Topic: Why has Ripple decreased so much in Market cap? Used to be second to Bitcoin - page 3. (Read 5371 times)

I guess its discussed here because the XRP is a crypto currency and Ripple Labs is trying to promote their business.   Ripple makes a lot of sense if you understand balance sheet operations & double entry book keeping.  Its how money travels For example:  Me --> Chase --> Citibank --> You.   As I understand it, this gets replaced by :  Me --> Ripple Network -->  You

When the money travels from one node to another it is noted as an asset on one balance sheet & a liability on the other's balance sheet.  

The confusion is that the XRP & BTC are both defined as "crypto currencies" but they are marketed/ promoted from different views.  XRP acts a token to make the Ripple transfer possible.  In this sense it behaves like a currency should.  Think of a casino in an agnostic location where people from all countries come to play.  XRP is similar to a poker chip.  It only exist to allow different currencies to play.  The plastic token itself has no value but it might have numbed printed on it like 5, 10, 100

In contrast bit coin is promoted as thrice; commodity/money/currency.   To make matters more confusing, most people don't understand the difference between gold (commodity), gold coins or convertible notes (money), USD (currency denomination).  Bitcoin tries to be commodity/money/currency in one entity.  If you follow this "Metallism" view.  Miners should mine "bits".  The currency that is called "BTC" are backed by "bits".  And its "money" value should be priced on the supply/demand of these "bits" (as opposed to being priced in USD).  

Imagine traveling back in time.  Each nation's banks hold reserves of specie (gold or silver).  The banks print notes that are convertible to specie.  The notes are denominated in local currencies like Dollar, Francs, Pounds, Deustch Marks,etc..  No matter what number is printed on the coin or note, the money derives its value from the commodity that backs it.  Currency is the representation of that money.  The reason this existed is enable foreign trade.  Gold is gold.  I can accept your currency because I can covert it to gold and my currency is also backed by gold.  The market agrees that gold is top of the money hierarchy in value so there is always a demand for gold.  Even within the US during the Free Banking era, each bank printed its own convertible notes back by reserves in specie.

Schumpeter categorize 2 philosophical traditions of money:  Chartalism & Metallism.  Crypto (especially Bitcoin) be would philosophically in-line with the Metallism tradition.  Like Metallism, Bitcoin promoters believes that (1) state issued fiat money has no intrinsic value, (2) state created money devalues money through inflation, (3) money should be priced by laissez-faire markets as opposed to a central authority

However, there is a BIG contradiction here.   Metallism would not define crypto (especially Bitcoin) as money because it not convertible to something of intrinsic value.  Metallism would define Bitcoin as "fiat" in the sense that it came to existence out of nothing.  The only difference is that instead of being created by the state authority, it was created by an unknown person/ group calling itself Satoshi Nakamoto.  But technically each BTC is created from "mining".  So technically its intrinsic value is derived from "mining", not a quantified physical asset like an ounce of gold.  In other words, BTC's intrinsic value is digital alchemy- zeros & ones.  In essence the same way that Central Banks create money - by keystroke.  

Ripple seems to recognize this contradictory quality of crypto as a commodity/money/currency.  I believe that's why it's "pre-mined".  It seems to me Ripple sees the potential in crypto not as a competing currency to existing fiats.  Rather, Ripple is exploring the use of crypto as protocol to transfer fiat.  Regardless of denomination; Dollar, Euro, RMB, Bitcoin, Dogecoin, Litecoin, etc..  Ripple doesn't have a philosophical view of money just a banking view of money.  Ripple is a privately owned company so that makes XRPs similar to a private bank issued currency.  Except Ripple is nothing like a bank so XRPs are to be treated as tokens.  You are not supposed to hoard XRPs and store your money in it.  If big banks use Ripples system to transfer money then the XRP would be invisible to the end user.

This is what I gather from reading their website.  But yes its confusing because they have Ripple wallets that you need to deposit BTC to use so it seems like its a bit coin competitor

Maybe this is a pivot, and maybe it is a good one, but that has not always been how it was presented. For a while they were going out of their way to try to get people to sign up for ripple wallets, and in fact I have one. I found it very confusing and when I went back a few months later, it didn't even work with my browser any more. I didn't care enough to try to fix it. Maybe, with this pivot, they don't care if I care.

So we have to wait for those services to be built. Got it.

NO news from the OC.  So the holder sold xrp.
Opencoin should do more work to let people use ripple.

This is again, because the Ripple protocol is not a consumer facing product.  It's like saying when you walking in the bank, there's just a computer sitting there with all the access to facilitate payments, on their proprietary software.  How many customers would know how to do it?  How many would even bother to try?

Ripple will really start making sense for people as more products and services are built, integrating Ripple as their backend.  Many times, you may never know you're using a Ripple powered product.  Just as you have no idea what goes on behind the scenes at PayPal or the ACH and Swift systems, or yes, even SEPA.  Once you start having merchant tools for easy website integration, different payment networks integrating, the benefits will become crystal clear.  But development takes time and Ripple Labs is not in the business of developing the entire infrastructure around Ripple.

As for bank integration, RL's has made great strides, although as was said, these active discussions can't be made public and for obvious reasons.  But you can see the fruit of their labor in instances like this from David Andolfatto, Vice President at the St. Louis Fed.


Lastly, there are still people in this thread who just don't under IOU's as it relates to Ripple.  There's a disconnect here between:

1.  IOU's as a means of credit.  Meaning, you can buy now and pay later.  (False)
2.  IOU's as a representation of an actual asset balance.  (true)

The latter is what you can utilize in Ripple.  If you can't differentiate between the two, Ripple will never make sense to you.  Furthermore, the counter-party risk is not in the IOU.  The counter-party risk, is in the 3rd party who holds your assets.  The IOU is just a liquid representation of that balance.  Like when you go to the casino, your cash is exchanged for poker chips.  The poker chip is an IOU backed by your cash.  You can turn it in at anytime and get your cash or you can give it away or lose it to another player and they now have ownership over that cash, because they hold the chip. (IOU)

Same thing, you're just exchanging balances at 3rd parties.  What's really going to be cool and when the power of Ripple is really going to become apparent, is when the federation of payment networks takes flight.  Assume Paypal, Bank of America, HSBC, Bitsamp, and BTC-e were all gateways.  Since you're able to exchange balances, your going to be able to do all kinds of things.

From your BoA account, you could directly pay any merchant that accepts Paypal.  Direct balance exchange via IOU's, without central clearing in the middle.  
Or, you could send direct from your Paypal account to BTC-e, without wiring money or having to buy BTC, pay the fee, then transfer the coins, wait an hour.  You know the deal.    

You just exchange your Paypal balance for a BTC-e balance a viola, you have USD or BTC or NMC on BTC-e.  And someone who had a balance on BTC-e, now has USD in Paypal.  Confirmed and irreversible in seconds.  

The possibilities are limitless.  Now, we can move our balances around, like we do email.  We can send email to any @email address, thanks to SMTP.  Thanks to Ripple, we'll do the same with value because right now, a Paypal user can only send to a Paypal user.  A bank of america user can only send to a BoA user, etc.  It's like pre-SMTP email.  When you really sit back and think about it, it's totally mind blowing that we're still stuck in these closed systems.  
 

True, though they understand it well enough to use it, which is most certainly not true for ripple.


Alright then, since I'm not a bank or in the business of providing banking services, why do I ever (in fact frequently) hear about ripple. Again the targeting of the message and the message itself seems misdirected and confused.

I would say most people don't understand how banking works in general.  What they know is they don't like ATM fees or foreign transaction fees, etc.  I see Ripple having more potential as an institutional tool rather than a consumer facing product.  Consumers just want to make payments easier.  If Ripple can be adopted by big banks to make transactions easier for consumers then it'll succeed if not then it won't. 

Now we're getting somewhere. As with the iphone, meeting present needs is paramount. Steve Jobs never sold the iphone on the basis of the next iphone being better. It was always on the basis of what the (then) current iphone could do for its users.

If Ripple does useful things now, and most importantly you can communicate that in a way that is compelling and comprehensible to the audience, great. Right now you haven't even gotten past people being confused about what the term ripple even means.

This is not limited to this thread (or countless other essentially identical threads). Beyond this forum, I've talked to a lot of other people both online and offline who really have no understanding of what ripple does or how it benefits them at all.

Speaking for myself personally, I agree with you. I do see Ripple as a bridge. It's possible that the future evolution of money will be rippling among friends, but it's also possible that the future of evolution of money will be a trustless crypto-currency. It's also possible the future will be something none of us can think of yet.

The business plan we made for Ripple was the best we could come up with given the information available to us at the time. If you can think of a way we could do things better, we're all ears. We definitely don't expect to be doing the same thing forever. If there's no place for us in the future, so be it. Either Ripple Labs will do something else or we'll cease to exist.

Personally, I'm largely indifferent to the form future money and payment systems take. I see advantages of each, and both will likely improve dramatically over the next few years. The market will ultimately decide. Ripple was designed to meet present needs and to move in the direction its designers believed would be beneficial.

That is very interesting and it does seem to explain what we are seeing.  I don't think a large global hawala network will work.      

Time to go for a walk and enjoy what's left of this sunny afternoon.

It is likely the two do not in fact have (even basically) the same problem(s), because bitcoin has gone much farther much faster than original ripple. Your explanation of what is going on is contradicted by the evidence.
 

My point is that I'm skeptical of claims that you are creating a bridge to where "we" want to be, if that means a world that does not have trillions of dollars of legacy fiat currency markets that need to be "rippled." By and large the bitcoin community sees no need for a future where a company doing the sorts of things that Ripple does has a central role. That may simple be a lack of vision and the people running Ripple are just smarter than everyone else, or it may be a disagreement as to direction. I suspect the latter.

You have basically the same problem Bitcoin has. If everybody used it, it would be great. But not enough people have an incentive to adopt it to reach a critical mass. One of the things the new Ripple does different is focus, at least initially, on gateways.

This was essentially the original (pre crypto) ripple. You created IOUs exclusively with your actual trusted friends and they could get canceled in the course of trade, but not traded. That seemed to never really go anywhere. Then this crypto VC bubble happened and we got where we are.

Apple's business plan in creating each iPhone is to meet a current demand, a demand that they expect to be temporary. You can view each iPhone as a bridge that meets people's present needs and lays the groundwork for future products that meet their changing needs in the future.

I wouldn't take this analogy too far. But every business plan is a temporary thing. Ripple Labs doesn't expect to be doing the same thing forever and its current revenue model will almost certainly become obsolete at some point. That may mean Ripple Labs does something else. It may mean Ripple Labs develops the things that make it obsolete. You can only plan so far ahead.

If your point is that we're likely to explore other revenue models before our current one runs out, then I would absolutely agree with you.

That analogy fails in so many ways.

Apple's business plan in creating the iphone was not and is not to "create a bridge." Show me a speech by Steve Jobs where he said that the reason to adopt the iPhone was as some sort of bridge.

@ leopard2

Bitcoin is a robust decentralized system for directly exchanging assets in an unforgeable global ledger.  I think the value in bitcoin is high. 

This may sound harsh, but in my opinion:

- Ripple is a system that obfuscates counter-party risk,
- ripples are an essentially valueless token with a misleading name. 

That being said, I can perhaps imagine several small digital hawala networks becoming useful if they are composed of like-minded entities where sufficient trust can be established to surmount the counter-party risk associated with the IOUs.

no one answered my use case question about replacing SEPA payments on a website with ripple.

When Apple builds a new iPhone, they make the old ones obsolete. Very few businesses expect to be able to continue with the same business model making the same products forever.