Topic: Ripple or Bitcoin - page 45. (Read 34134 times)

No, that's bad finance. Their financial loss is the COGS. Their opportunity cost -- actually selling the goods -- is the sales price less transaction fees.

In the current "real-world" setup, money is either held by a bank and FDIC insured to $250K or advanced by a credit card company. So, there is no "default risk" unless the FDIC goes down. In the Ripple system, neither the store of value nor the transit value is insured. This seems like a real negative currently.

People like BitCoin because it is decentralized, that is one of the biggest selling points.
If Ripple is owned by someone I don't understand why there is a point being part of it as it is just an unacceptable version of what ever their countries currency is.
Which is a waste of time and money.
I can't wait for the 'Ripple took my money!' to be posted all over the Bitcoin forum.

That's what they said about Facebook and Twitter. We're open about almost everything else because the benefits outweigh the costs.

Say you need $50 to buy groceries. What do you do today? You put it on a credit card (at 12%?) or, worse, take out a payday loan. But there are almost certainly friends of yours who would gladly lend you the $50 if they knew you needed it.

To some extent. If one gas station didn't accept credit cards, they'd lose business to others. But since pretty much every gas station does, it basically just means gas is 2% (or so) more expensive.

I think it's overall a pretty bad deal for consumers. They pretty much accept it because merchants have accepted the 2% as the cost of doing business, so they see all these things as free.

You're right -- it's even worse than my analogy suggests. They lose the sale price, not the cost of goods.

Why? Who would want all of their financial transactions to be public?

Money can be lost. The trust extended to a gateway should be rationally balanced against the benefits of that trust.

This has only a minimal affect on people who use gateways to facilitate payments -- only money that's "in transit" is at risk. If you figure a respected gateway has, say, a 5% chance of going bankrupt or being shut down in a year and will be holding 5% of your yearly gross at a time, that's functionally equivalent to a .25% cost. Compared to 2% for credit cards, that's wonderful.

However, it can have a significant affect on people who use gateways as a store of value. For that, you really want gateways that are insured. This is a great application for Bitcoins, IMO.

This is a key feature of Ripple. Transparent relationships between parties, public visibility of trust and balances, and public verifiability of transaction.

It is absolutely everything the traditional banking system isn't. Once the public gets used to transparency in their personal financial dealings they will begin to demand it of banking institutions as well.

The problem with people like you...
Is that you are too lazy to try Ripple.

Open a Ripple account, get enough some XRP to function...
Send 2 BTC to Bitstamp, sell 1 BTC for USD...
Transfer some USD and BTC from Bitstamp to your Ripple account...
Now you have an account with XRP, BTC, and USD.

Start exploring the network... start making transactions.

Ripple is a mind-blowing game-changer...
You can make it as simple or as complicated as you like...
People will be doing unbelievably creative things with Ripple.

Bitcoin infrastructure is incredibly primitive...
Everybody is rolling their own exchanges and services the HARD WAY...
None of it is up to business standards...
Ripple replaces all that creaky infrastructure with something BRILLIANT.

People like TradeFortress and all the Exchanges...
Are gonna be on Ripple in 6 months...
Or they will become irrelevant.

I'm not so sure about the logic here -- which doesn't mean I have it right mind you. Aren't merchants basically buying business they wouldn't otherwise get for 2% plus the risk of charge-backs? Otherwise, they wouldn't accept credit cards right? They pass on the cost to consumers -- who use the 30 day float if they're smart to offset the 2% they subsidize and grab whatever card rewards they can. As a consumer, I'm happy because I get the goods, the float, and the rewards. As a merchant, I'm happy because I get business that I wouldn't otherwise receive. As a processor, I get the fee from the merchant and interest on any unpaid balance from the consumer. If a new system takes away the credit side, then you might actually see business fall. So, how does Ripple deal with this -- something with Gateways or Exchanges? And, having said that, the remittance business is predatory plain and simple -- as are credit card "loans" at 15%.  

FWIW, with respect to grocery stores, I believe the analogy is flawed. Let's say the average sale is $100/customer for 100 customers and there is a 2% fee. That's $200 right? Let's also say the cost of goods sold is $50/customer here -- could be anything. So, the grocer loses the cost of goods sold for 2 customers ($50 x 2 or $100.00). Seems like the grocer should actually prefer to have the theft and pay no CC fees by a 2:1 margin in this example?

What if a very large, well-trusted gateway goes bankrupt? Or is shutdown by authorities?

Yes. This is one case where it might make sense for a gateway to extend trust to another gateway. And people evaluating the reliability of such a gateway should take into account the additional risk they're incurring. The gateway has to choose between keeping the profits in this path for itself while taking the risk or allowing market makers to take the risk, but also the profit. We don't know if anyone will actually adopt this business model. Personally, I think very small gateways may adopt this business model (because it's their only choice) and larger gateways may adopt it temporarily, until market makers come around.

Yes. So it requires a gateway to honor the IOUs of another gateway, thank you. Got it.

It wouldn't require individuals to do anything. The gateway operator would either hold or accept balances from one or more other gateways, depending on which half of the imbalance he had to fix.

In my example of a gateway that's primarily aimed at merchants, the gateway operator could simply set up an account that offered to accept, say, Bitstamp USD balances in exchange for balances from his gateway. This would allow his customers' customers to buy from his customers using Bitstamp balances. Bitstamp would then become part of his cash in pathway -- he'd redeem those balances with Bitstamp directly.

If you imagine a "cash over the counter" gateway, the gateway operator could use Bitstamp as his cash out pathway. He would hold a balance at Bitstamp and offer to exchange his own balances for Bitstamp balances. This would ensure his customers could easily pay people who want to accept Bitstamp balances. He would take some of the money he took over the counter, send it to Bitstamp, and thereby acquire the balances he would trade for his own to keep his balances liquid.

Eventually, market makers would probably do this for him. But he may find his business model unusable in the absence of sufficient liquidity and he may at least need to do it himself to bootstrap.

LOL...another misunderstanding of Ripple. Even though Ripple has the concept of "IOUs", the debts they represent are NOT the same as loans! They are substitutes for money already on deposit at a gateway.

2% for credit cards. 7% for remittances.

I think people have grown to accept as "just the cost of doing business" what they would consider intolerable if they were forced to look at it objectively.

I had a conversation about this with a man who owns a chain of grocery stores. And I asked him to imagine a hypothetical where 1 in 50 of his customers steals their groceries -- just walks out the door with a cart full of groceries without paying. Of course, he said his business couldn't survive with such a high level of theft, his margins were too tight and his costs too high, and that he would make fixing that his number one priority. Meanwhile, he takes credit cards which costs him just over 2% -- slightly more than 1 in 50.

Thank you.

Wouldn't this require people to honor each other's IOUs? This would require a credit-link between individuals would it not?

This is a quote from the "The Holy Grail! I wish I could kiss the author of Bitmessage on his face." thread (https://bitcointalk.org/index.php?topic=212490.220).


I'm curious what people think of this viewpoint in the context of Ripple...

Not any time soon.

I think only in very specific use cases, such as a gateway that has a huge cash in / cash out imbalance. Imagine a cash over the counter gateway or a merchant only gateway.

If Ripple catches on as a payment network, then the liquidity will make it a good platform for exchanging fiat for crypto. The big problem with exchanging fiat for crypto is the mismatch between hard and soft money. If Ripple makes hard fiat doable, I think that's enough to make it a competitive platform for exchanging fiat for crypto.

You can provide liquidity between gateways yourself if market makers don't do it for you.

Thank you. The basic thesis and business proposition seems clearer to me now. I don't have huge problems with the payment systems as they exist now -- other than the fee structure and exchange rates of course. They seem to function "reasonably" efficiently -- certainly not instantaneously but within tolerable limits. Seems like a different conversation, and maybe a different product, that deals with alternative, secure, non-inflationary stores of value, which may or may not be anonymous -- which is where I have seen a number of criticisms of Ripple focused on various threads. It might be nice to be all things to all people, but establishing a single communications protocol is a large enough goal in its own right to be worthy of respect.