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For anyone who doesn't grok Ripple, I looked into it a bunch a while back. (Feel free to correct me on any of this.) The Ripple network works a lot like the Bi

For anyone who doesn't grok Ripple, I looked into it a bunch a while back. (Feel free to correct me on any of this.) The Ripple network works a lot like the Bitcoin network: units of value can be stored at a wallet address, and whoever owns the wallet's private key can send funds to other wallets. The big difference is that while Ripple does have its own, internal currency (XRP, which right now is used mainly to pay transaction fees to the network), you can also send ”IOUs“ — units of value issued by some third party. So, some party might take USD (could be your bank, or a third party like PayPal or Stripe), Bitcoin (could be your favorite Bitcoin exchange), Euros, etc., hold them, and issue IOU to your Ripple wallet. So you give $100 USD to PayPal, they send an IOU worth $100 PayPal USD to your Ripple wallet (signed by them and stored in the Ripple blockchain). You can send all/part of that PayPal-issued $100 to anyone else via Ripple, just like you'd send XRP. Whoever wants to can redeem them for USD at PayPal — you just deposit it into a special Ripple address that PayPal gives you and, boom, the money shows up in your PayPal account (because PayPal was holding it all along). Here's where it gets even cooler. The Ripple protocol includes an “order book” where you can trade currencies. So, if I'm buying something online and use Euros and the company I'm paying uses USD, my Ripple client could automatically get an IOU for x Deutsche Bank EUR (from my bank), trade it on the Ripple network at the current exchange rate for y Bank of America USD (the seller's bank), and then pay them via Ripple in USD that they can deposit straight into their bank account! Eventually most transactions might be done in straight XRP so we save on transaction fees (from trading). That's the plan anyway, as I understand it. Ripple ain't there yet. But, there are companies out there right now that issue IOUs in a few currencies and are trusted enough that people might accept them for payment. So I’m pretty excited.

gwern 13y ago
It is cool, but the irony is, the IOU stuff will soon be mimicked by Bitcoin with 'colored coins', and Ripple will lose the last major feature it had over Bitcoin. And at that point - who wants a pre-mined backdoored e-currency which can't be made anonymous or used places like Silk Road?
- nowarninglabel 13y ago
  Legitimate businesses. We had a great conversation the other day at this Virtual Currency Talk: http://cr.perkinscoie.com/rff/ff00120bf2ac2fdfe524c63378439ae3cd97be08 http://cr.perkinscoie.com/rff/ff00120bf2ac2fdfe524c63378439a... about the reputational risk of Bitcoin. There is a need to legimatize Bitcoin with governments or use a virtual currency that is able to establish legitimacy, so that large businesses which only have a marginal gain from incorporating Bitcoin will actually have an incentive to do so. Furthermore, there was a very strong consensus among all parties, most especially by Patrick Murck (President, Bitcoin Foundation) that Bitcoin is not an anonymous or "private" currency, and that many people who believe it can be made anonymous are most likely in store for a rude awakening when government scrutiny and regulation catches up with the pace of the technology.
  - gwern 13y ago
    > There is a need to legimatize Bitcoin with governments or use a virtual currency that is able to establish legitimacy, so that large businesses which only have a marginal gain from incorporating Bitcoin will actually have an incentive to do so. The reputational issue is solved by widespread real-world use, which is not something Ripple can boast either. These 'large businesses' have no reason to use Ripple even if it's clean due to backdooring, if no one else is using it. > Furthermore, there was a very strong consensus among all parties, most especially by Patrick Murck (President, Bitcoin Foundation) that Bitcoin is not an anonymous or "private" currency I would be fascinated to hear if this means that Murck and the Foundation plan to sabotage the adoption of any Zerocoin-like extension...?
- deleted 13y ago
  [deleted]
nullc 13y ago
>The Ripple network works a lot like the Bitcoin network It doesn't work like the Bitcoin network at all. Except that its computer software for handling transactions. Bitcoin is based on a primarily zero trust model, where every node validates all the data completely and cannot be tricked— except for transaction ordering which (due to relativity) can't be evaluated like that, and so Bitcoin uses a computational lottery to establish ordering. Ripple has a small number of server nodes which can freely set all balances, no validation at all. Its an entirely different model. The servers believe according to a majority of configured trusted peers. It doesn't even appear if the ripple model can be stable even absent attackers if the peering are not centrally controlled. See this thread for more discussion: https://bitcointalk.org/index.php?topic=144471.0 https://bitcointalk.org/index.php?topic=144471.0 (esp the later posts with the network topology diagrams)
- SJoelKatz 13y ago
  Each Ripple server does validate all the data completely and cannot be tricked. Ripple uses consensus to establish transaction ordering. Ripple does have only a small number of server nodes today, but that should be growing over time. A node cannot freely set balances. Each node signs each ledger and any change to a ledger entry (such as a balance) must be accompanied by a signed transaction justifying that change or other nodes will reject it. Nodes are in fact called "validators" and they validate each ledger to ensure that any changes are justified by transactions. They sign these ledgers every few seconds. As for the peering needing to be centrally controlled, I assume you're referring to each node's set of validators. While that does need to be sanely managed, it doesn't need to be centrally controlled. A number of organizations can publish lists of validators they believe to be reliable. The algorithm is very tolerant of things like minimal overlap or bad apples. Every honest node wants to agree with every other honest node, and dishonesty is impossible to hide, so the problem is not that difficult. (I'm one of the architects of the Ripple network.)
  - rxl 13y ago
    First, let me quote http://ripplescam.org/ http://ripplescam.org/: But wait – you can become your own validator! [...] The consensus system ensures there is only one ledger – the most accepted one. If you run your own validator, you must connect with OpenCoin Inc servers, or you will be building a different ledger. In practice, it is not possible to “dethrone” OpenCoin Inc as you have to co-operate with OpenCoin Inc. Second, I'll point out that while minimizing the number of validators may be attractive, it also makes the currency much more vulnerable to top-down control, via governments, corporations, etc. Last, if you're reading this, I'd suggest that you read up a bit about Ripple on Bitcoin Forum before you make conclusions about the currency - there are a lot of interesting discussions about its viability (like this one: https://bitcointalk.org/index.php?topic=146964.0 https://bitcointalk.org/index.php?topic=146964.0).
turingbook 13y ago
I think it is worthy noting that one of founders is Jed McCaleb, the original developer of ed2k and MtGox.
contingencies 13y ago
I have had access to rippled for many months, and it is a pretty big part of my job to evaluate different financial systems and asset types and to consider their impact for potential future of financial networking from a technical standpoint. Here's my summary of the most important distinctions between Bitcoin and Ripple: (1) Ripple includes a single 'asset', the Ripple, or XRP (X-ISO4217-A3[1]: XXRP) with which to tax shared resource use and avoid network abuse. Unlike Bitcoin's mining model, Ripple has a non-profit foundation to distribute the vast majority of these tokens. (2) Ripple settlements are effectively much faster than Bitcoin, since rollbacks are designed to be impossible.[2] (3) Ripple encourages anyone to issue any asset. So you can have contingencies' "IOU for 5 euros", or Sidnicious' "IOU for 5 euros" and then you can choose whether or not to consider them to be of equivalent value. This is hugely powerful, since monetary theorists agree that the most desirable and missing feature of an economic system is the capacity to create a record of value (ie. debt, or money) where value is actually being created. (4) The Ripple reference implementation is far cleaner and better written. In summary, Ripple is hugely different to Bitcoin, far more aligned with academic thought on economic systems reform, and a toolkit for creating various forms of exchange rather than a currency itself. The XRP thing is just there to prevent resource abuse. [1] http://www.ifex-project.org/our-proposals/x-iso4217-a3 http://www.ifex-project.org/our-proposals/x-iso4217-a3 [2] Can't validate that myself.. though it makes sense you'd know "something's wrong" really damn quickly, since everything would stop working entirely: IIRC a Ripple ledger consensus occurs rapidly and takes majority agreement.

gwern 13y ago

It is cool, but the irony is, the IOU stuff will soon be mimicked by Bitcoin with 'colored coins', and Ripple will lose the last major feature it had over Bitcoin. And at that point - who wants a pre-mined backdoored e-currency which can't be made anonymous or used places like Silk Road?

nowarninglabel 13y ago
Legitimate businesses. We had a great conversation the other day at this Virtual Currency Talk: http://cr.perkinscoie.com/rff/ff00120bf2ac2fdfe524c63378439ae3cd97be08 http://cr.perkinscoie.com/rff/ff00120bf2ac2fdfe524c63378439a... about the reputational risk of Bitcoin. There is a need to legimatize Bitcoin with governments or use a virtual currency that is able to establish legitimacy, so that large businesses which only have a marginal gain from incorporating Bitcoin will actually have an incentive to do so. Furthermore, there was a very strong consensus among all parties, most especially by Patrick Murck (President, Bitcoin Foundation) that Bitcoin is not an anonymous or "private" currency, and that many people who believe it can be made anonymous are most likely in store for a rude awakening when government scrutiny and regulation catches up with the pace of the technology.
- gwern 13y ago
  > There is a need to legimatize Bitcoin with governments or use a virtual currency that is able to establish legitimacy, so that large businesses which only have a marginal gain from incorporating Bitcoin will actually have an incentive to do so. The reputational issue is solved by widespread real-world use, which is not something Ripple can boast either. These 'large businesses' have no reason to use Ripple even if it's clean due to backdooring, if no one else is using it. > Furthermore, there was a very strong consensus among all parties, most especially by Patrick Murck (President, Bitcoin Foundation) that Bitcoin is not an anonymous or "private" currency I would be fascinated to hear if this means that Murck and the Foundation plan to sabotage the adoption of any Zerocoin-like extension...?
deleted 13y ago
[deleted]

nullc 13y ago

>The Ripple network works a lot like the Bitcoin network It doesn't work like the Bitcoin network at all. Except that its computer software for handling transactions. Bitcoin is based on a primarily zero trust model, where every node validates all the data completely and cannot be tricked— except for transaction ordering which (due to relativity) can't be evaluated like that, and so Bitcoin uses a computational lottery to establish ordering. Ripple has a small number of server nodes which can freely set all balances, no validation at all. Its an entirely different model. The servers believe according to a majority of configured trusted peers. It doesn't even appear if the ripple model can be stable even absent attackers if the peering are not centrally controlled. See this thread for more discussion: https://bitcointalk.org/index.php?topic=144471.0 https://bitcointalk.org/index.php?topic=144471.0 (esp the later posts with the network topology diagrams)

SJoelKatz 13y ago
Each Ripple server does validate all the data completely and cannot be tricked. Ripple uses consensus to establish transaction ordering. Ripple does have only a small number of server nodes today, but that should be growing over time. A node cannot freely set balances. Each node signs each ledger and any change to a ledger entry (such as a balance) must be accompanied by a signed transaction justifying that change or other nodes will reject it. Nodes are in fact called "validators" and they validate each ledger to ensure that any changes are justified by transactions. They sign these ledgers every few seconds. As for the peering needing to be centrally controlled, I assume you're referring to each node's set of validators. While that does need to be sanely managed, it doesn't need to be centrally controlled. A number of organizations can publish lists of validators they believe to be reliable. The algorithm is very tolerant of things like minimal overlap or bad apples. Every honest node wants to agree with every other honest node, and dishonesty is impossible to hide, so the problem is not that difficult. (I'm one of the architects of the Ripple network.)
- rxl 13y ago
  First, let me quote http://ripplescam.org/ http://ripplescam.org/: But wait – you can become your own validator! [...] The consensus system ensures there is only one ledger – the most accepted one. If you run your own validator, you must connect with OpenCoin Inc servers, or you will be building a different ledger. In practice, it is not possible to “dethrone” OpenCoin Inc as you have to co-operate with OpenCoin Inc. Second, I'll point out that while minimizing the number of validators may be attractive, it also makes the currency much more vulnerable to top-down control, via governments, corporations, etc. Last, if you're reading this, I'd suggest that you read up a bit about Ripple on Bitcoin Forum before you make conclusions about the currency - there are a lot of interesting discussions about its viability (like this one: https://bitcointalk.org/index.php?topic=146964.0 https://bitcointalk.org/index.php?topic=146964.0).

turingbook 13y ago

I think it is worthy noting that one of founders is Jed McCaleb, the original developer of ed2k and MtGox.

contingencies 13y ago

I have had access to rippled for many months, and it is a pretty big part of my job to evaluate different financial systems and asset types and to consider their impact for potential future of financial networking from a technical standpoint. Here's my summary of the most important distinctions between Bitcoin and Ripple: (1) Ripple includes a single 'asset', the Ripple, or XRP (X-ISO4217-A3[1]: XXRP) with which to tax shared resource use and avoid network abuse. Unlike Bitcoin's mining model, Ripple has a non-profit foundation to distribute the vast majority of these tokens. (2) Ripple settlements are effectively much faster than Bitcoin, since rollbacks are designed to be impossible.[2] (3) Ripple encourages anyone to issue any asset. So you can have contingencies' "IOU for 5 euros", or Sidnicious' "IOU for 5 euros" and then you can choose whether or not to consider them to be of equivalent value. This is hugely powerful, since monetary theorists agree that the most desirable and missing feature of an economic system is the capacity to create a record of value (ie. debt, or money) where value is actually being created. (4) The Ripple reference implementation is far cleaner and better written. In summary, Ripple is hugely different to Bitcoin, far more aligned with academic thought on economic systems reform, and a toolkit for creating various forms of exchange rather than a currency itself. The XRP thing is just there to prevent resource abuse. [1] http://www.ifex-project.org/our-proposals/x-iso4217-a3 http://www.ifex-project.org/our-proposals/x-iso4217-a3 [2] Can't validate that myself.. though it makes sense you'd know "something's wrong" really damn quickly, since everything would stop working entirely: IIRC a Ripple ledger consensus occurs rapidly and takes majority agreement.