6 ms·

"If so, then doesn't it have all the same problems and concerns as Ripple?" Correct. Like Ripple, Stellar requires special (and dangerous) trust in certain nod

by mrb 12y ago

"If so, then doesn't it have all the same problems and concerns as Ripple?" Correct. Like Ripple, Stellar requires special (and dangerous) trust in certain nodes. For example, gateways (https://www.stellar.org/blog/introducing-stellar/#gateways https://www.stellar.org/blog/introducing-stellar/#gateways) have to be trusted by the Stellar network as they send messages like "a user deposited 100 USD via a bank wire transfer, so please accept this digital representation of 100 USD, trust me". This trust is dangerous as people running an (initially) honest gateway may start acting maliciously and lie about how much USD or EUR or other currency exist on the network. By the time the malice is detected, maybe the network could trace all USD or EUR that was issued by the gateway, and revoke it, suddenly pissing off a lot of users who owns this currency as it would disappear from their wallet. Users would then loose trust in Stellar, and the network would collapse... Stripe would presumably be the first gateway trusted by the Stellar network. Okay, so what if Stripe decided they could not trust other gateways and wanted to remain the only gateway? Well Stripe would be the only way to inject USD or EUR or other currencies in the network, effectively making Stellar a fully centralized digital currency, with the entire Stellar network being dependent on Stripe not being hacked, not being abused by a malicious employee, not shutting down, etc. This is the complete opposite design principle of Bitcoin which requires absolutely no trust in any specific authority.

gdb 12y ago
Gateways actually don't have to be trusted by the network. Think of them as similar to stores issuing credit: the gateway just says "the user has a credit for 100 USD, redeemable at my store". That credit is tradable, but only to other users who trust credit from that gateway. This means there needs to emerge a good system for users to decide which gateways to trust, but a malicious gateway can only directly harm the users who have decided to trust it. The beauty of this model is anyone can become a gateway at any time. See for example the gist linked at the end of the Stellar blog post: https://gist.github.com/thejollyrogers/b114b5a98fa11a5a4ad0 https://gist.github.com/thejollyrogers/b114b5a98fa11a5a4ad0 — becoming a gateway is just two API calls.
- eordano 12y ago
  I smell compatibility hell. "Hey, take my credit from X gateway" "Sorry, I don't trust X"
  - gdb 12y ago
    Yep! That's where the stellar comes in. It's something that everyone the network can accept and requires no trust. So as long as someone is willing to convert your gateway's credit to stellar (and worst case, your gateway should be willing to do so), you're fine.
    - kanzure 12y ago
      > (and worst case, your gateway should be willing to do so) Isn't the worst case that the gateway goes belly up?
      - gdb 12y ago
        Well, the real worst case is probably that the Earth gets hit by a coronal mass ejection and takes down all electronics: http://bit.ly/1qO25PH http://bit.ly/1qO25PH :). But more seriously, a gateway you trust going under is indeed a risk. That's part of why you can specify not just "I trust this gateway" but also "I trust this gateway for up to 100 CAD" — you can explicitly specify your exposure.
    - eridius 12y ago
      That's assuming your gateway has stellar on hand to provide as conversion. Stripe is starting with 2% of the stellar, but (AFAIK) nobody else is starting with any significant chunk. If a gateway issues credit in exchange for real-world exchanges, I don't see why there's any expectation that they'll have stellar on-hand to use for the conversion, although perhaps they can use their real-world money to buy stellar from some other gateway. I'm also wondering, since the amount of Stellar is capped (100 billion, right? Can this ever change?), and since 50% of Stellar is being distributed to people who sign up, it seems like a sizable portion of this Stellar will almost certainly immediately become unusable as people sign up, get their Stellar, and never come back. Edit: Just found the bit where it says Stellar will be created at a rate of 1% annually. The fixed 100 billion cap I cited was based on earlier comments about Ripple's cap.
natrius 12y ago
Switching between currencies, especially paper currencies, requires trust unless you're physically handing over money. I have full control over my bitcoins, but if I want dollars, I need to trust Bitstamp and my bank, or Stellar and my gateway. Anyone can be a gateway, so Stripe can't prevent others from succeeding. The only barrier to entry to becoming a successful gateway is earning the trust of the folks transacting on the network.
tomasien 12y ago
IMO it would HELP if some of the USD and other government backed currency transmitters/gateways/etc tried to help with accountability IE - how much USD did we transfer into Stellar in raw numbers today. I'd be willing to participate on the ACH side.
alwillis 12y ago
Correct. Like Ripple, Stellar requires special (and dangerous) trust in certain nodes. This is incorrect. A trustline between a user and a gateway is no different (https://ripple.com/wiki/Ripple_for_Gateways#Gateway.E2.80.99s_and_Trust https://ripple.com/wiki/Ripple_for_Gateways#Gateway.E2.80.99...), special or any more dangerous than a trustline between any two users on the network. I can extend a trustline of $20 to my buddy Jim or I can extend a trustline to a gateway for $20. It makes no difference to the network. For example, gateways (https://www.stellar.org/blog/introducing-stellar/#gateways https://www.stellar.org/blog/introducing-stellar/#gateways) have to be trusted by the Stellar network as they send messages like "a user deposited 100 USD via a bank wire transfer, so please accept this digital representation of 100 USD, trust me". Also incorrect. The only trust required is for the user to trust a gateway to hold a balance on their behalf. The consensus process--you might want to read about it at https://ripple.com/wiki/Consensus https://ripple.com/wiki/Consensus ensures that the all nodes agree to this change in the status of the ledger. This trust is dangerous as people running an (initially) honest gateway may start acting maliciously and lie about how much USD or EUR or other currency exist on the network. Wrong again. Both Ripple and Stellar's consensus process require that all of the nodes agree on the state of the ledger before any new transactions can be added to it. Bogus transactions or changes to the ledger are easily detected. From Ripple's wiki (https://ripple.com/wiki/Consensus#Liars https://ripple.com/wiki/Consensus#Liars): If someone should be dishonest, the honest actors will notice them lying and can disregard their future attestations. That is, if you lie once, you have no gain as the network doesn't care and they won't care what you say in the future. The ripple protocol requires validators to sign the consensus ledger after each validation interval. If a validator fails to do this, it will be easily detectable. Similarly, if a validator signs a ledger and then signs a ledger after that which cannot be reached by a combination of valid transactions, this will also be easily detectable. And then you say… By the time the malice is detected, maybe the network could trace all USD or EUR that was issued by the gateway, and revoke it, suddenly pissing off a lot of users who owns this currency as it would disappear from their wallet. Users would then loose trust in Stellar, and the network would collapse... Nope; see above why this can't happen. Stripe would presumably be the first gateway trusted by the Stellar network. Okay, so what if Stripe decided they could not trust other gateways and wanted to remain the only gateway? The model isn't based on trusting any particular gateway; it's based on trusting multiple gateways to not collude against you. Example: you may not trust a gateway run by the Democratic National Committee or one run by the Republican National Committee, but you can be pretty confident they aren't going to collude against you. And because they'd both are on your Unique Node List, if they agree with the other nodes you talk to, you can be confident the ledger reflects the true state of the network. Well Stripe would be the only way to inject USD or EUR or other currencies in the network, effectively making Stellar a fully centralized digital currency, with the entire Stellar network being dependent on Stripe not being hacked, not being abused by a malicious employee, not shutting down, etc. Wrong. Again. Anyone on Ripple (or Stellar) can be a gateway or market maker and provide liquidity on the network. There's nothing special about Stripe, except that they have more money and reputation than most of us do. It does mean that lots of people will trust Stripe to hold USD balances on their behalf. If you're totally paranoid, with Ripple or Stellar, you can decide to only transact fiat currencies with people you know and trust and act as gateways for each other (https://ripple.com/wiki/Ripple_for_Gateways https://ripple.com/wiki/Ripple_for_Gateways). The beauty is you can transact with people outside of your circle if one of your friends has extends trust to someone you don't know. You don't have to trust them, but as long you trust someone in common, you can transact with fiat. This is the complete opposite design principle of Bitcoin which requires absolutely no trust in any specific authority. Because the bitcoin protocol doesn't take into account the concept of gateways between the blockchain and fiat currencies, bitcoin users are left with relying on exchanges like Mt. Gox to address this. How did that work out?

by mrb 12y ago

gdb 12y ago

Gateways actually don't have to be trusted by the network. Think of them as similar to stores issuing credit: the gateway just says "the user has a credit for 100 USD, redeemable at my store". That credit is tradable, but only to other users who trust credit from that gateway. This means there needs to emerge a good system for users to decide which gateways to trust, but a malicious gateway can only directly harm the users who have decided to trust it. The beauty of this model is anyone can become a gateway at any time. See for example the gist linked at the end of the Stellar blog post: https://gist.github.com/thejollyrogers/b114b5a98fa11a5a4ad0 https://gist.github.com/thejollyrogers/b114b5a98fa11a5a4ad0 — becoming a gateway is just two API calls.

eordano 12y ago
I smell compatibility hell. "Hey, take my credit from X gateway" "Sorry, I don't trust X"
- gdb 12y ago
  Yep! That's where the stellar comes in. It's something that everyone the network can accept and requires no trust. So as long as someone is willing to convert your gateway's credit to stellar (and worst case, your gateway should be willing to do so), you're fine.
  - kanzure 12y ago
    > (and worst case, your gateway should be willing to do so) Isn't the worst case that the gateway goes belly up?
    - gdb 12y ago
      Well, the real worst case is probably that the Earth gets hit by a coronal mass ejection and takes down all electronics: http://bit.ly/1qO25PH http://bit.ly/1qO25PH :). But more seriously, a gateway you trust going under is indeed a risk. That's part of why you can specify not just "I trust this gateway" but also "I trust this gateway for up to 100 CAD" — you can explicitly specify your exposure.
  - eridius 12y ago
    That's assuming your gateway has stellar on hand to provide as conversion. Stripe is starting with 2% of the stellar, but (AFAIK) nobody else is starting with any significant chunk. If a gateway issues credit in exchange for real-world exchanges, I don't see why there's any expectation that they'll have stellar on-hand to use for the conversion, although perhaps they can use their real-world money to buy stellar from some other gateway. I'm also wondering, since the amount of Stellar is capped (100 billion, right? Can this ever change?), and since 50% of Stellar is being distributed to people who sign up, it seems like a sizable portion of this Stellar will almost certainly immediately become unusable as people sign up, get their Stellar, and never come back. Edit: Just found the bit where it says Stellar will be created at a rate of 1% annually. The fixed 100 billion cap I cited was based on earlier comments about Ripple's cap.

natrius 12y ago

Switching between currencies, especially paper currencies, requires trust unless you're physically handing over money. I have full control over my bitcoins, but if I want dollars, I need to trust Bitstamp and my bank, or Stellar and my gateway. Anyone can be a gateway, so Stripe can't prevent others from succeeding. The only barrier to entry to becoming a successful gateway is earning the trust of the folks transacting on the network.

tomasien 12y ago

IMO it would HELP if some of the USD and other government backed currency transmitters/gateways/etc tried to help with accountability IE - how much USD did we transfer into Stellar in raw numbers today. I'd be willing to participate on the ACH side.

alwillis 12y ago

Correct. Like Ripple, Stellar requires special (and dangerous) trust in certain nodes. This is incorrect. A trustline between a user and a gateway is no different (https://ripple.com/wiki/Ripple_for_Gateways#Gateway.E2.80.99s_and_Trust https://ripple.com/wiki/Ripple_for_Gateways#Gateway.E2.80.99...), special or any more dangerous than a trustline between any two users on the network. I can extend a trustline of $20 to my buddy Jim or I can extend a trustline to a gateway for $20. It makes no difference to the network. For example, gateways (https://www.stellar.org/blog/introducing-stellar/#gateways https://www.stellar.org/blog/introducing-stellar/#gateways) have to be trusted by the Stellar network as they send messages like "a user deposited 100 USD via a bank wire transfer, so please accept this digital representation of 100 USD, trust me". Also incorrect. The only trust required is for the user to trust a gateway to hold a balance on their behalf. The consensus process--you might want to read about it at https://ripple.com/wiki/Consensus https://ripple.com/wiki/Consensus ensures that the all nodes agree to this change in the status of the ledger. This trust is dangerous as people running an (initially) honest gateway may start acting maliciously and lie about how much USD or EUR or other currency exist on the network. Wrong again. Both Ripple and Stellar's consensus process require that all of the nodes agree on the state of the ledger before any new transactions can be added to it. Bogus transactions or changes to the ledger are easily detected. From Ripple's wiki (https://ripple.com/wiki/Consensus#Liars https://ripple.com/wiki/Consensus#Liars): If someone should be dishonest, the honest actors will notice them lying and can disregard their future attestations. That is, if you lie once, you have no gain as the network doesn't care and they won't care what you say in the future. The ripple protocol requires validators to sign the consensus ledger after each validation interval. If a validator fails to do this, it will be easily detectable. Similarly, if a validator signs a ledger and then signs a ledger after that which cannot be reached by a combination of valid transactions, this will also be easily detectable. And then you say… By the time the malice is detected, maybe the network could trace all USD or EUR that was issued by the gateway, and revoke it, suddenly pissing off a lot of users who owns this currency as it would disappear from their wallet. Users would then loose trust in Stellar, and the network would collapse... Nope; see above why this can't happen. Stripe would presumably be the first gateway trusted by the Stellar network. Okay, so what if Stripe decided they could not trust other gateways and wanted to remain the only gateway? The model isn't based on trusting any particular gateway; it's based on trusting multiple gateways to not collude against you. Example: you may not trust a gateway run by the Democratic National Committee or one run by the Republican National Committee, but you can be pretty confident they aren't going to collude against you. And because they'd both are on your Unique Node List, if they agree with the other nodes you talk to, you can be confident the ledger reflects the true state of the network. Well Stripe would be the only way to inject USD or EUR or other currencies in the network, effectively making Stellar a fully centralized digital currency, with the entire Stellar network being dependent on Stripe not being hacked, not being abused by a malicious employee, not shutting down, etc. Wrong. Again. Anyone on Ripple (or Stellar) can be a gateway or market maker and provide liquidity on the network. There's nothing special about Stripe, except that they have more money and reputation than most of us do. It does mean that lots of people will trust Stripe to hold USD balances on their behalf. If you're totally paranoid, with Ripple or Stellar, you can decide to only transact fiat currencies with people you know and trust and act as gateways for each other (https://ripple.com/wiki/Ripple_for_Gateways https://ripple.com/wiki/Ripple_for_Gateways). The beauty is you can transact with people outside of your circle if one of your friends has extends trust to someone you don't know. You don't have to trust them, but as long you trust someone in common, you can transact with fiat. This is the complete opposite design principle of Bitcoin which requires absolutely no trust in any specific authority. Because the bitcoin protocol doesn't take into account the concept of gateways between the blockchain and fiat currencies, bitcoin users are left with relying on exchanges like Mt. Gox to address this. How did that work out?