Why Ripple™ is against everything Bitcoin - page 29.

oakpacific

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Quote from: mmeijeri on May 12, 2013, 10:17:35 AM

Quote from: oakpacific on May 12, 2013, 09:31:34 AM

And nobody other then you knows how much is out of your control.

What do you mean by that?

"You" refers to whom the "you" in your sentence refers to, the Opencoin. They decide how much XRPs they will allocate to anyone out there at any given time, nobody else knows.

evoorhees

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Democracy is the original 51% attack

Quote from: oakpacific on May 12, 2013, 10:15:11 AM

Quote from: evoorhees on May 12, 2013, 10:12:44 AM

Quote from: n8rwJeTt8TrrLKPa55eU on May 11, 2013, 09:43:36 PM

I am neutral about Ripple and taking a wait-and-see attitude, there are good arguments both pro and con whether the system will actually work as marketed. As part of my research, I have a question which hopefully someone here can answer:

Quote

OpenCoin, Developer of Ripple Protocol, Closes Funding From Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners and Angel Investors

What is the sustaining business model for OpenCoin on which this investment was predicated? Or did these firms simply receive a large chunk of XRP with the assumption that the value will appreciate? Basically I'm trying to understand how investing in OpenCoin was pitched, and what the VC exit strategy is going to be. These guys would not have handed over money without the expectation of a 10x or 100x rate of return.

Given that OpenCoin doesn't take a cut on transactions, and that once the source code is released and cloneable the technology stops being a scarce resource, is OpenCoin planning to offer additional/ongoing/proprietary paid-for services and products, or is the entire monetization strategy based on widespread network adoption and a rising XRP value?

This is a very good question, and you're absolutely right that the VC investors are being enticed by something like 100x potential return or higher. They are not investing millions for any other reason.

That said, I see only two possible business models:

1) Give a large amount of XRP to the investors. If system takes off, they make huge returns.

2) At some stage, attempt to license gateways, such that Ripple becomes a proprietary system earning money on its IP. I doubt OpenCoin is so foolish as to think this would work. I do not think this is their plan. This leaves only option 1, above.

Notice something important though... the promise to investors must have been more than "you get X% in OpenCoin equity" because the company MUST ASSUME that it will be closed or shut down once Ripple achieves a significant size (the egold problem). In other words, everyon in OpenCoin must know that OpenCoin is temporary, and thus the only promise they could make to the investors is to hand them a bunch of XRP's which would outlast the company.

If the investors really only invested in return for equity in OpenCoin, then they are fools and don't understand the implications of cryptocurrency markets at all.

But when you open source everything, not a line of code or any IP right is your own, competitors can replicate your network easily, including your currency, how is the XRP to worth anything then?

For the same reason that BTC is worth something when anyone can easily clone it. Network effects, user adoption, brand recognition, proven track record, etc.

mmeijeri

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Martijn Meijering

Quote from: evoorhees on May 12, 2013, 10:17:20 AM

Again, it doesn't do this. Ripple doesn't let you exchange between fiat and BTC. It lets you exchange between fiat IOU's and BTC. To actually take possession of the fiat, you're back in the normal banking/payments system.

Sure, but why would that be a problem during the transition from fiat to crypto? The same is true for Mt Gox or any other exchange.

mmeijeri

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Martijn Meijering

Quote from: oakpacific on May 12, 2013, 09:31:34 AM

And nobody other then you knows how much is out of your control.

What do you mean by that?

evoorhees

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Democracy is the original 51% attack

Quote from: Coinseeker on May 12, 2013, 08:34:49 AM

Quote from: mmeijeri on May 12, 2013, 04:22:32 AM

Quote from: datafish on May 11, 2013, 06:39:36 PM

I think Erik's point about ripple moving IOUs rather than assets around is an important one.

It's an important difference, but I see IOUs issued by gateways mainly as a temporary tool for the transition to crypto. Once Ripple was widely used, XRP could be used for everything and you wouldn't need IOUs anymore, except perhaps for exchange with other crypto-currencies. I don't think there is a fundamental reason something similar couldn't be done with Bitcoin. In any event, Ripple would give us exactly what Bitcoin needs right now: an efficient, distributed mechanism for exchanging between fiat and BTC.

Bingo!

Again, it doesn't do this. Ripple doesn't let you exchange between fiat and BTC. It lets you exchange between fiat IOU's and BTC. To actually take possession of the fiat, you're back in the normal banking/payments system.

IOU for $1 =/= $1 (the former has non-trivial counterparty risk, the latter is an asset).

oakpacific

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Quote from: evoorhees on May 12, 2013, 10:12:44 AM

Quote from: n8rwJeTt8TrrLKPa55eU on May 11, 2013, 09:43:36 PM

I am neutral about Ripple and taking a wait-and-see attitude, there are good arguments both pro and con whether the system will actually work as marketed. As part of my research, I have a question which hopefully someone here can answer:

Quote

OpenCoin, Developer of Ripple Protocol, Closes Funding From Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners and Angel Investors

What is the sustaining business model for OpenCoin on which this investment was predicated? Or did these firms simply receive a large chunk of XRP with the assumption that the value will appreciate? Basically I'm trying to understand how investing in OpenCoin was pitched, and what the VC exit strategy is going to be. These guys would not have handed over money without the expectation of a 10x or 100x rate of return.

Given that OpenCoin doesn't take a cut on transactions, and that once the source code is released and cloneable the technology stops being a scarce resource, is OpenCoin planning to offer additional/ongoing/proprietary paid-for services and products, or is the entire monetization strategy based on widespread network adoption and a rising XRP value?

This is a very good question, and you're absolutely right that the VC investors are being enticed by something like 100x potential return or higher. They are not investing millions for any other reason.

That said, I see only two possible business models:

1) Give a large amount of XRP to the investors. If system takes off, they make huge returns.

2) At some stage, attempt to license gateways, such that Ripple becomes a proprietary system earning money on its IP. I doubt OpenCoin is so foolish as to think this would work. I do not think this is their plan. This leaves only option 1, above.

Notice something important though... the promise to investors must have been more than "you get X% in OpenCoin equity" because the company MUST ASSUME that it will be closed or shut down once Ripple achieves a significant size (the egold problem). In other words, everyon in OpenCoin must know that OpenCoin is temporary, and thus the only promise they could make to the investors is to hand them a bunch of XRP's which would outlast the company.

If the investors really only invested in return for equity in OpenCoin, then they are fools and don't understand the implications of cryptocurrency markets at all.

But when you open source everything, not a line of code or any IP right is your own, competitors can replicate your network easily, including your currency, how is the XRP to worth anything then?

evoorhees

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Democracy is the original 51% attack

Quote from: n8rwJeTt8TrrLKPa55eU on May 11, 2013, 09:43:36 PM

I am neutral about Ripple and taking a wait-and-see attitude, there are good arguments both pro and con whether the system will actually work as marketed. As part of my research, I have a question which hopefully someone here can answer:

Quote

OpenCoin, Developer of Ripple Protocol, Closes Funding From Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners and Angel Investors

What is the sustaining business model for OpenCoin on which this investment was predicated? Or did these firms simply receive a large chunk of XRP with the assumption that the value will appreciate? Basically I'm trying to understand how investing in OpenCoin was pitched, and what the VC exit strategy is going to be. These guys would not have handed over money without the expectation of a 10x or 100x rate of return.

Given that OpenCoin doesn't take a cut on transactions, and that once the source code is released and cloneable the technology stops being a scarce resource, is OpenCoin planning to offer additional/ongoing/proprietary paid-for services and products, or is the entire monetization strategy based on widespread network adoption and a rising XRP value?

This is a very good question, and you're absolutely right that the VC investors are being enticed by something like 100x potential return or higher. They are not investing millions for any other reason.

That said, I see only two possible business models:

1) Give a large amount of XRP to the investors. If system takes off, they make huge returns.

2) At some stage, attempt to license gateways, such that Ripple becomes a proprietary system earning money on its IP. I doubt OpenCoin is so foolish as to think this would work. I do not think this is their plan. This leaves only option 1, above.

Notice something important though... the promise to investors must have been more than "you get X% in OpenCoin equity" because the company MUST ASSUME that it will be closed or shut down once Ripple achieves a significant size (the e-gold problem). In other words, everyone in OpenCoin must know that OpenCoin is temporary, and thus the only promise they could make to the investors is to hand them a bunch of XRP's which would outlast the company.

If the investors really only invested in return for equity in OpenCoin, then they are fools and don't understand the implications of cryptocurrency markets at all.

evoorhees

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Democracy is the original 51% attack

Quote from: datz on May 12, 2013, 12:03:17 AM

Quote from: slothbag on May 11, 2013, 11:41:49 PM

I think had Ripple not kept an insane amount of XRP for themselves and had found a way to fairly distribute XRP like bitcoin mining does then I would say Ripple does everything Bitcoin does and more.

But Because of this I won't ever rely on XRP to store wealth, at least not for 10-20 years until they are evenly disbursed and opencoin have spent most of their stash.

So bitcoin is still the winner in that sense. And given it only costs like $1 or less in XRP to start benefitting from the Ripple system right now, why not embrace both. You don't need to care about XRP to start using Ripple.

Bitcoin mining is the ~~problem with~~ genius of Bitcoin.

FTFY

oakpacific

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Quote from: mmeijeri on May 12, 2013, 09:29:07 AM

Quote from: dave111223 on May 12, 2013, 09:22:26 AM

I think it reeks of hubris when you look at the financial mess a large number of world governments are in trying to manipulate their currencies; despite having 1000s of very intelligent people analyzing and reanalyzing their course of action, and plotting and debating various options a long the way....but yet a few programmers seem to think..."step aside, we'll show you how to manipulate a currency safely"

Not if you sit on nearly 100% of the money supply.

And nobody other then you knows how much is out of your control.

mmeijeri

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Martijn Meijering

Quote from: dave111223 on May 12, 2013, 09:22:26 AM

I think it reeks of hubris when you look at the financial mess a large number of world governments are in trying to manipulate their currencies; despite having 1000s of very intelligent people analyzing and reanalyzing their course of action, and plotting and debating various options a long the way....but yet a few programmers seem to think..."step aside, we'll show you how to manipulate a currency safely"

Not if you sit on nearly 100% of the money supply.

mmeijeri

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Martijn Meijering

Quote from: dave111223 on May 12, 2013, 09:16:19 AM

You lost me here, what do you mean the "bot would gain USD"? Are you saying an account controlled by Opencoin would start buying back XRP with a USD balance?

An account to which the bot has access. Initially the bot would be given a certain amount of the XRP OpenCoin intends to give away anyway. As it sold the XRP, the bot would accumulate USD. Then it could try to intervene as long as its funds (both USD and XRP) allowed it to do so, until a time limit expired and any remaining balances would be transferred back to OpenCoin. I think you can do this completely within the automated scripting system, making the decision to deploy the bot irrevocable.

Quote

So you are assuming:
1) Opencoin is going to keep a large amount of USD balance within the system

Not necessarily a large amount, and if the bot ran out of USD it could no longer prop up the XRP exchange rate.

Quote

2) Opencoin is going to sacrifice this USD balance to by back XRP during a crash

Not just during a crash, but as a result of existing volatility, which it would reduce, at a cost.

Quote

Also you seem to be under the impression that market manipulations is as simple as plugging numbers into an equation....such as "could have prevented last month's BTC bubble"....you mean to say if you had 1million bitcoins you would have been able to say "Oh uh looks like a bubble might be brewing, let me get out my texas instrument, *punch punch punch*, ok problem solved, just sell 300bitcoins every 30 minutes for the next 2 days and the price will increase at a nice 2-3% per month"...

No, you could program the bot to intervene if the price rose more than 2.5% in a day, more than 10% in a week, more than 25% in a month. Intervention could only happen as long as the bot had sufficient USD / XRP for the direction it wanted to intervene in. Its funds could run out, but it would still have some stabilising effect.

It would be a more meaningful intervention than putting up walls, because those can just as easily be removed.

dave111223

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I think it reeks of hubris when you look at the financial mess a large number of world governments are in trying to manipulate their currencies; despite having 1000s of very intelligent people analyzing and reanalyzing their course of action, and plotting and debating various options a long the way....but yet a few programmers seem to think..."step aside, we'll show you how to manipulate a currency safely"

dave111223

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Quote from: mmeijeri on May 12, 2013, 08:57:50 AM

Quote from: dave111223 on May 12, 2013, 08:51:22 AM

They would only be able to manipulate the price of XRP is one direction (down); by releasing additional XRP they can prevent the price increasing, or decrease the price if they wish.

One sided stabilisation could be useful by itself. It could have prevented last month's BTC bubble from arising in the first place, so it wouldn't have had to pop and crash afterwards.

Quote

But what is the plan if the prices in crashing, how will the stabilize it? Start buying back XRP? (Don't think the investors will go for that somehow)

The bot would gain USD if it sold XRP, and as long as it had a positive USD balance it could also intervene in the other direction. As long as the XRP funding provided to the bot were not too large it wouldn't get in the way of plans to simply sell XRP.

You lost me here, what do you mean the "bot would gain USD"? Are you saying an account controlled by Opencoin would start buying back XRP with a USD balance?

So you are assuming:
1) Opencoin is going to keep a large amount of USD balance within the system

2) Opencoin is going to sacrifice this USD balance to by back XRP during a crash

Also you seem to be under the impression that market manipulations is as simple as plugging numbers into an equation....such as "could have prevented last month's BTC bubble"....you mean to say if you had 1million bitcoins you would have been able to say "Oh uh looks like a bubble might be brewing, let me get out my texas instrument, *punch punch punch*, ok problem solved, just sell 300bitcoins every 30 minutes for the next 2 days and the price will increase at a nice 2-3% per month"...

mmeijeri

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Martijn Meijering

Quote from: dave111223 on May 12, 2013, 08:51:22 AM

They would only be able to manipulate the price of XRP is one direction (down); by releasing additional XRP they can prevent the price increasing, or decrease the price if they wish.

One sided stabilisation could be useful by itself. It could have prevented last month's BTC bubble from arising in the first place, so it wouldn't have had to pop and crash afterwards.

Quote

But what is the plan if the prices in crashing, how will the stabilize it? Start buying back XRP? (Don't think the investors will go for that somehow)

The bot would gain USD if it sold XRP, and as long as it had a positive USD balance it could also intervene in the other direction. As long as the XRP funding provided to the bot were not too large it wouldn't get in the way of plans to simply sell XRP.

oakpacific

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Quote from: dave111223 on May 12, 2013, 08:51:22 AM

Quote from: mmeijeri on May 12, 2013, 08:02:32 AM

OK, the predictable rate of BTC production vs the unpredictable release of XRP could be an advantage. The total number of both is fixed however. And if OpenCoin controls the release, they are also in a position to stabilise the exchange rate, which has clearly been a problem for BTC, so it's not universally disadvantageous for them to have this power. Then again, there are no guarantees they will actually do this. Maybe they could release a script that verifiably stabilises the USD/XRP exchange rate to within certain limits on daily, weekly and monthly swings until its XRP supply runs out?

They would only be able to manipulate the price of XRP is one direction (down); by releasing additional XRP they can prevent the price increasing, or decrease the price if they wish.

But what is the plan if the prices in crashing, how will the stabilize it? Start buying back XRP? (Don't think the investors will go for that somehow)

No, they control the supply, so theoretically they can get as much as they want to a bunch of shills they control, yet very little to honest participants. Then the shills can start playing the trick of "moving money left hand to right" publicly and push the price up. This will work very effectively at the beginning when you want to create the hype.

dave111223

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Quote from: mmeijeri on May 12, 2013, 08:02:32 AM

OK, the predictable rate of BTC production vs the unpredictable release of XRP could be an advantage. The total number of both is fixed however. And if OpenCoin controls the release, they are also in a position to stabilise the exchange rate, which has clearly been a problem for BTC, so it's not universally disadvantageous for them to have this power. Then again, there are no guarantees they will actually do this.

They would only be able to manipulate the price of XRP is one direction (down); by releasing additional XRP they can prevent the price increasing, or decrease the price if they wish.

But what is the plan if the prices in crashing, how will the stabilize it? Start buying back XRP? (Don't think the investors will go for that somehow)

Quote from: mmeijeri on May 12, 2013, 08:02:32 AM

Maybe they could release a script that verifiably stabilises the USD/XRP exchange rate to within certain limits on daily, weekly and monthly swings until its XRP supply runs out?

Better yet they should just create a script that verifiably picks tomorrow's lottery numbers.

P.S. If they plan to use XRP releases to stabilize the price, why is the price of XRP currently going up and down like a yoyo more than 50% swings each day? Was 7000XRP to BTC yesterday, then 12000XRP earlier today, now 9000XRP right now...(they really need to get that verifiably script in place?) It's currently more volatile than any alt-coin, let alone Bitcoin.

cbeast

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Let's talk governance, lipstick, and pigs.

Cash and Bitcoin generally don't have a double spend problem, but Ripple does. Using Ripple as an exchange leaves a problem on both ends of the transaction.

"I no give credit, you get mad."
"I give credit and you no pay, I get mad."
"Better YOU get mad!"

Coinseeker

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Quote from: mmeijeri on May 12, 2013, 04:22:32 AM

Quote from: datafish on May 11, 2013, 06:39:36 PM

I think Erik's point about ripple moving IOUs rather than assets around is an important one.

It's an important difference, but I see IOUs issued by gateways mainly as a temporary tool for the transition to crypto. Once Ripple was widely used, XRP could be used for everything and you wouldn't need IOUs anymore, except perhaps for exchange with other crypto-currencies. I don't think there is a fundamental reason something similar couldn't be done with Bitcoin. In any event, Ripple would give us exactly what Bitcoin needs right now: an efficient, distributed mechanism for exchanging between fiat and BTC.

Bingo!

oakpacific

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Quote from: mmeijeri on May 12, 2013, 08:12:39 AM

Quote from: oakpacific on May 12, 2013, 08:08:13 AM

You should read my last sentence, I do not worry about Opencoin manipulating the XRP market. What I worry about is some other organizations(like a botnet for example) creating a Ripple clone(if they release the source code then why not), and tries to outdo Ripple, all because they want the currency they create in the XRP way to appreciate, like what Jed openly admitted.

That would not be a problem with Ripple or XRP, but with the competing system and currency. If you stay away from that competing system, you should be fine.

That would be a problem with Ripple developers and XRP investors because if a competing network outdoes them, through both good means and bad means, the value of their XRPs will plummet.

mmeijeri

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Martijn Meijering

Quote from: oakpacific on May 12, 2013, 08:08:13 AM

You should read my last sentence, I do not worry about Opencoin manipulating the XRP market. What I worry about is some other organizations(like a botnet for example) creating a Ripple clone(if they release the source code then why not), and tries to outdo Ripple, all because they want the currency they create in the XRP way to appreciate, like what Jed openly admitted.

That would not be a problem with Ripple or XRP, but with the competing system and currency. If you stay away from that competing system, you should be fine.

Quote

Whether Ripple will become a good model for a payment network remains to be seen, what I am convinced however, is that XRP is a bad investment.

Then don't invest in it.

Topic: Why Ripple™ is against everything Bitcoin - page 29. (Read 45626 times)