Topic: Why Ripple is a bad idea. - page 4. (Read 10646 times)

Huh? When did Diaspora fail? Last I heard it was just being developed and wasn't really fully built yet, else I would have given it a try. It looked like a come back in a year or few stage of development. Did the developers abandon it or something?

-MarkM-

Ripple will fail because of the same reasons Diaspora failed.

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where? 

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Can someone send me some Ripple coins please i have none 

Address is in sig  

From what I understand the XRP are required to prevent DDOS attacks and spamming the system, and if IRC they may be used as an intermediary when sending any currency over the network more effeciently.  So as long as they keep giving them away for free (but restricted) or at a floating exchange rate close to free to promote adoption but discourage abusing the system then I dont mind it.

Even if the exchange rate eventually goes up a little or a lot, as long as they keep supply in order to keep exchange rates stable then it should continue to fulfil its purpose.  Yes it will make them a lot of money, but I dont have a problem with these guys earning some money for their hard work implementing and further developing.. Its one problem the Bitcoin Foundation is trying to solve.. they want to work on Bitcoin fulltime and be paid but sometime personal donations just aren't enough.

That may be a problem in the short term, but I hope that we soon have a number of competing gateways with plenty of liquidity between them. So even if you trade to MtGox IOUs because that's the deepest order book with the best rates between bitcoins and USD, you could immediately exchange those USD IOUs for ones at a gateway whose redemption policies you find more attractive.

Don't let all the IOU stuff distract you from the fact that this is a new currency, Ripples, XRP, which is quite similar to bitcoin and related altcoins.

All the stuff about IOUs and distributed currency exchange can even be put aside for a moment as being just a clever bunch of window-dressing and public relations spiel to "justify" the hundred billion coins that a few individuals and a corporation that quite likely they are the owners of are getting all to themselves from the start so they can do various give-aways and such to lure people into using it.

Sure if the IOUs and forex stuff works and catches on that is great, it will bolster the value of those 100 billion coins, but even if it does not there is still a whole new altcurrency, with 100 billion coins in very few hands, basically a massive pre-mine in this subforum's terminology.

All the stuff about IOUs and forex might help this new altcurrency catch on with the masses, the lack of massive expenditure on proof of work might help it catch on with those who think proof of work is wasteful, about the only downside of the lack of proof of work is people who like to get their currencies by mining are out of luck with this one.

How much do how many people actually care about pre-mine? Will 10,000 free coins shut you up about that and get you on board?

If "everyone" is going to use "gateways" the decentralisation isn't really looking very P2P, its more like it plans to be centralised in the same kind of "central exchanges" we are already seeing and that some folk already complain about, that made them cry out for a P2P exchange system in the first place. In particular if a supposedly P2P exchange of bitcoins for dollars is going to really just give me MtGox tokens that will cost me notarisation of documents and mailing in of IDs to get the actual dollars that to me just seems more like extending MtGox's reach than an alternative to MtGox.

Don't get me wrong, I am in Ripple, I have my free 10,000 coins, I am tempted to let them sit a few years hoping they will go up in value. But it looks like I will still end up getting my dollars in the IRC over the counter channel even if Ripple means I can get them in return for MtGox ripple-dollars instead of directly for bitcoins. I simply do not have enough need for dollars yet for the cost of notarising and whatevering my ID, maybe even having to pay a hundred pounds for a copy of my birth certificate so I can then pay gosh knows how much for a passport to get notarised and whatevered, to seem like a tiny overhead worth going through compared to how many dollars I need to renew a domain (the main thing I have had to cash out bitcoins for so far.)

-MarkM-

There are two things that help to prevent this:

First, Charlie would lose his network. So long as the value of his network is significantly greater than the value of the money in it at any particular time, this is a very significant deterrent.

Second, while I wouldn't expect Ripple debt to be enforceable alone, I don't see why the contracts backing it wouldn't be enforceable at entry and exit points. If Charlie got $10 cash from Jack and has a contract with Jeff that says he'll pay that money to him if the ripple system tells him to, I don't see why that contract wouldn't be enforceable. For Charlie to argue otherwise, he has to argue that he gets to default on his contract with Charlie and his contract with Jeff and keep the money.

But I absolutely agree that this is a risk that should be evaluated carefully. Using the ripple system as a medium of exchange, this risk is very low. Using the system as a store of value, this risk is higher.

I think the idea is that Charlie would lose his reputation. I still have concerns about Ripple, but this isn't one of them.

There are several things built in to try to keep IOUs pegged to the currencies they're denominated in. For example, within the system, issuers must always accept their own IOUs at face value.

Also, we expect merchants or others who accept payments to just use a raw currency. You'll communicate a price as, say, "30 Euros". If a merchant can't maintain sufficient connectivity to allow consumers to pay them 30 Euros by using 30 Euros at a major gateway, they should consider that a failure. So they'll try to maintain connectivity to one or more major gateways such that anyone with similar connectivity can pay them 30 Euros for an amount very, very close to 30 Euros.

You may have a "junk economy" too, I suppose. I don't think people will find that terribly useful, but if they do, I guess that's good too.

It just sounds like anyone could charge what they want and because it is just IOUs. Aren't we seeing a debt based currency war going on now? Every nation is devaluing their productivity by inflating their economies. It won't be long before we are mowing lawns and washing cars for one million. It just seems that this economy is way too easy to hyperinflate.

One of the things that we're finishing up is a gateway between bitcoin and ripple. This will mean that both that you can cash out ripple IOUs as bitcoins and also that you can pay merchants that take ripple payments in bitcoins.

I've been trying to get my head around Ripple for the past few days and I must say that I like what I see so far.

I particularly like the consensus over mining approach.

I think Ripple will be good for day to day transactions, at least its good to have some competition to Bitcoin in this regard, makes for a healthy payment system landscape post FIAT collapse

But I think Bitcoin will still win out in terms of long term value store.  I just cant imagine leaving any significant wealth in Ripple as IOUs?  I feel like it would be safer to convert those IOUs out to Bitcoins and hold onto them like gold/silver.

Regardless, its nice to think that we can now transact in multiple free open source payment systems, and store wealth freely without ever needing the existing corrupt systems and do it all electronically with a click of a mouse.

Yes, that's right. For any particular currency, between any two accounts, there's only one balance. While you must acquire other people's IOUs before you can trade them, you can produce an unlimited supply of your own IOUs, limited only by whether other people are willing to hold them.

Sometimes we use IOU terminology and sometimes we use balance terminology. In the system, there are really just balances. So if we say "Jeff holds $50 in Jack IOUs", that's the same as saying "Jack owes Jeff $50". If Jack then pays $50 to Jeff leaving a balance of zero, this can also be described in IOU terms as Jack destroying the IOUs Jeff holds.

I think you would both just have a balance of 0.  Also, don't forget you have to acquire the IOUs before you can trade them.

So if you IOU me for a million for mowing your loan and I IOU you for a million for washing my car, then we can each buy a Maybach?

I'm one of the people working on it. There's lots of explanatory material in the wiki: https://ripple.com/wiki

Ripple IOUs are just balances, just like a bank balance. If you have a bank balance of $50, that means your bank owes you $50. For me to pay you $50, I give you a check. The system processes that check and then my bank owes me $50 less, your bank owes you $50 more, and you consider me to have paid you $50. Most likely, you would only hold your bank's IOUs, so the only worthless IOUs you have to worry about is if your bank fails.

Isn't this what got the economy into the subprime mortgage mess?

This idea makes a ton of sense when you're the banker and know that you'll be able to privatize the profit while it lasts and then socialize the fallout when the whole thing collapses.  But it doesn't make for any sort of sound financial revolution that will bring the world freedom from tyranny.

I think the concept behind Ripple is infinite rehypothecation. If someone accrues enough IOUs, then even if many of them are worthless, they all average out. It presupposes that bad debtors will not themselves aggregate enough Ripple points to matter to the system and will be weeded out. It makes sense if we presume that social pressures will determine the average value of Ripple tokens.  It's a numbers game that needs to be based on social science. I would really like to see the algorithms that go into determining the risk and value of the IOUs, but I have a feeling that this will not be forthcoming. If they are not absolutely revolutionary algorithms, then we are looking at a system that will be easily gamed.

I think the algorithms behind Ripple will make a quant blush.