@PirateButtercup:
Thanks for your detailed answer.
I was not looking closer to the consensus ledger and did not mention that directly (ripplescam.org has some critics there as well). That seems to be a form of decentralized/distributed system (I would not distinguish them so sharply as in reality they are mixed).
The reason why I was investigating Ripple was the promis for a decentralized exchange.
That is for me the area missing badly in the BTC eco-system. And for that part the gateways are a central point and a single point of failure, the same way like the BTC exchanges we have now (can be easily shut down by a government). At the end I did not see any benefit using Ripples IOUs (or colored coins or vouchers) and to not directly trade on several exchanges BTC to fiat. At least I have more control and its seems more transparent to use them directly.
I see some potentials in the Ripple concept (for the existing finance industry it is for sure a very interesting project), but they are far away from that why I am interested in BTC.
In BTC I like the differences to Fiat. In BTC money you dont need trust in any central point (like exchange, gateways), my BTC is not an IOU. It is a keypair where my private key is the proove that I own it, and the only trust included is the crypto behind it and the BTC network.
Also I dont like the reserve banking concept. I dont want that my money works for the bank behind the scenes. If I want to lend my money I want to do that directly and not via a system based on that model.
Of course that does not create value from itself, value come when people are using it as money.
If I use online wallets or let my BTC balance at an exchange, I am in the IUO world. If the company crashes, my money is gone.
I am not looking for a faster payment system (I think the problem of the slow confirmation with BTC is over-estimated. It depends on the use case and there will be intermediate solutions for fast payments - probably temporary IOU based solutions) and I am not looking for a forex market or ETF (like Gold ETF holding gold for you if you trust them).
I am looking in a trustless crypto - fiat exchange. And so far I understand Ripple it does not meet my expectations.
Topic: Some thoughts on Ripple - page 2. (Read 3461 times)
Good on ya’!!! You’re coming around the curve :-) Realizing that Ripple is significantly more than a value holder like BTC or LTC is good.
There are a few points that you made which are a little off, a few aspects of the protocol that you missed and a few logical steps that you have yet to make.
First off, the consensus ledger is on a distributed network. It is not centralized. It is not run by the gateways. You can set up a server yourself and run rippleD….I am in the process of doing so myself. Here is an image you help you understand the different types of networks.
Ripple Labs doesn’t ‘control’ the Ripple network. It is much more of a guide-on-the-side. In much the same way ICANN doesn’t ‘control’ the internet. Their future functions are to be funded by the XRP they retained.
In short, it seems that you focused on the banking-like aspect of Ripple. It is also a foreign exchange market. It is also a payment system.
The vision is MUCH larger than what you’re seeing. Just as every business, bank, person, etc. has an email address, all will….should….could…what have you….have a Ripple account. When my bank opens an account, ALL of it’s members will have access to the ripple network. When my employer opens an account, they can pay me directly through the network (instead of through my bank). At this early stage, gateway’s look pretty significant……but ‘gateways’ are only really needed until such a time as all the financial systems are federated.
You can buy XRP anonymously through sites like Ripplewise. Your BTC are bridged directly into the system. Your account will stay as anonymous as you want it to be.
Ripplescam.com is a joke. Have you noticed the dates or the comments? All of the dates were prior to Ripple going open source. Many of his points can be categorically dismissed, as you can download the code yourself from github and check. The author of the post will not update his position with this information nor has he allowed any new posts since July….especially any that undermine his assertions.
I have read your post as thoroughly as I could. I'm sorry to say, but I got lost on a couple of your examples. I'll study them a bit closer later....or perhaps someone else can answer them....
I was in your position just 8 weeks ago....trying to critically deconstruct Ripple. It took me and a group of friends 2 weeks to fully get our heads around 'trust lines' .... once we did, we found it to be an over-blown issue. Other than to one gateway, most users will have no reason to use trust lines.
Now my friends and I all feel 100% certain that Ripple is an inevitable evolution to a higher form of financial networking.
Ripple is not really crypto currency.
Crypto currencies are digital currencies & ripple are trying to be the digital money changer/borker.
Crypto currencies are digital currencies & ripple are trying to be the digital money changer/borker.
sometimes an IOU of a bitcoin is worth more than an actual bitcoin and you need services such as ripple or traditional banking system. If you don't currently have the need to keep assets in IOU form, don't do it.
I need some time to appropriately absorb and study all of the points in the original post....BUT....in terms of this quote....your bank statement and checks are IOUs from your bank... people don't actually have the stock of companies that they purchase, just IOUs from their brokers.....most gold/precious metals ownership is in the form of receipts....etc, etc.....
You should think about the ramifications of your statement, because everyone has a need to keep assets in IOU form on a daily basis....they just don't recognize it. If you want your money to work for you, keeping it liquid is the worst advice you can ever follow, as inflation will eat it. The second you put it to work, you're dealing with IOUs.
i wants to sell my ripple
Scam
sometimes an IOU of a bitcoin is worth more than an actual bitcoin and you need services such as ripple or traditional banking system. If you don't currently have the need to keep assets in IOU form, don't do it.
I just looked closer to Ripple with high expectations but got finally a pretty bad impression.
Maybe I dont understand all aspects right and maybe I am missing some. I am open for comments if I am wrong with some of the following.
But at least I am not the only one who sees Ripple as at least a pretty misleading project: http://ripplescam.org
Here is my summary of that afternoons investigation:
As far as I understand Ripple, it has much more in common with the traditional banking system then with Bitcoin.
It may be an interesting modernisation for banks and may be successful in that direction as well as it supports new crypto currencies. But it is in many aspects very different to Bitcoin:
- Money as depth
- Based on trust to gateways (banks, brokers, exchanges, FED...)
- NOT decentralized (gateways)
- Controlled and issued by a company
- Not anonymous (at least when you want to convert your IOUs)
…
I think it includes the same or even higher risks as our traditional finance system.
If a gateway goes default and if it is a huge system relevant one (like MtGox or BTC China), that event could cause a default of many other gateways and a bailout by all the users with trustlines to them (if I understood Ripple correct). The trust lines are obligatory to be able to interact but not well controlled (does the user alway update the trustlines after each tx?).
The inter-gateway (interbank) transfers could cause dangerous system wide effects.
Lets think of an example:
A Ripple user could use Ripple and another exchange with very different prices for arbitrage. So he needs a trustline with at least the tx volume to the Ripple gateway exchange. The fact that there are real reasons why there is a price penalty at some exchanges (problems to get out the fiat like at MtGox, low volume, weak trust of exchanges in some countries with low legal environment, weak security or customer care,......) will be blurred behind the scenes (the exchanges negotiate inter-gateway transfers like interbanking).
That will cause some distorted balances. Say JustCoin (which has normally much lower volume and higher prices then MtGox) will hold a lot of these BTC or USD Vouchers (BTC or USD in ripple are not real, they are IOUs for that currency including the trust that some gateway will convert it back some day, just like fiat). Some day MtGox get hacked/shutdown/defaulted and simply disappears as possible gateway for liquidity for interbanking tx. What happenes to the other small gateways? Will they get desctructed by that major event like in the bank crisis the default of some big banks destroyed small ones?
What happendes to the trust lines many users has setup with MtGox to be able to do arbitrage trades? They will loose that amount (but not only the money they had "desposited" but the whole value of the trustline if they have forgotten to adjust it after every tx). There is no protection of the state for such events unlike the "100k at bank are safe" promise....(and we all pay pretty much for that insurance). Will then a FED step in as gateway to save the system if it had already reached a global system relevant size?
Another point is the "p2p" transfer between users directly. That sounds like cool p2p and a decentralized system. But if you look closer it turn out it is the same kind of a decentralized system like a money transfer from one users bank to the other users bank. The IOU (I owe you -> debt, fiat) is transferred but it has just some value if you trust a gateway (bank, FED,…). So you can make a tx directly but with a token controlled by a central instance. Its like you send a cheque or company voucher to a friend. Its even worse as you have to implicit trust that instance and as far I have seen (not sure with that) there is no automatic adoption to the min. amount of trust needed. That trust is the same you create when doing a deposit to a bank (when paying in 100 USD you trust the Bank for 100 USD). But here the trust/risk is implicit adopted with every tx. At the end your balance is the trust/risk. With Ripple I think you need to change that trust level after every tx (if you have deposited first 1000 USD, then widthdraw 900 you still have 1000 USD trust setup). But I have not looked that close to Ripple, so maybe I am wrong here.
And there a much more problems with Ripple, best explained at http://ripplescam.org.
For me the Ripple system looks very similar to the our banking system, where we suffer from to strong interdependencies to some "too big to fail" companies and socialized losses (bailouts payed by the tax payers). Just to include crypto to that system seems for me more danger then benefit. If the bank lobby and state manage to hype Ripple as better BTC (just because it has crypto) it could become a real danger to the distribution of BTC.
Maybe I dont understand all aspects right and maybe I am missing some. I am open for comments if I am wrong with some of the following.
But at least I am not the only one who sees Ripple as at least a pretty misleading project: http://ripplescam.org
Here is my summary of that afternoons investigation:
As far as I understand Ripple, it has much more in common with the traditional banking system then with Bitcoin.
It may be an interesting modernisation for banks and may be successful in that direction as well as it supports new crypto currencies. But it is in many aspects very different to Bitcoin:
- Money as depth
- Based on trust to gateways (banks, brokers, exchanges, FED...)
- NOT decentralized (gateways)
- Controlled and issued by a company
- Not anonymous (at least when you want to convert your IOUs)
…
I think it includes the same or even higher risks as our traditional finance system.
If a gateway goes default and if it is a huge system relevant one (like MtGox or BTC China), that event could cause a default of many other gateways and a bailout by all the users with trustlines to them (if I understood Ripple correct). The trust lines are obligatory to be able to interact but not well controlled (does the user alway update the trustlines after each tx?).
The inter-gateway (interbank) transfers could cause dangerous system wide effects.
Lets think of an example:
A Ripple user could use Ripple and another exchange with very different prices for arbitrage. So he needs a trustline with at least the tx volume to the Ripple gateway exchange. The fact that there are real reasons why there is a price penalty at some exchanges (problems to get out the fiat like at MtGox, low volume, weak trust of exchanges in some countries with low legal environment, weak security or customer care,......) will be blurred behind the scenes (the exchanges negotiate inter-gateway transfers like interbanking).
That will cause some distorted balances. Say JustCoin (which has normally much lower volume and higher prices then MtGox) will hold a lot of these BTC or USD Vouchers (BTC or USD in ripple are not real, they are IOUs for that currency including the trust that some gateway will convert it back some day, just like fiat). Some day MtGox get hacked/shutdown/defaulted and simply disappears as possible gateway for liquidity for interbanking tx. What happenes to the other small gateways? Will they get desctructed by that major event like in the bank crisis the default of some big banks destroyed small ones?
What happendes to the trust lines many users has setup with MtGox to be able to do arbitrage trades? They will loose that amount (but not only the money they had "desposited" but the whole value of the trustline if they have forgotten to adjust it after every tx). There is no protection of the state for such events unlike the "100k at bank are safe" promise....(and we all pay pretty much for that insurance). Will then a FED step in as gateway to save the system if it had already reached a global system relevant size?
Another point is the "p2p" transfer between users directly. That sounds like cool p2p and a decentralized system. But if you look closer it turn out it is the same kind of a decentralized system like a money transfer from one users bank to the other users bank. The IOU (I owe you -> debt, fiat) is transferred but it has just some value if you trust a gateway (bank, FED,…). So you can make a tx directly but with a token controlled by a central instance. Its like you send a cheque or company voucher to a friend. Its even worse as you have to implicit trust that instance and as far I have seen (not sure with that) there is no automatic adoption to the min. amount of trust needed. That trust is the same you create when doing a deposit to a bank (when paying in 100 USD you trust the Bank for 100 USD). But here the trust/risk is implicit adopted with every tx. At the end your balance is the trust/risk. With Ripple I think you need to change that trust level after every tx (if you have deposited first 1000 USD, then widthdraw 900 you still have 1000 USD trust setup). But I have not looked that close to Ripple, so maybe I am wrong here.
And there a much more problems with Ripple, best explained at http://ripplescam.org.
For me the Ripple system looks very similar to the our banking system, where we suffer from to strong interdependencies to some "too big to fail" companies and socialized losses (bailouts payed by the tax payers). Just to include crypto to that system seems for me more danger then benefit. If the bank lobby and state manage to hype Ripple as better BTC (just because it has crypto) it could become a real danger to the distribution of BTC.
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