal counsel to dot the i's and cross the t's is routine business.

A court of law can't stop a bitcoin from going to person A to person B, but absolutely can refuse to force person A to repay a claimed debt to person B if that court does not believe the debt to be valid or exist in the first place according to its own rules.

If this is enough to change people's minds, then it suggests their objections were dishonest... But the more the merrier, I'm all in favour of competition. May the best one (or ones) win!

Ripple is not a currency, XRP are and they are called "ripples" (which is an unfortunate name imho).

They are getting distributed more and more, if you dislike this aspect as the only one that much though, you might like to work together with Iain on getting Splash off the ground:
https://bitcointalksearch.org/topic/pre-ann-splash-ripple-without-the-pre-mine-372486 / https://en.bitcoin.it/wiki/Splash
If he manages to keep his stuff reasonably localized in the code (should be possible imho), he'd be able to pull improvements from upstream relatively easily.

After reading through this thread I can safely say that I will not be "investing" in Ripple.

Everything about it meets some theoretical ideal that only exists on paper.

And then scam phrases come out like "Anyone can buy and sell Ripple". Oh really? Anyone can buy and sell the US dollar, anyone can buy and sell Bitcoin or Litecoin or any of the other cryptos that have been released over the last year.

The problem is WHO owns the Ripple currency. These developers come up with this whole idealistic system, try to pump it as a business and then say that "anyone can buy Ripple" while leaving out the fact that the only people selling are the developers.

I don't have an opinion on the overall goal of Ripple as a system, but as a currency it's shit. I am not going to hand over money(or cryptocurrency) that I have legitimately worked(or mined) for and wish upon a star that it somehow succeeds. The mere fact that the Ripple system has this 100% premined and centralized cryptocurrency associated with it means that it will not succeed.

/thread

As far as I can tell there is zero legal difference between using Ripple to buy or sell Bitcoin and using a non-Ripple Bitcoin exchange. In both cases there is credit risk and you have to trust the exchange or Ripple gateway to give you any fiat or crypto owed. At least in the case of Ripple you have a trusted third party (the Ripple network) keeping the books rather than the exchange itself.

It is a POTENTIAL legal one and if you read the link I gave before you might be able to guess in which direction gateways need to be licensed probably.

Bitcoins are far less legally explored than digital IOU transfer systems and while I definitely would see that as a major risk, I wouldn't call it a "core flaw" of that system (Bitcoin is also a bit more "safe" in that regard as it advertises 0 backing, it tries to be a pure bubble right from the start).

Anyways, I hope to also get some legally binding opinions in the future about what transferring Ripple IOUs means and when you have to redeem them, how to do that and so on. In the meantime I would recommend nobody to see Ripple IOU transfers as something that can be ignored, not binding or something that won't hold before a court. I have yet to see actual arguments that would support such a view actually other than that contracts in that regard are implied by the network, but not always explicitly written, printed and signed by both parties directly and then filed away.

By the way: There already have been HUGE amounts of BTC scammed out of bitcoin users by misusing trust, still it didn't hurt the system at all - why should the occasional dishonest/fraudulent gateway hurt Ripple so much more or be a core flaw?

Sure, meanwhile, I've never been scammed selling BTC for PayPal, but would never recommend people learn this for themselves by trying.

I agree Ripple is technologically marvelous and works when everyone's honest and making good on their agreements to pay and nobody's saying they're getting hacked.  It's just that I expect it to fail spectacularly when any of these change, because none of these common real-life scenarios seem to be considered anywhere in the design.  Ripple's core flaw isn't a technological one, it's a societal/legal one.

I agree, but more importantly it is an excellent exchange between fiat and crypto. It will also be great as a way to stimulate use of cryptocurrencies in general, since that's what's used behind the scenes if you use Ripple for exchanging between various fiat currencies. If Ripple captures a significant portion of fiat remittance payments, it will give a huge boost to cryptocurrencies in general and XRP in particular.

I think anybody saying how Ripple or any cryptocurrency will fare, really has no basis for it. The facts are there are both positive and negatives about Ripple. The same can really be said about any cryptocurrency though. I personally think given the price ( $.027 ) it's as good an alt investment as there is out there.

And exactly the same thing is true with Bitcoin payments, so it has nothing to do with Ripple. If you're dealing with large amounts of money, write things down. Use purchase orders and invoices, perhaps in electronic form, perhaps written down on paper, perhaps both. If all you want to use Ripple for is as a distributed Bitcoin exchange, then enter into a written contract with a reputable Ripple gateway. Bitstamp is one of the more popular Bitcoin exchanges, and it's also a Ripple gateway. That's just one written contract with one registered business.

Ripple is not a scam, it's just full of trading options which most of you obviously don't understand. Identifying Ripple network with one of this options is not a good representation of the real situation.

For example trust... All of you think that you have to trust someone in order to use Ripple, non-sense.

Bitstamp is exchange in Bitcoin world and is gateway in Ripple world. If you know how to use Bitstamp in Bitcoin world, you will know how to use Bitstamp gateway in Ripple world. I'm using Ripple for about 6 months and only trust line I have set is towards Bitstamp and I only set that trust line when I deposit BTC from Bitstamp gateway to Ripple. After I complete the deposit, I exchange BTC to XRP and I set trust line toward Bitstamp gateway to zero, so I don't trust anyone in Ripple and I'm trading all the time in the Ripple integrated order book. If you still after reading this say that it's needed to trust someone inside Ripple in order to trade, you have to learn basics about Ripple. Best way to learn is to try, don't base your opinion on theory.

Cheers

It's informed conjecture.  A court of law may well decide that a Ripple IOU is not an enforceable contract, for reasons well established in law.  The burden of proof is on the person attempting to the contract, and "the ripple ledger says so" is not going to overcome an alleged debtor's claim they've been hacked and never entered into any contract in the first place.  As soon as Ripple has its first "allinvain" moment, and the ripple community asserts that that moment is an "irreversible" one, the legal community will quickly disagree and the world will understand why "the ripple ledger says so" means pretty much nothing legally, and that's when everyone will realize the screen door submarine is capable of no other destination than the seabed.

Yeah, just like with Bitcoin, there are certainly different levels of understanding (I rarely try to go beyond "it's both digital money, depending on your perception of what money actually is you'll see it as currency or asset" with BTC for example), the basic "Ripple = distributed exchange and marketplace" part shouldn't be THAT hard to get though.

Most Bitcoiners seem to have a hard time ignoring XRP as native asset, maybe since all they are used to so far are systems that only exist for this single asset and you need to jump through hoops to actually trade it?


I can think of several ways how you could commit theft even more passively (e.g. issuing several coins with the same private key or also just getting "hacked", being "sorry" and move on like TradeFortress)
Still in the end one has to trust you (that you keep your promises) as well as the legal system (if you don't keep your promises) to use your coins. This is not different to Ripple, where the only difference is that you simply declare and encode that trust in a special type of transaction instead of just implying it by using your service(s).

So you mean the following network (A,B,C are Alice, Bob and Charlie) for example (using 100 USD amounts):
B trusts A for 1000 USD and has currently 100 USD deposited with A.
C trusts A for 1000 USD and has currently 0 USD deposited with A.
B sends 100 USD.A to C and gets something in return for that outside of Ripple (e.g. a nice massage).

A now claims that the 100 USD B has deposited were used up because she felt like shopping, the 100 USD were charged back by PayPal, or that only B would be allowed to redeem anyways.

What A did is most likely illegal under EU directive 2009/110/EC (http://ec.europa.eu/internal_market/payments/emoney/) and probably also in most other jurisdictions worldwide too. C has every legal right to sue her and these laws governing this are in place far longer than e.g. Bitcoin existing, not very abstract, complex or exotic at all and he would have a very easy time finding an eager lawer to represent this easy case.

Also C did something not very smart by not checking beforehand with A that he is actually allowed to withdraw (e.g. C is based in Cuba, A in the US...), so there might be situations where A legitimately can not send the actual assets to someone who wants to redeem them (e.g. one of your customers enters a invalid payment address).

Ripple in its current form is not really any more this "community credit" system that you describe, A most likely is a registered MSP in B's and C's jurisdiction, publishes regular audits and deals with amouts far beyond 50k USD (Bitstamp alone has a few millions of USD issued on Ripple right now, not even counting BTC or other currencies). Ripple transactions are digitally signed, cannot be faked without having the private key and so on. This is even easier to proof than e.g. a Bitcoin payment to a merchant service like BitPay where you first need to provide proof that the address you sent to was actually from them (and not e.g. displayed by a trojan on your system), the only chance for that being to contact them and ask for a custom text signed witht he private key of that address or doing blockchain analysis.

If you want certainty, write a contract to that effect, agreeing to rely on Ripple's impartial ledger as evidence. You may also want purchase orders and invoices. All this is business 101 and has absolutely nothing to do with Ripple itself.

Its important to make people understand that this is how Ripple works. Charlie made a mistake in trusting Alice, and you making the right decisions about whom to trust is exactly what Ripple is based on. If you have a problem with that, Ripple may not be for you. But understand that this is is not fundamentally different from other trust concerns that are commonplace everywhere ein our lives.

Trust Alice for lunch money, trust Bank of America for your paycheck, maybe trust that Bitcoin won't die a silent death for your retirement fund.

This is particularly true in light of the fact that this:


is just conjecture. A court of law may well decide that a Ripple IOU shall be an enforcable contract. That would be a distinct possibility today, and it will be more likely if people increasingly decide they want to use Ripple.

Sure, in which case you'd probably use a gateway with whom you have a written contract.


If you want enforceability, write things down. That's straightforward enough. It's orthogonal to the use of Ripple though.

Then you have the benefit of legal recourse against Casascius who has made public representations guaranteeing he has not kept the keys which you relied upon before accepting a Casascius Coin, and any sweep like that would be evidence to the contrary which would be a tortious and likely criminal fraud that caused you a loss.  There is also a big difference - for me to commit a theft like this (assuming I still had keys and actually could), this would require affirmative steps taken to commit the theft, unlike a Ripple counterparty who merely needs to do nothing to default on someone.  Since I've made clear my real life identity and plenty of people have confirmed it, and have publicly stated my intentions to remain subject to the law, I think it's not apt as a comparison.

Ripple, on the other hand, can fail spectacularly with as few as three people.  Alice "owes" Bob and Bob "sells" that debt to Charlie, as Charlie trusts Alice.  Despite that trust, Alice doesn't feel like paying Charlie, or claims that she never actually owed "Bob", but rather, a hacker made the original transfer and so the debt never existed in the first place.  Charlie is pretty much SOL and can't sue to recover from Alice because legally Alice doesn't owe Charlie anything.  His sole remedy is to let Bob know what a jerk of a friend he has.  This is no big deal if we're talking lunch money, but when it's $10k or $50k, we're talking bigger amounts than most people's social capital really makes sense to leverage.

Meanwhile, Ripple aside, if Alice "owes" Bob and they have a written agreement, and Bob "assigns" that debt to Charlie with a written assignment agreement... the whole thing is magically enforceable in a court of law (happens every day with debt collectors).  Amazingly, a mere piece of paper (or equivalent signed electronic communication) has just trumped all of Ripple in terms of enforceability, and even works with larger amounts like $50k.  (Now for lunch money, Ripple's probably got it beat for convenience...but then again...so has cash, paypal, or your favorite bank payment app)

I think there is no denying that if the theorems behind money are not something your brain is trained to think about, understanding Ripple *is* hard. Sure, everyone gets what an IOU you is, but that still leaves you with a dozen questions about how everything comes together in this particular system. What are the implications of paying with IOUs, what does it mean for me when I use Ripple?

It certainly took me a while to get it. The fact that the Ripple site is focussed on promoting an XRP giveaway and touting high-level enduser benefits probably isn't helping.

In fact, even after I had a good understanding of Ripple itself, I needed to listen to this interview with David Schwartz to get me excited about the "rippling through accounts" feature as something to facilitate private lending ("money as a social resource" is the phrase he used).

http://letstalkbitcoin.tumblr.com/post/50482657399/lets-talk-bitcoin-episode-007-ripple-the

Especially if those people do understand the complexities of Bitcoin...