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XRP is essential as the native currency of the protocol. All other currencies exist on Ripple in the form of balances. (Similar to how I store my money at Cit

XRP is essential as the native currency of the protocol. All other currencies exist on Ripple in the form of balances. (Similar to how I store my money at Citibank in the form of USD balances. This is how our traditional financial system works). The protocol needs a native currency (XRP) in order to pay the anti-DDOS fee. Every payment or trade requires the user to pay a 0.0001XRP fee which the protocol destroys. It's purpose is to create a cost to sending "transaction SPAM" and make it extremely expensive to DDOS Ripple servers for any sustained period of time. This transaction fee is dynamic and scales higher in terms of heavy server load. It's important that this type of fee be paid in a currency that is native to the protocol. This allows the protocol to remain neutral and global.

alcari 13y ago
But why do we need special Ripple servers at all? Couldn't the system have been designed with a larger collection of nodes in mind and simply done without XRP?
- kylebrown 13y ago
  Ripple is a distributed database of bid/ask offers. A distributed system needs to be byzantine fault tolerant (BFT). Bitcoin achieves BFT by using its native currency (bitcoins) in a proof-of-work scheme. Basically BFT means a malicious node can't do anything which will break the blockchain, because the only way any node can make changes to the blockchain is if it has solved a block (has the private keys to next block of bitcoins). Nodes with private keys to previous bitcoins have to get changes relayed through the node which solves the next block. Likewise, Ripple achieves BFT by using its native currency (XRP) in a consensus scheme. The consensus scheme relies on Unique Node Lists (UNL), instead of proof-of-work. So nodes can only propose changes to the ripple ledger if they are on the UNL of some other node. And changes will only be accepted if they are signed by the private keys of the native currency (XRP). Nodes which aren't on any UNLs have to broadcast their changes to nodes which are on a UNL, and of course, must still have the private keys to make those changes. There are probably other ways to provide BFT, but using a native crypto-currency is one of them.
maaku 13y ago
> The protocol needs a native currency (XRP) in order to pay the anti-DDOS fee. No, it doesn't. Have you seen the various pre-OpenCoin ripple protocols, or the currently competing colored coin proposals? None of them necessarily needed or would have benefited from a scarce-money fee currency. Ripple is a protocol for generating ad-hoc user-issued assets and arranging trade networks for exchanging these currencies. There's no reason fees can't be collected in whatever currency is being transacted, and then atomically converted into whatever currency the collecting node desires. That's what ripple is designed to do.
- kylebrown 13y ago
  The fact is that you can't transact separate currencies which are on separate protocols, unless you represent one as an issued-asset on the other. Colored Coins use the native currency of its protocol - bitcoin. The developer of the first colored coins client, Stefan Thomas, moved on to become CTO of ripple. Ripple is a new protocol altogether, with advantages over extensions/overlays on the bitcoin protocol, the main ones being no mining and much quicker ledgers. User-issued assets on ripple have a customizable transit fee which is effectively collected in the issued currency (since the fee is paid from the balance of the issue back to the issuer). For example, bitstamp's issuer fee is 0.2%, so any trades of bitstampBTC or bitstampUSD pay 0.2% of the amount back to bitstamp's issuer address. (the fee is set at creation of the issuing address and can't be changed later).
  - maaku 13y ago
    This is not true. There are mechanisms for cross-chain trade, and with a few small changes theres quite a bit more that you can do. See the smart contracts page of the wiki, and the freimarkets whitepaper for example.
- rfugger 13y ago
  I wrote the earlier Ripple designs [1]. To me, the main thing XRP adds to the concept is a way of bootstrapping the network by providing a way to bridge the gap between islands of nodes with no trust pathway for monetary value to flow between them. I tried getting Ripple going for nearly 10 years (including a YC interview in 2007), and this bootstrapping issue was a big one. XRP also provides anti-DDOS, which is also something you'd also need to consider carefully in implementing my original designs, as well as a brilliant way to finance the creation, development, and maintenance of the network. [1] http://archive.ripple-project.org/Protocol/Protocol http://archive.ripple-project.org/Protocol/Protocol

alcari 13y ago

But why do we need special Ripple servers at all? Couldn't the system have been designed with a larger collection of nodes in mind and simply done without XRP?

kylebrown 13y ago
Ripple is a distributed database of bid/ask offers. A distributed system needs to be byzantine fault tolerant (BFT). Bitcoin achieves BFT by using its native currency (bitcoins) in a proof-of-work scheme. Basically BFT means a malicious node can't do anything which will break the blockchain, because the only way any node can make changes to the blockchain is if it has solved a block (has the private keys to next block of bitcoins). Nodes with private keys to previous bitcoins have to get changes relayed through the node which solves the next block. Likewise, Ripple achieves BFT by using its native currency (XRP) in a consensus scheme. The consensus scheme relies on Unique Node Lists (UNL), instead of proof-of-work. So nodes can only propose changes to the ripple ledger if they are on the UNL of some other node. And changes will only be accepted if they are signed by the private keys of the native currency (XRP). Nodes which aren't on any UNLs have to broadcast their changes to nodes which are on a UNL, and of course, must still have the private keys to make those changes. There are probably other ways to provide BFT, but using a native crypto-currency is one of them.

maaku 13y ago

> The protocol needs a native currency (XRP) in order to pay the anti-DDOS fee. No, it doesn't. Have you seen the various pre-OpenCoin ripple protocols, or the currently competing colored coin proposals? None of them necessarily needed or would have benefited from a scarce-money fee currency. Ripple is a protocol for generating ad-hoc user-issued assets and arranging trade networks for exchanging these currencies. There's no reason fees can't be collected in whatever currency is being transacted, and then atomically converted into whatever currency the collecting node desires. That's what ripple is designed to do.

kylebrown 13y ago
The fact is that you can't transact separate currencies which are on separate protocols, unless you represent one as an issued-asset on the other. Colored Coins use the native currency of its protocol - bitcoin. The developer of the first colored coins client, Stefan Thomas, moved on to become CTO of ripple. Ripple is a new protocol altogether, with advantages over extensions/overlays on the bitcoin protocol, the main ones being no mining and much quicker ledgers. User-issued assets on ripple have a customizable transit fee which is effectively collected in the issued currency (since the fee is paid from the balance of the issue back to the issuer). For example, bitstamp's issuer fee is 0.2%, so any trades of bitstampBTC or bitstampUSD pay 0.2% of the amount back to bitstamp's issuer address. (the fee is set at creation of the issuing address and can't be changed later).
- maaku 13y ago
  This is not true. There are mechanisms for cross-chain trade, and with a few small changes theres quite a bit more that you can do. See the smart contracts page of the wiki, and the freimarkets whitepaper for example.
rfugger 13y ago
I wrote the earlier Ripple designs [1]. To me, the main thing XRP adds to the concept is a way of bootstrapping the network by providing a way to bridge the gap between islands of nodes with no trust pathway for monetary value to flow between them. I tried getting Ripple going for nearly 10 years (including a YC interview in 2007), and this bootstrapping issue was a big one. XRP also provides anti-DDOS, which is also something you'd also need to consider carefully in implementing my original designs, as well as a brilliant way to finance the creation, development, and maintenance of the network. [1] http://archive.ripple-project.org/Protocol/Protocol http://archive.ripple-project.org/Protocol/Protocol