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Have you ever submitted a payment or received a payment and seen it marked as "pending". That's likely the result of a delay due to interbank transfers. Real ti

by lojack 9y ago

Have you ever submitted a payment or received a payment and seen it marked as "pending". That's likely the result of a delay due to interbank transfers. Real time settlement is something theoretically possible with central banking using something like Fedwire, but in practice most banks use a third party clearinghouse like CHIPS. Additionally, if you have funds in USD and you need to make a payment in EUR, you'll probably need to work through a third party bank that deals with forex settlement. This all adds delays and costs. With Ripple, realtime clearing and settlement happens automatically even between currencies. If my bank and the vendors bank both use ripple, I can use USD to pay the vendor EUR in real time, and the transaction completes in seconds.

z2210558 9y ago
Yes, but is there something that Ripple is doing here that could not be done by any non-blockchain distributed system? The chief value in blockchain seems to be in getting people to agree to do something at all.
- lojack 9y ago
  > Yes, but is there something that Ripple is doing here that could not be done by any non-blockchain distributed system? Yes... as far as I'm aware, most (all?) other non-blockchain distributed ledgers require complete trust between parties. Its hard enough for two banks to trust each other completely, let alone all banks to trust all other banks. The old way of doing things is to either trust a central bank completely, which is easier to do, but far from distributed, or to trust a third party with a days worth of transfers and settling at the end of the day. Still not distributed, but requires less trust. > The chief value in blockchain seems to be in getting people to agree to do something at all. Exactly! Blockchain technology is essentially nothing more than a cryptographically secure distributed ledger. There's probably other ways of having a secured distributed ledger without technically being a blockchain, and I'd be interested in hearing about them, but I'm not aware of their existence at the moment. Either way, I'm not sure why there's so much pushback on blockchains?
  - bpicolo 9y ago
    > require complete trust between parties Doesn't it just require trust of a single party for settlements (or any number of independent settlements parties)? Which you still sort of require in the ripple model because ripple owns a crap ton of it's own coinage (60% of the pot).
    - lojack 9y ago
      > Doesn't it just require trust of a single party for settlements If you're talking about two banks... There are thousands of banks out there all with varying levels of trust, and those banks all need to transfer funds between each other on a daily basis. Most banks only have direct relationships with a handful of other banks. > Which you still sort of require in the ripple model because ripple owns a crap ton of it's own coinage (60% of the pot). Yes, they own 60% of XRP available, but if you're settling a transfer between USD/EUR then you only need to trust ripple for the length of time for that settlement to happen.
      - ric2b 9y ago
        > Yes, they own 60% of XRP available, but if you're settling a transfer between USD/EUR then you only need to trust ripple for the length of time for that settlement to happen. Which for a bank would be all the damn day because they wouldn't just be doing one transaction every 2 months.
nwah1 9y ago
I participated in writing a money transfer service. There's a number of steps, and the actual transfer is just one of them. There can be multiple identity verification checks, and bank authorizations. Each bank has their own internal API, etc. Sometimes their API is just randomly down, if it is some terrible foreign bank. I know for a fact that Bitcoin's transaction time is not "real time," so why would Ripple's be?
- lojack 9y ago
  Because bitcoin relies on proof of work in order to determine consensus. Usually vendors require X confirmations, and confirmations happen every 10 minutes of so (every time a block is mined). Ripple doesn't use proof of work, it relies on a web of trust. So, in order to transfer money from Bank A to Bank B, it relies on Bank A to have some path to Bank B that is trusted. If Bank A and Bank B don't trust each other, but both trust Bank C, then the money is routed through Bank C. Not sure what you mean by identity verification, if you're talking about for the customers, then they'd still need to have their identity verified at the bank (for purposes of Ripple, a bank is a ripple Gateway, but not all gateways are banks). Honestly, I'm an armchair expert in money transfer systems -- pretty familiar with Ripple, but less familiar with other systems.
megaman22 9y ago
I'm always amazed that in this day and age, it takes three business days for my paycheck to direct deposit into my checking account...

by lojack 9y ago

z2210558 9y ago

Yes, but is there something that Ripple is doing here that could not be done by any non-blockchain distributed system? The chief value in blockchain seems to be in getting people to agree to do something at all.

lojack 9y ago
> Yes, but is there something that Ripple is doing here that could not be done by any non-blockchain distributed system? Yes... as far as I'm aware, most (all?) other non-blockchain distributed ledgers require complete trust between parties. Its hard enough for two banks to trust each other completely, let alone all banks to trust all other banks. The old way of doing things is to either trust a central bank completely, which is easier to do, but far from distributed, or to trust a third party with a days worth of transfers and settling at the end of the day. Still not distributed, but requires less trust. > The chief value in blockchain seems to be in getting people to agree to do something at all. Exactly! Blockchain technology is essentially nothing more than a cryptographically secure distributed ledger. There's probably other ways of having a secured distributed ledger without technically being a blockchain, and I'd be interested in hearing about them, but I'm not aware of their existence at the moment. Either way, I'm not sure why there's so much pushback on blockchains?
- bpicolo 9y ago
  > require complete trust between parties Doesn't it just require trust of a single party for settlements (or any number of independent settlements parties)? Which you still sort of require in the ripple model because ripple owns a crap ton of it's own coinage (60% of the pot).
  - lojack 9y ago
    > Doesn't it just require trust of a single party for settlements If you're talking about two banks... There are thousands of banks out there all with varying levels of trust, and those banks all need to transfer funds between each other on a daily basis. Most banks only have direct relationships with a handful of other banks. > Which you still sort of require in the ripple model because ripple owns a crap ton of it's own coinage (60% of the pot). Yes, they own 60% of XRP available, but if you're settling a transfer between USD/EUR then you only need to trust ripple for the length of time for that settlement to happen.
    - ric2b 9y ago
      > Yes, they own 60% of XRP available, but if you're settling a transfer between USD/EUR then you only need to trust ripple for the length of time for that settlement to happen. Which for a bank would be all the damn day because they wouldn't just be doing one transaction every 2 months.

nwah1 9y ago

I participated in writing a money transfer service. There's a number of steps, and the actual transfer is just one of them. There can be multiple identity verification checks, and bank authorizations. Each bank has their own internal API, etc. Sometimes their API is just randomly down, if it is some terrible foreign bank. I know for a fact that Bitcoin's transaction time is not "real time," so why would Ripple's be?

lojack 9y ago
Because bitcoin relies on proof of work in order to determine consensus. Usually vendors require X confirmations, and confirmations happen every 10 minutes of so (every time a block is mined). Ripple doesn't use proof of work, it relies on a web of trust. So, in order to transfer money from Bank A to Bank B, it relies on Bank A to have some path to Bank B that is trusted. If Bank A and Bank B don't trust each other, but both trust Bank C, then the money is routed through Bank C. Not sure what you mean by identity verification, if you're talking about for the customers, then they'd still need to have their identity verified at the bank (for purposes of Ripple, a bank is a ripple Gateway, but not all gateways are banks). Honestly, I'm an armchair expert in money transfer systems -- pretty familiar with Ripple, but less familiar with other systems.

megaman22 9y ago

I'm always amazed that in this day and age, it takes three business days for my paycheck to direct deposit into my checking account...