Topic: Why Ripple™ is against everything Bitcoin - page 31. (Read 45626 times)

Thanks for the compliment.

I think there maybe sensible reason why Opencoin/Ripple developers are so hesitant when it comes to release the source code, as what I said in another post, they may be worried that it's easy for others to "clone" their network and outdo them(after all only trust is required), so they decide to withhold from releasing the source code until their network "matures".

I personally am not too worried about the fact that Opencoin gets to decide the allocation of XRPs, but by creating XRP, Ripple set a very bad precedent: that a random organization can somehow print its own money and rake in a few million bucks for something costs next to nothing to create. You can bet that all Ripple-clones/forks will follow suit. Whether the Ripple network model will prove to be useful remains to be seen, but buying and hoarding XRPs is most likely a very bad idea.

RE: Oakpacific

This is some great analysis that makes these forums worth reading. I will be sure to follow more your posts in the future and I hope to hear more of this analysis. It's some of the best available on these forums. Imo, it's interesting how everyone has access to the same information (in this case about Ripple), but only a few are able to extract the real truth. Thanks for posting this.

I believe it is possible to see a little about Opencoin through their current approach, even if the majority of their business remains a closed-source mystery, as outlined in this analysis by Oakpacific.

One thing though, let's not get ahead of ourselves analysing Opencoin before they even release the source code. There is no way it is sensible to buy XRP until you have seen the source code of the system. As somebody mentioned , anything can be changed between now and when they release the code.

However, I'd speculate (*speculate* in bold underline) alongside Oakpacific that the fact that they have taken this approach, developing the code closed source initially, and keeping a large number of coins for themselves, does not bode well for a cryptocurrency company, which after all will have to rely on a free and open community to run and support its software in order to succeed. However, jury's out.

Well, if you can provide some vision as to what the intent of Ripple is here and how it addresses the shortfalls of the current system, I for one, would be appreciative.

Candidly, I just don't see the problem that Ripple is meant to solve yet. What I have read so far suggests that BTC doesn't seem to be able to scale properly for "Mom and Pop" read day to day demand levels. That doesn't seem to be controversial and I'm sure people are working on it. This may, in fact, be the issue that Ripple is intended to solve. If so, then it's not a "perfect" solution in that it appears that you need to accept a substantial amount of counter-party (read Gateway) risk in exchange for rapid processing. The argument in favor of this that I am hearing is that it's no worse than the current system and may actually reduce transaction fees as well. OK. That would be something to discuss if true.  What else am I missing from the big picture -- a lot I'm sure.

I think the problem here is lack of vision. Many people only know what is here now and cannot see potential or future progression of technology. What Ripple is now is a closed beta distributed platform. What is it has the potential to become is a decentralized, superior protocol which solves many of the problems Bitcoin faces. Do not abort a baby before it has the time to grow into a productive human being. 

Ripple is not a scam...
1) It is closed source.
2) It is centralized.
3) Ripple does not allow users to send "every kind of currency."
4) Issuance of XRP's is left to the whims of men.
5) The security model of Ripple is untested.

3) Ripple does not allow users to send "every kind of currency."

This is what I understand as well. You still have the problem of getting to Fiat in either case. However, if I understand BTC correctly, you possess your coins directly and can transact with any Fiat dealer even if your preferred dealer -- ha ha -- goes down. With XRP's, you're locked into your "trusted" Gateways and if they go down you're finished as an IOU is not the actual crypto-currency itself. To my mind, this is just a way of replicating a "bank" without the government backing or insurance. That doesn't seem like a step forward to me.

While I'm really really cynical about the financial crisis and how it was resolved, the US government did step up and guarantee the system -- unlike Cyprus which was just about a complete wipe out. The fact that it comes out of "our" pockets over time rankles but the alternative was far worse. And of course, rather than repeat that debacle, a currency which is independent of any government, is cryptographically secure, and retains it's relative value would be a big step forward. My limited understanding is that BTC could theoretically fill this role. XRP's could not as they are really a transmission mechanism and not a store of value.

Looking for helpful corrections where I have it wrong.    

Excellent post and I appreciate you taking the time.  Your point about getting money into Ripple was great, whereas it's no different than Bitcoin.  Got it.  What I'm not getting is the asset/IOU thing.  Now I understand the fundamental difference obviously but maybe it's the electronic form of these that's confusing me.  How is it I don't have to trust a gateway with a Bitcoin?  If I want to pull it out as USD, it still has to go through them.  That is until nearly everything and everyone takes Bitcoin.  Especially my landlord, utilities, grocery store, etc.  All my basic needs.  Until that point, how are Bitcoins and XRP's really that much different?  Can I not hold XRP's much the same way?  Maybe even get a rise in value over time from their original "IOU" value?  Does that not make them an asset? Which I think was what you were saying in your last paragraph?

I read your post several times to try to figure this out but something is still not clicking for me.  

Nevermind, I just read a post on the Ripple forums that cleared this up.  The difference is that an XRP you can hold yes, but a gateway still has to hold the actual BTC.  Where with BTC's I can hold them on my own.  So I have to trust a gateway with XRP and with BTC, I just trust myself to not lose my wallet.

Don't be ridiculous, it's a crystal clear answer. Something like 30 people I'd guess, a hundred at most, and probably a lot less.





Of course it's not enough if it stays like that. What makes it promising is that it seems unlikely that it will stay that way because it would be against OpenCoin's best interests. And even if OpenCoin doesn't deliver, others could, based on the same principles. Or using Open Transactions. The two aren't even mutually exclusive.


Don't patronise me, I know how Bitcoin works.

The difference is this:

With Bitcoin, when you hold Bitcoins or transfer Bitcoins, then there is no trust required. You actually hold and control the asset.

With Ripple, when you "hold" or "transfer" other currencies, then you have to trust gateways (and OpenCoin as well for the foreseeable future).

In other words, Ripple is billed as a way to "transfer all currencies" as easily as one transfers Bitcoins. But this is a misnomer, because you're only actually transferring debts/IOU's of those currencies, and must thus rely on and trust various parties, which is hardly different than our current bank/paypal/visa system.

Further, even though you think you only need to trust the gateway in Ripple, you forgot that you still need to get money into the gateway. Ripple can't move assets, remember, so people still need to "load" and "unload" the system with various currencies at the gateways, requiring all the trusted parties that your BitInstant example required.

But it's important to distinguish between trust needed to hold and transfer assets and trust needed for exchange between assets. In the BitInstant example, you're not using Bitcoin so much as acquiring Bitcoin via various parties who already have it. Once you have the Bitcoin, it's your asset and no more trust is required. With Ripple, even if you can "acquire euros" at a gateway, someone needed to trust the same types of parties to get the euros into the gateway's bank account (Ripple didn't do it), and further still, the euro IOU that you acquire will STILL require trusting the gateway in perpetuity. Usage of the monies in Ripple, then, requires trust, where in Bitcoin it does not. You can say the ability to move IOU's around via Ripple is valuable (likely it is), but it is not the same as moving assets. It is the claim that Ripple moves assets which I have a problem with. Ripple can only move the asset called XRP's, and in this way it provides no innovation over Bitcoin which has been moving BTC's for four years successfully.

2) It is centralized.  Yes it may become decentralized in the future, but until then, my contention stands. It is not trust of the OpenCoin team which worries me here, it is the fact that they are the single point of failure. They could be shut down tomorrow a la egold. If Bitcoin had been as centralized as OpenCoin when it was getting started, the Government would've arrested and shut down the project long ago.

3) Ripple does not allow users to send "every kind of currency." Ripple is marketed as better than Bitcoin because it can "send any kind of currency." This is not true. It sends IOU's around, which are created out of thin air. The asset - the currency unit itself - is not transferred via Ripple. Sure you can sell a Bitcoin on Ripple for a USD, but then do you have the USD? No, it rests with a gateway somewhere. To actually get it, you're back in the normal banking system just as if you had traded BTC for USD on an exchange. Ripple can only transfer one asset - XRP's - everything else is a debt that must be fulfilled and transferred by someone else. There are numerous liability/risk issues with a payment system that relies on trust, in this case you need to trust "gateways" with the currency units that Ripple claims you own.

It's very different in that it is designed to be both distributed and open-source. And if the gateways are reliable, redeeming IOUs might be a relatively rare event. An IOU might be traded for goods and services thirty times before someone redeemed it.