Topic: Ripple XRP distribution requires immediate formalization - page 2. (Read 5917 times)

The distinction between the two methods of distribution becomes less important over time though.
Assuming in a year or two both systems have distributed 50%+ of total posible units (already true of Bitcoin), how will they differ afterwards ?

Bitcoin will continue small incremental distributions effectively indefinitely while Ripple will have that 50% "Fort Knox" stash in the background.

At that point various scalability issues in Bitcoin (TPS ceiling, blockchain size, etc) will be contrasted against scalability strengths of Ripple, while Ripple's Systemic Risk will be contrasted against Bitcoin's lack of centralization (although such centralization is still possible and maybe even likely since a large enough "printer" or just a large bank can attempt to corner the Bitcoin market, i.e. compare to how Silver market is effectively cornered and suppressed today).

I speculate that two different uses will be found, very high transaction rates and trading volumes of various assets against each other and against XRPs in Ripple, but I don't see many people feeling comfortable storing too much value in XRPs over long periods of time,
because of ever-present possibility of the XRP flood from the "Ripple Fort Knox"

In either system, there is no long term way to sustain the ceiling for too long tho, although, ironically, Ripple enabling massive BTC IOU issuance by fractional reserve gateways might create a "paper BTC market" 100x of times the actual size of the "real BTC market" again, similar to Silver today in which case Bitcoin can become as tamed as Silver or Gold are today.

In Bitcoin there is a fairly clear distinction between the mining done to determine initial distribution and the mining done to synchronize transactions. The first few years are for distribution (with security taking a free ride), after that it's for security.

Bitcoin could have been easily designed so that Satoshi starts with all 21M coins, and hashing is used only for security and paid for by transaction fees. That would definitely cause less resources to be wasted, but it would no longer be a decentralized currency.

There's a tradeoff, the shorter the distribution halflife the less resources are wasted (since the coins are created when they are less valuable) but the less decentralized the currency. If you're worried about the wasted resources, choose a shorter halflife.

Ripple is taking the centralized extreme of this spectrum. If you think about why Satoshi didn't say "I'll assign all the bitcoins to myself, and use them to promote Bitcoin! I'll distribute them to people however I see fit, trust me on this.", you'll understand why we don't think it's a great idea for Ripple.

It's true that Ripple is about more than just the XRP as a currency, but it's a significant part of it and should be treated accordingly.

I am arguing that it's better to make people do measurable, algorithmically verifiable pointless work to "earn" XRP than to give a central body built-in authority over a decentralized system.

It's not difficult to change the scheme from a fee per transaction to a special "fund" transaction that sets a certain number of "prepaid transactions" in your account. You can then perform that number of transactions for no fee. The amount of transaction credits you get per drop could be adjusted by consensus. Similarly, the currency could be made more divisible by consensus.

Ah, I see. From a tech point of view it makes much sense but from financial point it is not. Do you know how many transactions are processed every day in this world? The challenge of success... The more successful ripple becomes every day the more likely becomes its failure.

If ripple succeeds I can predict a scalability issue here. At some point transactions will become too expensive and there will be need for inflation in XRP, and OpenCoin will inevitably have to issue more.

A well established gateway would require a banking license! Only banks are allowed to take deposits. How many banks will become ripple gateways before they open the code?!

I believe his point is that your bias clearly affects how you weigh the evidence for your arguments. I've seen your posts for awhile, and the JoelKatz from a year ago wouldn't be tirelessly defending a new altcoin for which the future method of distributing the currency is not public knowledge.  He would also be wary of an implementation that does beta testing in a centralized manner, without full release of the source code, in which a centralized body initially controls all the tokens (and presumably will continue to do so, at least with a large portion of them, for a long time after the beta phase is over).

A phrase like "transparent after the fact" will never sound reasonable when the mechanism you're describing is hidden from your audience.  Such statements lack verifiability and are therefore not part of a reasoned argument to anyone but your (current) self.  That this logic is lost on you seems to be as good an example as any for the dangerous effects of conflict of interest.

We wanted to do XRP calculations internally in a 64-bit unsigned with one bit reserved to signal that it was an XRP amount and one bit free as a sign bit. To avoid having to deal with overflows inside operations and simplify the code, we didn't want to use more than 1/16th of the legal range. For human convenience, we wanted the main unit to be divisible into millionths. That set an upper limit of 2^(64-2) / (16 * 10^6) or 288 billion. 100 billion seemed the most human-friendly number within that range.

Joel, how did you decide on this number 100 billion XRPs?

That makes no difference. The amount of mining is determined by the value of mining. Anything that increases the value of mining would be expected to equally increase the amount of mining. All the additional mining, equal to all the additional value, would be waste. The only reason mining isn't pure waste for coins like Bitcoin is because it is required to secure the currency.

Essentially, you are arguing that it's better to waste and destroy resources than to use them to promote Ripple. You are arguing that it's better to make people do pointless work to "earn" XRP than give them away for free.

So what? Litecoin isn't going anywhere, heck nor even is BBQcoin. So the hedge funds don't pick them to manipulate, and their users only become millionaires instead of billionaires, aw shucks too bad... actually not *too* bad at all...

-MarkM-

If OpenCoin waits until there are already a fair number of well established gateways that have regular transaction activity, it will be virtually impossible to convince these gateways to accept a fork. Especially if these gateways would lose their generous bribe of XRPs from the OpenCoin billionaires stash. It would have the same chances as one of the alt coins like Litecoin surpassing Bitcoin (i.e. impossible).

No, remember I also said once we get the source code we can make a fork, divide all the RIpples evenly between all the people who claim to have thought of a more fair distribution method, and let them all apply their method to their share.

-MarkM-

I disagree completely (shocker!). Even if the sole purpose for consuming energy by mining XRP is to prevent OpenCoin from having total control over the distribution of the currency, it would be worth it in my eyes. Obviously you will have a different opinion.

But my proof of work proposal for distribution of XRP is compatible with Bitcoin merged mining so how much is really being wasted? Certainly not all the energy. Maybe some of it (very little).

The problem is that you advocating proof of work along side central distribution of XRP, while I am advocating proof of work in lieu of central distribution.

People can buy XRP using proof of work based coins, including bitcoins. So those who want to spend proof of work to obtain them are free to do so.

-MarkM-

It's hugely different. In one case, resources and energy that exist only in finite supply and could have gone to productive uses are wasted. In the other case, there is no waste at all.

I'm making reasoned arguments, not offering opinions. Arguments are valid or invalid regardless of who makes them.

After all the XRPs are given away, how will new users acquire them? They will have to buy them. That means they had to forgo consumption of something else in order to get XRPs. This is no different than the energy consumed for mining; They had to forgo the consumption that the energy could have allowed, in order to create XRPs. The only difference is that the respective electric company was the counterparty instead of OpenCoin.

But anyway the definition of "fair" and "wasteful" is going to be rather subjective and really there's no way for someone who works for the company that owns all the currency to answer in an objective fashion.

I completely disagree. So long as the supply is limited, XRP can prevent spam, even if they are given away for free. The waste you are advocating is entirely needless. There is simply no need for anyone to ever waste anything to acquire them. You are arguing for huge amounts of wealth to be destroyed and power to be wasted for absolutely no reason whatsoever.

There are more differences than that:

1) Proof of work allows anyone to participate in the production of XRPs

2) The resources used to create the proof of work are not wasted, they contribute to the decentralization of the distribution

3) There is already a large user base of SHA-256 miners (the Bitcoin miners), the amount of "wasted" resources used to mine XRPs is negligible since people are already mining Bitcoins

4) Any additional mining participants that the demand for mined XRPs brings in can also contribute to increasing the Bitcoin hash rate, which is not a waste of resources

The distasteful aspect of Ripple is that the creators gave themselves all 100 billion currency units. I greatly prefer "wasted money and resources" going towards mining than this alternative. But I don't even consider it wasted resources. That's YOUR opinion, and you're hardly unbiased. How much effort really went in to thinking about ways of distributing the XRPs that don't involve starting with a hoard of the entire stash of them?

Developers MUST BE RELIEVED of the responsibility of XRP distribution AS SOON AS POSSIBLE!



No it is not unfair nor is it wasteful. You said it yourself that XRPs are needed to prevent transaction spam and that they have to have some marginal value for this to work (or else they could be cheaply obtained by spammers). You are right that XRP mining would not be "securing the blockchain" but instead it would be "making spam expensive."

You claim that the mining of XRP leads to wasted energy and resources but wasting energy and resources is a requirement of the Ripple system to prevent spam! If in the future the acquisition of XRPs does not require an expenditure of energy or resources, then it cannot function to prevent spam.

What's the difference if someone works at Burger King flipping burgers and then pays OpenCoin $5 to get XRPs for opening an account (after XRPs are no longer given away for free), versus a miner who works at Burger King to pay for the electricity and equipment depreciation to merge mine Bitcoin and Ripple for some millibitcents and drops per day?

There is no difference...except that with a proof of work system the creators do not gain unjust control over the entire money supply.