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This seems like it would have a serious early-adopter problem, in that it needs a pretty large network of people that somewhat know each other in order for thin

by JimmyL 17y ago

This seems like it would have a serious early-adopter problem, in that it needs a pretty large network of people that somewhat know each other in order for things to work. Specifically, if I join this service, I can't do anything until someone who knows me joins, at which point we can then lend money to each other. If a bunch of my friends join, then we have our own small complete social graph - but we can't access the greater community until one of us is friends with someone else who has a complete social graph that would act as the bridge between us. I also don't see what the incentive is for someone to join. Zopa/LendingClub pays interest, Kiva is charitable, this is...what? And how do you get your physical cash in and out of the system - would the service make deals with banks (which would put them under more regulatory oversight), or...? Lastly, this seems like it would be targeted by anti-money laundering laws real quick. A way to transfer money electronically between people who know each other, across trans-national boundaries with no government tracking of the amounts in or out...what could go wrong, from the perspective of the Feds?

TriinT 17y ago
"This seems like it would have a serious early-adopter problem, in that it needs a pretty large network of people that somewhat know each other in order for things to work." It's a classic, textbook example of the network effect: the more people use the service, the greater the value for each user. If a network of early-adopters were established and enough momentum were gained, it could perhaps work. "I also don't see what the incentive is for someone to join." Some might have an incentive to join. Some die-hard anarcho-capitalists would perhaps join for a matter of ideology. Others, like money launderers, would perhaps join so that they would not leave a paper trail. "A way to transfer money electronically between people who know each other, across trans-national boundaries with no government tracking of the amounts in or out...what could go wrong, from the perspective of the Feds?" Ripple looks like a P2P approach to the hawala system, and if the Feds are targetting the hawala system, they would doubtlessly target Ripple. However, cryptography might provide plausible deniability. I don't know because I am no expert on financial crypto and the like. Last but not least: I personally find this an interesting concept, not much else. A rigorous mathematical analysis would be required to show that the system does work. One would have to study the robustness of the system to malicious nodes. Let us see: graph theory, game theory, mechanism design, cryptography, law, etc. There's food for thought here for many years of research...
joe_the_user 17y ago
It's got more problems even than these. Bernie Madoff ran on a "network of trust" and he established a strong track-record over the years. The problem is that a monetary system requires more than even sophisticated mutual trust. It requires knowledge that the underlying processes are sound - and most people can't understand that. That's exactly why Ponzi schemes constantly reappear.
- TriinT 17y ago
  Maddof was supposed to be an investment manager. Ponzi too. Ripple is just a way of transferring IOUs. Investment and protocol design are entirely different beasts.

by JimmyL 17y ago

TriinT 17y ago

"This seems like it would have a serious early-adopter problem, in that it needs a pretty large network of people that somewhat know each other in order for things to work." It's a classic, textbook example of the network effect: the more people use the service, the greater the value for each user. If a network of early-adopters were established and enough momentum were gained, it could perhaps work. "I also don't see what the incentive is for someone to join." Some might have an incentive to join. Some die-hard anarcho-capitalists would perhaps join for a matter of ideology. Others, like money launderers, would perhaps join so that they would not leave a paper trail. "A way to transfer money electronically between people who know each other, across trans-national boundaries with no government tracking of the amounts in or out...what could go wrong, from the perspective of the Feds?" Ripple looks like a P2P approach to the hawala system, and if the Feds are targetting the hawala system, they would doubtlessly target Ripple. However, cryptography might provide plausible deniability. I don't know because I am no expert on financial crypto and the like. Last but not least: I personally find this an interesting concept, not much else. A rigorous mathematical analysis would be required to show that the system does work. One would have to study the robustness of the system to malicious nodes. Let us see: graph theory, game theory, mechanism design, cryptography, law, etc. There's food for thought here for many years of research...

joe_the_user 17y ago

It's got more problems even than these. Bernie Madoff ran on a "network of trust" and he established a strong track-record over the years. The problem is that a monetary system requires more than even sophisticated mutual trust. It requires knowledge that the underlying processes are sound - and most people can't understand that. That's exactly why Ponzi schemes constantly reappear.

TriinT 17y ago
Maddof was supposed to be an investment manager. Ponzi too. Ripple is just a way of transferring IOUs. Investment and protocol design are entirely different beasts.