Topic: ripple: let's test it! - page 7. (Read 43943 times)

Why is a time horizon required? Every single gateway deposit is 0% interest loan. Just have the 8% just keep adding up forever. What's the problem? Ripple never requires anyone to pay back an IOU by a certain time anyways. So if they can never pay off their IOUs, they "declare bankruptcy." The bankruptee opens a new Ripple account and everyone moves on. Isn't that how Ripple works?

Trick #1: get financial institutions to be gateways for ripple system.

Trick #2: get people to accept your IOUs as actual underlying asset.

Trick #3: get people not to scam one another.

Don't worry it isn't too far fetched on top of being centralized and can be shut down by regulators.

Great system...

It's not possible in principle unless you have a time horizon set on every interest bearing asset. It is a necessary system invariant that if you want to ripple through someone, you give them something they value equally to (or greater than) what you take from them. This is not possible to enforce for interest bearing assets without a time horizon set on every asset.

Say you have an asset that you value today at 10 USD and it has an 8% interest rate. And say I want to ripple through you and take in exchange another asset that you value today at 10 USD that has an 8% interest rate. Is that fair? Well, it depends on the time horizons. Worse, a longer time horizon is good if the interest rate is good but bad if the interest rate is bad. So you need every user to set a target interest rate and a time horizon for every asset.

So it can't work unless you know the time horizon and, worse, also the baseline interest rate. But if you know the time horizon, the interest can just be added to the balance at issue time. Then it all "just works" because you know the present value of every asset.

Let's make the extreme example with reasonable rate.
Say I want to buy 1,000,000 FRC for 3000 BTC.
So I see timonFRC which represent FRC at refHeight 1000.
But that was a week ago, so 1008 blocks after, to purchase 1 M frc I will have to purchase I will need to purchase more than 1 M timonFRC for 100 BTC
After adjusting that, the order remains in the book for a month and then someone fills it.
I, holding the BTC until the order fulfillment will pay for one month demurrage on 1 M frc.
I haven't bothered to do the math because I think I already know what you will tell me: don't have an open order for a month.
I still don't understand what you mean when you say "we'll make it with contracts".
I can't find anything related to interests in the contracts wiki page. Maybe something perfectly equivalent functionally to what I want can be achieved solely with contracts, it's just that I don't see it.
I think transitive (ripple) trades can get really complex when time is involved, and I'm not talking about path finding, just each party getting exactly what they wanted to pre-sign.
I offer my help for designing this, or at least review. I'm just getting nervous because I have the impression that you're underestimating the problem by overestimating the related but separate of path finding with interest.
I'm not asking you to solve that problem. Don't ripple interest bearing assets by default and you don't have to.
But you can have easily have interest bearing assets that could be rippled in the future without further modifications.
Maybe you can do this with contracts, I just want to understand how.

Unless you're talking about some insane rate, demurrage can be ignored over the lifetime of a single trade offer.

Ok, sorry about that. Just allowed my imagination to fly because I lack a better explanation.
It's not you didn't gave it, it's just it doesn't make much sense to me.


Again, sorry about the tone, but I honestly think that there's a connection here. The same thing that prevents you from understanding deflation as a barrier to investment (in a monetary monopoly context), is preventing you from understanding why interest is necessary within the system.
Please, forgive my rudeness and let's just find out if I'm right or wrong on this connection.


I repeat, I'M FOR A FREE MONETARY MARKET. It is you who said that people should be able to sit on cash at no cost.
I reject the idea that money has to be necessarily designed that way. I just want demurrage cash for capital yields to be able to drop to zero like they naturally should and I believe that can happen in a free monetary market with capital-monies alongside demurrage ones.
If people want to sit on xrp or btc and believe that they're holding a so called "store of value" instead of just a symbol of value designed for exchange, that's their problem.
When many people "save" by hoarding at the same time they will feel rich. When they all want to redeem the "value" at the same time they will find out that was just an illusion.
Cash is a consented bubble, if people want to sit on bubbles I cannot stop them.
I don't want to prohibit btc or xrp. Do you want to prohibit frc, chiemgauer, sol violette and the rest of demurrage currencies?


That's my point. Users should decide it. Users should define the time horizon.
Are you saying that people can't rationally trade freicoin because they don't know the time horizon, because they don't know when they're going to spend them?
Well, the market has decided to value frc currently at approximately 0.0003 btc each. Is that irrational?
Maybe. Why the Ripple system should care? Should the system also prevent users from trading xrp "too high" or "too low" just because it's not rational to you?
Value is not absolute. Things don't have value: people value things. That's not from Gesell, it's from Menger who came before him.


The system shouldn't value anything, it should leave that to users.
For the "normal exchange system" I don't really see the problem. I set an order which says 3000 frc for 1 btc, what's the problem?
For trust lines is different. Then don't allow trust lines for interest bearing IOUs, they can be simulated with regular market offers anyway.
The path finding is out of the chain, each node can do it differently, maybe setting the time horizon to infinite, maybe to 1 month, that's for the users to decide.
If it is too much work, just ignore completely interest bearing assets when path finding. When you open source the software I'm sure people will develop alternative path-finding algorithms regardless of the system having interest bearing assets or not.

Now, on the "we'll do it with contracts" part. Do you have more details on that?
Is it something like the price-changing order I mentioned?
How will I trade FRC for BTC at exactly 0.0003 price with your proposal for demurrage gateways and contracts?

I still see it as a more complex solution, but at least that would solve the problem to some extend (although the IOUs would still have an expiry and would be non-fungible).

Whoever decides it, it has to be decidable. If you don't know the time horizon, you can't value assets that have interest. If you have assets you can't value, you can't rationally trade them.

It's purely because you cannot value such an asset. Ripple is based on being able to value assets so that they can be traded. We'll do it in contracts, but I don't see how it can be part of the normal exchange system because you cannot value it.

I can mock you as easily as you can mock me.

You can make up every conspiracy theory you want. The lack of evidence just makes the conspiracy all the more evil. But I don't make an argument I don't believe.

Your universe doesn't fit well with reality either. You want demurrage so that people can't sit on a pile of money at no cost. However, you also want currency freedom so people can choose a currency without demurrage if they wish to.

Why should the system care about that? Isn't this for individual users to decide?


But what if the interest bearing assets are going to be traded.
Say I buy from you 100 joelUSD at 5% interest for 100 timestampUSD.
Then, when I have 105 joelUSD after a year, I want to trade exactly 50 joelUSD for 50 timestampUSD.
How do I set the price to that offer if the interest is accounted for outside the chain?
I don't know when the order is going to be filled.
The way you want to implement, I wouldn't have 105 joelUSD after 1 year, but 100 joelUSD. Somewhere outside the chain you've promised to give me 105 joelUSD_2 in exchange for them.
But it doesn't solve the exact price for orders problem, maybe contracts do?

The problem is more clear for demurrage (negative interest). You told me how do you think I should manage a FRC gateway.
Users are supposed to perfectly arbitrage the demurrage. But then again, how users are supposed to trade FRC for BTC at exactly 0.0003 with a single order if the price of timonFRC in relation to real FRC is constantly being arbitraged?
Is this what you are supposed to be made with contracts? Is there a description of a time-changing orders using contracts somewhere?

If the Chiemgauer, Sol Violette or another demurrage local currency is to be issued within Ripple in addition to paper, it would be the same problem.

I'm starting to think that the rejection of implementing interest on Ripple is based on purely ideological grounds rather than technical reasons.
Just like for you deflation is not a problem because it is not even possible. If I remember correctly, according to you predictable deflation is impossible because economic actors have perfect knowledge and are perfect arbiters. Therefore time is not a variable to take into account in economics because every actor accounts for it instantly every second.
The same flawed reasoning you use for deflation, you use for interests. Somehow you're able to reconcile that with the so called "time preference" for capital-money in your head.

Maybe it's just about complying with the law. Since Ripple is not open source yet, you have effectively control over the network and opencoin is technically an unregistered money transmitter right now.
Allowing interest rates would also make you an unregistered credit institution. Is that it?
Maybe you don't want Ripple to compete with prosper for p2p lending?

Mhmm, the ideological explanation seems simpler to me. Even if it's hard for me to understand how an intelligent person like you can be so blinded to deflation and interests, basically to any time component in economics, but you've proved it to me several times on the old (and now buried) deflation thread. I guess you find beauty in the simplicity of your timeless economic universe, even if it doesn't fit well with reality.

I think as long as only a few big players (here exchanges) take part... ripple will be of very limited use... i think ripple owners should put their effort in bringing in such big players... only then i can imagine that people will find ripple more and more useful...

That's redundant. Already, the quicker they pay, the sooner they destroy the obligation. Having them pay more interest as well would be double dipping.

Say I trade a chair for a couch, and we agree that the chair and the couch are equal in value but that we'll swap back in a year. If I trade you back earlier, you get the couch back sooner, but I don't have the chair for as long. There's no reason either of us should charge the other. So long as the two things exchanged are roughly equal in value (which they must be, or the exchange wouldn't have taken place), it doesn't matter how long the exchange goes on. Loans in Ripple are exchanges of more liquid IOUs for less liquid IOUs of equal value.

It can't default because it was paid at the time it was made.

Well most people who take a loan can't usually pay you back the next day unless it was for some risky gambling proposition 

Hmm... how about something like a 1 year loan with compound interest so the quicker someone pays the less they owe. After 1 year if it's not paid, then the loan will default and it will extend to all your vouchers who cosigned your loan automatically rippling through the network.

We will support interest through contracts, but IMO, it's not necessary and doesn't work well. If a $10 IOU from me is worth $9, then we can just trade the $10 IOU for $9 and there's no need for interest because it's an even exchange.

You have to know the time horizon to value an asset that pays interest. For example, if one person owes you $10 at 10% and another person owes you $10 at 15%, which asset is worth more? Well, you might think it's the one at 15%, but if they pay you back tomorrow, the interest rate is irrelevant. So you must know the time horizon to value an asset with interest. But if you do know the time horizon, the interest is not needed. If I'm going to loan you $100 at 10% and I know the time horizon is a year, we can just make the IOU for $110. There's no need for interest.

This is a bit oversimplified, but hopefully the basic idea comes across.

There should be an option to add an interest rate on the IOUs.

Wow, so you are willing to hold onto 50% of the whole currency supply?? That's ambitious.

Now tell me about the FED and centralized power. What if one day you feel playful and want to dump all your XRP's to drive the price to 0 and ruin some folks just for the lulz?

Yeah, that's some crazy shit, you are not so bad... But my point is that you really need to trust the guys holding 50% of the total money supply, don't you? That's a problem with Ripple, you need to grant too much trust to a single private entity.

Honestly, I thought Bitcoin's purpose was to address the trust issue.

"Ripple is bad because it lets people do bad things." If Ripple was a hammer, you would forecast people having sore thumbs.

So you think that Ripple will replace the entire multi-trillion dollar fiat economy with a crypto-currency that cannot be inflated, and that's bad because it'll make some people rich. Gotcha.

We can't predict the future and it makes no sense for us to commit to a plan that prevents us from adapting to changing circumstances. We currently expect to give 50 billion away to drive adoption.

People granting trust to anonymous people on the interwebz like there's no tomorrow.

Congratulations Ripple, you are democratizing the very characteristics we hate about the banking system: creating money out of thin air because of a trust and debt based system.

I can foresee huge scams coming, spirals of debt collapsing and as it always happens, the weakest link will be left holding the bag.

And at the end of the day, if Ripple succeed you will be all set for life - because the only thing with a real value inside your system will be XRP's. The rest of "money" in it is just valueless paper, debt, IOU's.... So your Ripples will skyrocket in value. And how many will you hold to? 50 billion? 20 billion? Can we have a concrete figure?

Any kind person out there who can help a Ripple sceptic play with the client...

A loan of 300 xrp would be greatly appreciated

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Ripple cannot always guarantee that you will be able to trade what you have for what you want. It will do its best to allow you to do so if there is someone else who has what you want and wants what you have, or some combination of people who can make that path work. Whatever you have, likely nobody is willing to trade it for a Bitcoin at BitStamp. People are only obligated to do what they have agreed to do.

If you want to be guaranteed that your Bitcoins will be accepted by Bitstamp, then ensure your only Bitcoin pathway is to Bitstamp. Then anyone who wants to pay you has to solve this problem for you. You get to decide what assets you hold.

What sort of BTC is it? As far as I know, Bitstamp does not trust anybody, so you can only send them BTC if you are holding BitStampBTC or somebody who is holding BitStampBTC trusts you, then it can ripple through them and they end up holding your IOUs instead of BitStamps.

I'm probably missing something here, but when I try to transfer a btc from ripple to bitstamp I get the message "No Path Found" - why would this be?