Topic: Ripple - the real Bitcoin competition? - page 2. (Read 28369 times)

Uhh, debt without interest that is...ripple requires people to trust each other, bad! bad! Not so with BTC there is no trust required and scamming people works without consequences, now isn't that nice?
XRP is just the financing model opencoin did choose, if you have a problem with that just have as much XRP as you need.

The real reason ripple is attacked is that XRP is truly deflationary and that makes Bitcoin "Investors" feel threatened. Ironically the ones they should fear the most come out of their midst.

There is no reason you must do so, but for each of the alternatives you mention there are reasons why some might choose to do so.


You could do so, but then you are at risk of seizure / blocking by the government in whose jurisdiction the gateway operates.


Then you'd have exchange rate risk and exchange fees because not everybody accepts Bitcoin right now.


Not a good course of action for many governments.


Maybe because you live in Zimbabwe, or maybe because you want to launder drugs money, or money made by providing seedboxes for BTC etc etc, or because your government has outlawed Bitcoin and you cannot trade it openly.

Theres a world of difference between LTC and Ripple, Litecoins has all the same benefits and attributes as bitcoins, just with some parameters tweaked. Ripples are debt and the economy is centrally controlled. I'll endorse bitcoins, and all its clones but definately not ripples.

Funny how this is the same exact rhetoric was used against LTC, now that battle was lost Bitcoin zealots have a new scapegoat to attack.

I would even go as far as saying they are reliable anti-indicators.

Have added the ripple scam website to my sig.
edit: its not working how do you add a url to your sig ?

http://ripplescam.org/

Ripples are a way persuade people to forget bitcoins, and move back into inflationary centralised debt.

I don't see why I would want to trust a series of inter-indebted gateways, by holding IOUs in Ripple, when I could either:

1) Trust the gateway directly (example by just hold my USD or Bitcoin directly in my Bitstamp balance)

2) Trust purely in the market/a single protocol (hold in Bitcoin wallet)

3) Truth a government and hold fiat directly

Why would i choose option 4:
4) Hold an IOU in a gateway that is holding IOUs from other gateways as the reserve for my balance, hold this IOU with a virtual currency protocol, having the virtual currency protocol controlled by a single governing body.

When you look at it; it's actually balling up and combining the risks from all 1,2,3 + a little extra risk to spice it up.

Anyways bed time...look me up in 10 years and we'll see where Ripple is; I took my $500USD and cashed out, i'll either look like a fool or a smart guy by then.

The key here is that Ripple creates economic incentives for people to mediate this kind of transaction. Person C can hold WeExchange and Bitstamp IOUs, and let Ripple trade them for a small fee. Person A would only use WeExchange, Person B would only use Bitstamp. If Person A wanted to send USD to Person B, Ripple would give Person C their WeExchange IOUs and give Person C's Bitstamp IOUs to Person B. There's a market for Person C's fee, so it will tend to approximate the actual cost of moving money between gateways (in bulk, after netting.)

If nobody's providing this service between two gateways, there's a huge incentive to step in and make it possible, because you can set whatever fees you want. If the fees are too high, there's an incentive to step in and compete by trading IOUs with lower fees. It's more or less inevitable that if there are two gateways in use for a certain currency, a market for liquidity between their IOUs will spring up. Currently I understand these markets are rather sparse and illiquid, in part because the client doesn't have support for setting those fees yet, and in part because there's only one major gateway right now.

There are a few AAA banks and credit unions left, but not many.

Oxymoron spotted! I think you're preaching to the wrong choir buddy.

You should only trust gateways that have earned your trust, likely through frequent audits of their assets and liabilities. And that includes IOUs issued by other gateways. Note that gateways could accept IOUs issued by other gateways at less than face value. The exchange rates between the various IOUs for the same currency issued by different issuers would be the best market estimate of their relative reliability.


It's likely to start that way, unless some very widely trusted banks get in the game.


If the market is comfortable with holding IOUs for a while, then you wouldn't have to redeem the IOUs after every transaction. In fact, between individuals this could be a very convenient mechanism to split a check after a dinner in a restaurant. Granting a person a trust line means you'll accept their self-issued IOUs up to a certain limit.

Ripple project started before Bitcoin and it never was (and never will) a succesfull project.

So let me get this straight any gateway that allowed IOUs from other gateways would be taking on credit risk and in the event of a run would not be able to pay back 100% of it's own IUOs because of the IOUs of other gateways it held were defaulted.

You have said that it's people own fault for using these kind of gateways that are exposed to the above credit risk.  So you would therefore say that all people should use gateways that only redeem IOUs that they issued themselves (and are therefore able to pay off 100% of their IOUs)

So lets assume all gateways only redeem their IOUs (because people would be silly to use a gateway exposed to risk you said).

Person A logs into Bitstamp, deposits Bitcoins, sends them to Ripple a Bitcoin IOU

Person B logs into Weexchange, deposits USD, sends them to Ripple a USD IOU

Person A trades their Bitstamp Bitcoin IOU for Person B's Weexchange USD IOU.

Person A logs into their own Weexchange account and redeems the USD IOU and withdraws their USD

Person B logs into their Bistamp account and redeems the Bitcoin IOU and widthdraws their Bitcoins.

Now ask yourself, what was the point in all that?  When they could have both just logged into Bitstamp and done the trade directly without ever having to go to Ripple?

It would still be their own fault, since they would not be managing their credit risk wisely.


You can still trade them with others through Ripple. As long as the exchange in question is solid, it's much quicker, cheaper and more anonymous than using the banking system. If the exchange is really solid, IOUs would only be redeemed infrequently compared to the number of transactions. IOUs are what allows you to trade in fiat currencies on the Ripple network.


I think the system is solid, but I want to see the source first before I start risking large amounts of money. And any financial institution will have to earn my trust, regardless of what software they use.

Unless of course the "Good" (non-fractional reserve) gateways had allowed people to redeem IOUs from other gateways before they realized there was run on; in which case their reserves (which includes IOUs from other gateways) are no longer sufficient to cover their own IOUs; despite being 100% funded.

And if you can only redeem your IOUs at the same gateway that you received them...then wtf is the point of Ripple?

And I find it pretty odd that much of your reasoning behind Ripple being a sound/safe system is that "I'm not gonna keep much money in it anyway"...so I guess it is pretty safe then, cause you didn't put much money in to lose...

No different than Mt Gox really. Do you think they could get away with not letting people withdraw their balances?

It's not stupid, it's the truth. Yes, irrationality can trigger a stampede, but that will only be a problem for those exchanges that practice fractional reserve banking. Then that is the problem, not the XRP exchange rate, and the offending exchanges will be quickly eliminated, thus solving the problem. I'm not going to hold large sums of money at an exchange, or in the form of IOUs until they have earned my trust, which may take a very long time.

Just one more quote...so you are telling me that I could go down to my local police station and report to the police that Bitstamp wouldn't let me redeem my Ripple Dollars   Sorry just can't help laughing when I think about the look on the policeman's face.

P.S. I don't see any mention of "IOUs" on the Bitstamp website; I don't really see the mention of anything, there is basically no text at all.

I will spare over quoting just focus on this; as I think it shows we fundamentally disagree on the premiss that XRP and Opencoin have no affect on Ripple...

I think to say that "what Opencoin does with their XRP will have no impact on the Ripple system" ignores completely human nature and human history.

Even in recent months and years we've seen perfect examples of people seeing panic within other sectors and applying that same panic to their own sector.  When you see Cyprus, and yet this causes people in Spain and Italy to start worrying...although there was absolutely no evidence that similar government action was planned.

The difference is that in Cyprus the government is able to close down the banks and say "You can only withdraw 100EUR per day" and prevent a full scale melt down.  In ripple all there is no overseeing body to stop the panic, and the gateways would fall like dominoes.

For example:
- Opencoin sells some XRP and brings the price of XRP down too fast
- People start to get nervous about Ripple, they start to withdraw a portions of their holdings from Ripple to be safe
- The unusually high withdraw volume hits some of the gateways hard;  the ones that did not have enough reserves to cover the withdrawals
- People from the tapped out gateways are now bringing their IOUs to other gateways, these gateways either fold too, or block these IOUs causing further panic
- Everyone would be trying to cash out before their gateway went down...why risk having any money in Ripple when you could cash out and have the exact same amount if your own wallet
- End result you have a Ripple system filled only with bad debt; sure some people, who held IOUs from good gateways, managed to get out unharmed, but they would "get out" none the less
- I think at this point confidence in the system would be so badly shattered that people would never put money back into it (even the people who got out unharmed)

Now that is a "Ripple" effect


And please don't say something stupid like "This is a good thing, it keeps people honest".

Yes, but not for large amounts and I'm not going to at least until well after the code has been released.


If they accept your money and purport to issue and redeem IOUs then you can probably sue them, or at least report them to the police.


That may be more difficult.


It means they have an incentive not to cheat and users have a way to weed out bad gateways. This is how banks should operate IMO. Bitstamp are going to have to earn their trust lines.


Releasing "excessive" amounts of XRP would not impact the reliability of the Ripple system. If XRP tanks, there is no reason to start distrusting the USD balances. Reliability is a function of the source code (and the availability of independent validators, wider adoption etc), not of OpenCoin's "monetary policy".


Bank runs could happen and that's a good thing, because it keeps banks honest. But it's totally unrelated to the XRP exchange rate. And in fact, XRP is the only currency in the Ripple system that has zero counterparty risk and needs no exchanges gateways, precisely because it is handled entirely inside the Ripple system. Exchange rate risk, obviously, but no counterparty risks. And for IOUs it's precisely the other way round.


The protocol itself is distributed, but since the source hasn't been released there are only a handful of servers. If that doesn't change, no one in their right mind will trust Ripple.


Well, even then it's not really a problem because you shouldn't use Ripple to hold large sums of money until well after the source has been released and vetted, many independent validators and exchanges have sprung up etc.

I'm going to sue Bitstamp for their Ripple IOU; are you kidding me, have you actually used the system yet?  There is nothing even closely resembling a contract between me and Bitstamp.  When you transfer Bitcoins to Ripple there is nothing but "Enter your Address", there is no text as to what they will give you, what that means, what their obligations are...nothing...somehow I'm going to use that to sue them?
Also what if I didn't get the IOU from Bitstamp directly.  It may have come from Bitstamp 10 years ago and passed through 10,000 people before it got to me and was then worthless.  Somehow I'm going to trace back the debt through 10,000 people and bring Bitstamp to court?

And even if you could sue Bistamp, then what, you get half of Ripple trying to sue a company for money they don't have?


You act as if XRP and the other currencies within Ripple are totally isolated and each in individual little bubbles...when in fact any panic with XRP would immediately spread across the entire system.  As soon as the confidence is broken.  

And of course Opencoin would not try to shoot themselves in the foot, but all it would take would be to slightly misjudge the number of XRP they were able to safely unload without affecting the market.  Too much and people start to notice and panic, panic, withdrawal, withdrawal, uh oh the gateways were running factional reserve and we have our first virtual "run on a bank"



How distributed it is; are there any stats available on this (ie how many full server nodes run by how many different organizations?

*This may be a noob question; but the only why I was aware that I could access my Ripple account is at https://ripple.com/client/, so if someone someone hacked that server, or managed mess with the domain...doesn't that mean bye bye Ripple, at least until they can get a new site up and running?

How is it only a problem until source is released...if when the source is released it contains serious security flaws; and hackers are quickly able to put through double transactions, or steal balances etc...

In which case what will OpenCoin do, start rolling back balances?  And the fact that they have the ability to do this is another cause for concern.


Not really trying to scare people; I'm just asking questions that I can't seem to find answers that I'm satisfied with.

P.S. I don't think Ripple is a "scam"; i just think there are too many things that could go wrong, and probably will go wrong.